My husband are in a counter offer situation with a Bank Owned property. We are worried about the closing date that the bank is pushing.

Asked by Jennifer Silva, Sacramento, CA Fri May 7, 2010

The sellers accepted our offer price and percentage paid for closing costs, but they are firm about closing by June 14th and charging us $100 per day if we cause a delay in the close of escrow.

We are concerned that by the time everything is signed (around May 10th), and have had the home and pest inspections completed within 5 days after the contract signing, it will leave 30 days or less for escrow to close. We have already been approved for an FHA loan.

Is this a sufficient amount of time for escrow to close with an FHA loan?
What sorts of things can cause a delay in the close of escrow?
What can we do to prevent us delaying the close of escrow?
How would they determine if it is our fault?

We are also concerned because we will be out of town on vacation from 6/11 - 6/18, which will be right during the close of escrow. Our Realtor said that we can sign all the docs ahead of time and they will be ready for the closing.
Is that a good idea? What should we do?

Please help!!

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Kamal Randha…, Agent, El Sobrante, CA
Sat May 8, 2010
Hello Jennifer,

I dont think you have anything to worry about. If you close late due to delays caused by the bank, in most cases the bank will not charge you the per diem as outlined in the contract as long as your Realtor submits something in writing to the bank regarding the delay. I have worked on many REOs and have had the fees waived due to numerous different reasons. Make sure your Realtor is on top of everything. Good luck :)

Kamal Randhawa
1 vote
Linda Slocum,…, , Santa Clarita, CA
Sat May 8, 2010
If you are already pre-approved for an FHA loan, then you shouldn't have any troubles closing on time.

However, do be aware that the bank may request additional documentation for items in your file at the time they issue your loan documents, so you should be ready to respond to that request immediately. If you are out of town at that time, it could make things difficult.

Otherwise, the only other hangup that you could have would be the appraisal. If it doesn't come in at the purchase price, or if the appraiser indicates that FHA-required repairs are needed, then you'll need to make a decision as to how to deal with this.

Given the fact that there could be additional conditions/questions from your bank near the time of closing, it may be wise to consider postponing your vacation until this is complete. While it is true that you can even be in another country at the time of closing, the final conditions from the bank could cause troubles if you don't have access to your records.
1 vote
Sue Archer R…, Agent, Palm Harbor, FL
Sat May 8, 2010
First, congratulations on being accepted in your offer to the bank! I expect that it was a competitive bidding as all are in this market. As others have said having your realtor, yourself and your lender all sensitive to the timelines does help. Unfortunately, the back side of the loan process-appraiser, underwriter, etc. are outside of everyone's control. In other words, they are more likely the ones that might cause delays that will be outside of your control.

The other respondents mentioned good ideas in order to minimize those delays by: anticipating repairs that an appraiser might call out and addressing them (or make a plan for addressing them), getting anticipated funds in escrow up front, and determine how to sign escrow documents no matter where you are.

A worst case scenario, should the bank be one of the few that actually charges you the per diem charge, is to determine how much you're talking about. In the scheme of things, if you're delayed 14 days, that would be a total of $1400. Would you have paid $1400 more for the house if you had been requested to do so? While $1400 might be better left in your pocket, it really isn't alot if you're getting the home that you really want. That's all to say, prepare as best you can, and leave the stress behind. The amount extra, that probably won't be charged anyway, is not much when you look at the whole picture.

Best of luck to you!!!
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1 vote
Jeri Creson, Agent, Studio City, CA
Sat May 8, 2010
First...congratulations on finding your new home. Next...breathe.... It's very common for new buyers to get some post contract jitters and feel more pressure that truly exists. Communicate your concerns and fears to your agent, and listen to what he/she says is going to happen next. What you should be looking for here is a pro-active timeline of action steps you and your agent will be taking to make sure everything gets done on time. An REO sales contract can be particularly intimidating, but, if handled professionally, and with a well-calendared plan of action, you should be able to get things done with time to spare. If something unexpected does go wrong, and it sometimes does - especially around appraisals - you have options with the contract. Prior to the expiration of a contingency you can do 3 things: Accept the risk and move forward; cancel the contract and get your earnest money back; or renegotiate your time frame to suit the present situation.

Get a calendar, daytimer or set up an online calendar with the contingency dates on your contract. If you don't understand them, ask your agent to go over them with you. Mark a few reminders for key events a few days ahead so nothing sneaks up on you. Your agent should be able to help you set this up. Just taking responsibility for being part of this in an active manner will help accomplish 2 things: first, it will help insure they get done on time, and perhaps most importantly, it will give you some peace of mind and empower you during this escrow.

Good luck to you - and enjoy your new home!
1 vote
Jay Emerson, Agent, Fair Oaks, CA
Fri May 7, 2010
If the property passes FHA conditions and you have already been approved, 30 days "should" be sufficient. Make sure your Realtor protects your deposit and stays on top of the timeline.

Whatever your plan, have a backup plan. If there's no way to postpone vacation, have a way to get docs and sign wherever your destined -- have enough money delivered to escrow BEFORE closing so you are not the hang-up. Make it happen or budget for an extension and paying some per diem.

Truth sucks. Real estate is about timing.
1 vote
Ute Ferdig, Agent, Auburn, CA
Fri May 7, 2010
I think you can close by 6/14. While I understand that you don't want to pay a $100 per diem fee, it's not the end of the world. Unless the delay is caused by the bank, any delays will be presumed to have been the buyer's fault although your hands may have been tight. For instance, if the loan documents are delayed it will be considered buyer's fault although you yourself can't prepare the loan documents. Yes, you can sign the loan documents before you go on vacation. Going on vacation at a time when you are closing escrow is certainly not ideal and personally, I am not sure I'd be able to relax. Just make sure you stay in contact with your agent and make it easy for everybody (i.e., your real estate agent, escrow and loan agents) to get a hold of you while you are gone.
1 vote
Jim Walker, Agent, Carmichael, CA
Sat May 8, 2010
The possibility of being charged an extension fee is one of the many reasons that buyers should come to the realization that they should NOT be paying full market value for distressed sale properties. The truth is, the terms dictated by banks are anti-consumer. This is true for bank owned properties and for short sale properties subject to bank approval. The extension fees, the refusal to do any repairs, the roadblocks to allowing the buyer to do repairs prior to the close of escrow, the garbage fees imposed by escrow companies chosen for you by the bank. The hoops you must jump through, the roadblocks you must overcome, these are all reasons for you to pay less for a bank owned house or a short sale...

When buyers have the option of paying the same or less for a comparable "equity" sale (frequently advertised that way or "not an REO or short sale" they should realize that the equity sale is likely to save them money, save them stress, save them repair costs, and save on extension and garbage fees.

REO's and short sales can be bargains, but just as often not. If they are less money than comparable "equity sale" houses that is usually offset by their condition. Some of them can even become money pits, when the buyer underestimates the cost to renovate.
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