Loan contigency... 104 day escrow! Help please

Asked by Sabine, Malibu, CA Fri Sep 26, 2008

Part 1
Hello everyone,
I need some help with a difficult situation.
We opened escrow on a property on Sep 10th. We had agreed on a closing date of 11/7 . I wanted this date because I wanted to get a 60 day loan rate lock ASAP, as interest rates were great at the time of start of escrow.
Then, 5 days into escrow my real estate agent (who is also the seller’s agent) informs me that the seller’s attorney advised them that they could not close on 11/7. They had just finalized their divorce and the monies had to be seasoned for 90 days per California law. The seller has now asked to delay close of escrow to December 23rd. (that’s a 104 day escrow) Ok, this not good for us on so many levels- firstly, we now are no longer able to lock in the 5.5% rate we were quoted. Here is the big problem- The seller and our agent wants us to adhere to our original 21 day loan contingency removal (which is next Friday).
Continued below-

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Jacqueline J…, , Calabasas, CA
Sat Oct 11, 2008
I agree with David Krecker. If you do not get what you originally requested in your offer do not remove the contingencies.
If the house is still available, you can always resubmit a new offer.
It is in your best interest to be represented by your own agent in any real estate transaction.
It is very difficult for one agent to best represent both parties to a transaction.
Jacqueline Jacobs

If you are rate shopping call Marcello at Countrywide 818-430-0318
0 votes
Dyanna, , California
Sat Sep 27, 2008
Hello Sabine. I understand your situation, but don't think it is that bad. If the sellers don't want to close escrow until the 23rd of Dec. have them pay the cost of keeping your lock. Thats reasonable.

Now as far as the loan contingency, counter them back. How many days before the deal closed on 11-7 were you going to remove the contingencies? It seems as though it would have been 34-35 days. Am I right? Therefore, it would only be in the best interest of both of you to remove the contingencies about 25-30 days before you close your deal. This would be in the best interest to both you and the seller. You don't want to get in to a situation that you can not perform on and the seller wants to make suer this deal is going to close. Why would they want you to remove contingencies if the market is so unstable? This protects them too. Now, if they insist on you removing contingencies, counter them back with, if the price of the home declines it will be bought/sold at appraisal value at that time, appraisal will be completed 25 days before close. Values are declining, not very much in Malibu, but still declining. Win-Win!!

Please keep in mind that I am giving you my opinion only. Without being there and reading over the contract I am speculating on facts. I hope everything goes well for you!!

Good Luck!
0 votes
Jacqueline W…, Agent, Irvine, CA
Sat Sep 27, 2008
So sorry this is happening to you......I wish everyone would read the details of the situations we see on this forum so they could see and understand the potential ramifications of dual agency.

I recommend you seek the advice of legal is not possible for anyone in this forum to guide you with reviewing the complete contract. If the agent works for a larger firm, you might also want to meet with his/her Broker of Record and see if you can get some help.
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Scott Godzyk, Agent, Manchester, NH
Sat Sep 27, 2008
You have to decide if you really want this house. if not you can get out now. if you do then my first question is did you sign a buyer broker contract with this agent or did you sign a dual agency agreement. or did you just sign a diclosure that he is a sellers agent? I always tell people how can an agent look out for the buyer to get them the best price an dteh seller to get them the highest price and terms. they simply cant. Check your disclosures to see if they are violating any of them. If you already have a signed agrement with firm dates you can insist they abide by them, let the proceeds form closing be held by the attorney for the divorce seasoning. if they are going to make you wait ask for something for your trouble such as a credit or money that can be used for a 90 day lock. good luck Sabine with working things out.
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David Krecker, Landlord, Whittier, CA
Sat Sep 27, 2008
I would also agree with the removing contingencies very close to the time of closing. Your agent is double ending this and it appears as you say is NOT representing you in your best interest. This is why you need to be properly represented from a position of strength which I ALWAYS recommend for my clients. I would NOT adhere to the removal of the loan contingency. None of this appears in your best interest, this is a BUYERS market, so you should be holding some of the cards in the negotiations. As I tell my clients, always be prepared to move on , there are always better deals, don't agree with the terms, and if the property is still there when they are ready then you can resubmit your offer on your terms. Unless you really want this house, I would cancel the deal and keep looking. When they are ready tell them to call you and if your still interested then renegotiate.

The house value may be less, and as a State licensed appraiser also I have seen values come down when I review all offers I work with , with my clients. Enough said here...... that is what I would recommend to my clients and if you would like to discuss more let me know.....l
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David, , La Jolla, CA
Fri Sep 26, 2008
If you absolutely have to own it, then the answer is easy. If you are looking to pull the plug, sounds like you can still cancel.
0 votes
Homa Moaddel, Agent, Foothill Ranch, CA
Fri Sep 26, 2008
Hi Sabine,

I would remove my contingencies very close to the time of closing. For various reasons some of which you have mentioned you want to be fairly certain you will buy the house on your term(low interest rate..). Also the condition of the house may change within 30 days. So I also do my inspection close to the time escrow is going to close. I would do the inspection within 20 days of closing and start removing contingencies within 2 weeks prior to closing.


Broker Associate
Prudential California Realty
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Sabine, Home Buyer, Malibu, CA
Fri Sep 26, 2008
Part 2
My loan broker (who is great) advised me that this absolutely unfair. Although my file is very strong, who knows what will happen in the next 3 months. Also, we cannot remove that contingency without locking a rate first, we cannot do this because- 90 day lock requires all paperwork be submitted, including appraisal. 90 day lock is expensive. Interest rates are not very good at the present time… I want to float until I get a better rate! Not too mention, without submitting everything to underwriting, I cannot get a guaranteed approval… the banks are so unstable right now… who is to say the bank will even be around 90 days from now?
I have to watch my own back (since my agent has the sellers best interest in mind, not mine) How should I approach this? What would be a fair timeframe for me to remove the contingency? 30 days prior to closing?
Thank you
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