Home Selling in Milpitas>Question Details

cathay3, Both Buyer and Seller in Milpitas, CA

Extention of Time Addendum

Asked by cathay3, Milpitas, CA Sun May 13, 2012

My sister and I co-own a house and we had a contract that expired two days ago (Friday 11th) while the buyer was waiting for loan approval. The appraiser finally showed up the day before expiration, the inspection is to take place in two days. The buyer agent told my agent that they were working hard to get things moving. My agent shot us an Extension of Time Addendum via DocuSign on the 11th for us to sign but we do not see the buyer signed off on it...we thought it peculiar as the extension offers protection to the buyer. By the time I saw the request the contract had already expired. What's the right thing for us the sellers to do that's in our best interest?

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Cathy3:

I would not worry about the buyer not signing the extension of time addendum before you do. Since your agent is preparing it, you are basically offering to extend the contract, so you sign first, and the buyer has an option to sign or walk. If the loan contingency lasts till the loan is funded, which any competent buyer's agent should check on the initial offer, then the buyer gets back their earnest money deposit if the transaction does not close due to lack of loan obtained by any stated time.

When you make an offer to extend time, you can ask, if you have not already, to see the buyer's proof of funds to close. Make showing this proof as a condition of the extension. This will answer your question as to whether they have the money to pay the down payment and their share of closing costs. You should hope that they have considerably more money than necessary in case the appraisal comes in too loan and the bank won't loan the amount of money the buyer anticipated needing. You can also ask, at this point to look at their income, such as most recent pay stubs, and do a rough calculation of whether they have the income to qualify for their loan.

I would also ask if they took the loan to a broker rather than to a correspondent bank or retail bank. Going to a broker often slows things down a lot. It may also be a sign that they knew they would have trouble getting the loan. Ask, if they are with a broker, to which bank the loan has been committed. I f the answer is none yet, then you have a worry. At that point, I would look at back up offers. I would suggest your agent call back the next highest bidders and see if they might still be interested in your home.

One technique you might want to employ now is to make an offer to extend time ON THE CONDITION, that the loan contingency expire automatically, meaning without having to be released, by a certain time. This will put the buyer in the position of evaluating whether they can risk the loan not coming in. If they can't, and are not sure the loan will come in, they'll back out. If I were advising my client on this, I would give the buyer at least ten days before that expiration of loan contingency. The appraisal won't get to the loan officer for about five days after the appraiser visits the home. If the appraisal comes in too low to support the loan (common now in a market of rising prices for regular sales but appraisal values being held back by short sales and REO pricing and delays in closing at those prices), then the buyer either has to have more money for down payment or give up the transaction. Please give them time to find that out before they have to fish or cut bait.

If you decide not to extend the contract, then ask your agent to send a notice to perform. The agent can explain the timelines that then come into play before you place the home back on the market. Placing it back on the market, if you don't already have a back-up offer and your home is in the lower end of the price range, may be a blessing; prices are moving up rapidly in the lower end of the price range.

I hope this helps ease your anxiety and gives you some direction you can discuss with your agent.

Mitchell Pearce
408-639-0211
mitchell@handsonrealtor.com
0 votes Thank Flag Link Sun May 13, 2012
First, you should have some earnest deposit in escrow that should be hard money, which gives you some leverage. Sounds like the selling agent doesn't quite know what's going on or how to manage a transaction. You should have your broker work out the situation in your favor. We're not able to intercede with a recommendation as that would be interference on a deal that we have little knowledge of.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Sun May 13, 2012
Hi Cathay3 and thanks for your post.

First, i'm sorry that you find yourself in this predicament, and as much as I--or any other agent here on Trulia would like to help you--the intiricacies of your contract and the papers signed will be known only to your agent and to the buyer's agent. So talk with your agent, and I'm sure he/she will help you understand your current situation and your options.

Generally, however, as the others have already noted, unless the extension of time is signed by all parties (buyer and seller), then the extension was not granted. You should be able to get and to see an executed copy of this extension--just call your agent to see it.

if the extension has not been signed, you do have several options including noticing the buyers to request performance, finding out what and why the contract has not been executed, and terminating the contract for cause to find a new buyer. Each of these options and any other actions can be better explained by your agent.

I do find it troubling, however, that the appraiser has just shown up and that the inspection is just getting started especially since these coningencies are normally removed in the first 17 days after the contract is signed. If the contract is now expiring, I guess a good question to ask is why the contingencies were not removed sooner, and if the buyers actually have the capacity to close escrow even with an extension. Again, talk with your agent to get more information. I'm sure there's a lot more to this than meets the small paragraph of facts you're allowed when asking a question.

Good luck!!

Sincerely,
Grace Morioka
Area Pro Realty-People's Choice
0 votes Thank Flag Link Sun May 13, 2012
First off talk with the agent representing you. When a docusign is sent over the agent can set up the order of signature. Depending on how that was done you may not see the buyer's signature as it could have been sent to all parties as signer number #1. And until it is completed by all signers it get's hung up waiting. Once all signers have completed then a notice is sent to the agent the document is completed and the parties should receive a fully ratified document.

Have an amazing day!
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sun May 13, 2012
If the extension of time addendum was signed by both buyer and seller prior to expiration stating that the C.O.E (close of escrow) will be extended out to whatever date then you are still in contract.

Also a contract does not just terminate on the final day like you think it does. In the offer contract there is a clause that states that 3 days after a deadline the seller can give the buyer a notice to perform. In the notice to perform the seller will have their requests such as extended time periods.

Also, check out my Santa Clara County Real Estate blog at http://BayAreaConnect.com for real estate news, weekly new listing photos, and market reports.

If you have any further questions give me a call, (408) 840-3852, or shoot me an email at Thomas.Feng@gmail.com
Web Reference: http://BayAreaConnect.com
0 votes Thank Flag Link Sun May 13, 2012
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