3 days from close of escrow, seller requests an extension to COE by 120 days. Should we be asking for compensation from the seller?

Asked by Ken, Scottsdale, AZ Wed May 25, 2011

This is a regular sale through realtors. Escrow was to close on Friday and we find out Wed night that the seller needs an extension on COE (which they picked the date for in the offer) by 120 days. As the buyer we were ready to wire money to title company within the next day so funds are set aside and interest is ringing up.

As a buyer, should I expect compensation during the 120 day extension, and what should I be asking for? Thanks everyone!

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Answers

36
Joanne Berna…, Agent, Northfield, NJ
Sat Jun 18, 2011
Obviously, laws differ from state to state, Here in New Jersey when a home is being sold in a short sale the seller must make the buyer aware of this.The listing remarks contain the wording, "may be subject to third party approval". We have a specific addendum that is put in the contract stating that. Buyer must agree to accept that performance dates may be altered by the bank. It doesn't sound like you had the benefit of any of these safeguards and didn't know the property was being sold as a short sale. If you haven't already done so, consult a lawyer and find out what your rights are. It will be the best money you ever spent! You may lose your deposit money if you walk away from the deal. One would ask what right the seller has to re-list the property for sale when he has a fully executed contract already in place!
0 votes
Ken, Home Buyer, Scottsdale, AZ
Fri Jun 17, 2011
Thanks Paul, but to be clear, this was a reguualr sale between us and the trust. We did not know of the short sale behind the scenes and it was not disclosed to us.
0 votes
Paul Welden, Agent, Scottsdale, AZ
Fri Jun 17, 2011
....... and now people know some of the reasons to stay away from short sales.
0 votes
Ken, Home Buyer, Scottsdale, AZ
Fri Jun 17, 2011
Hi folks,

Thanks for all of your guidance here. I promised to provide an update, so here it is.

A couple of other background pieces for everyone. This is an investment property for the seller and there are tenants in the property. We are/were planning to leave the tenants in place and use the property as an investment until we needed to use it for ourselves.

The seller is a Trust, who has the current title. The debt on the property belongs to the beneficiary of the Trust and behind the scenes was working a short sale arrangement with a bank. The short sale was approved, but the bank invoked a 120 day waiting period. Thus the request to extend COE.

We agreed to an extension provided our cost of money was covered. That was not acceptable to the seller and they came back with multiple complex, complicated deals that would result in the buyer (us) lending the seller the money outside of the escrow process. We did not go down that path as it would entail retaining legal counsel, accountants, etc....

To make a long story short, we cured them, and another complex alternative came back. We said no and provided an option to agree to the extension, but the seller was to provide the buyer a per diem, as the buyer would have to do in the reverse situation.

A couple of days past, and then the realtor rellisted the property, even though we are still in escrow. The price went up, and mention was made of the extended close requirement. Vague references are made to contacting the realtor for more details on financing.

We are working with the realtor and title company on the next steps as we are prepared to close escrow and they are not. So not sure what will eventually happen, but unfortunately it appears it is a lose-lose for everyone.
0 votes
gabriel palo…, Agent, Pompano Beach, FL
Mon Jun 6, 2011
No, you should give them an answer.
0 votes
Kellie Ruthe…, Agent, Prescott, AZ
Thu Jun 2, 2011
First of all, have your Realtor inquire as to the reason for the extension and get that to you so you can make a proper decission. Then, where are you living now and how will this affect you, can you stay where you are or do you need to find other living quarters during this time? And what extra expenses will you experience because of this set back and will you require the seller to cover those? And now consider your loan, how will it be affected? And if you do a lease back, is the seller willing to pay your full amount to cover your new monthly payment? Close the deal, charge them for what ever extra expenses you may experience, rent must cover your new loan and lets not forget a security deposit too. But, I can't help wonder......why so long? Very unusual and good luck....
0 votes
Susan Cox, Agent, Rockwood, TN
Thu Jun 2, 2011
This is a long time to be expected to wait! You could find another property or ask for a price adjustment.
0 votes
David Cooper, Agent, Los Angeles, CA
Thu Jun 2, 2011
Legally, you have the right to close escrow and if they stay one day past the recording date, they are trespassing. I would hope your agent will explain in whatever terms necessary that you will close the escrow, and they should be planning to move immediately. Take the gloves off, this is an outregious request


David Cooper. Las Vegas Foreclosure Buyer's Agent in Bank Owned REOs. 35 years experience. FReee List +1-7024997037...davidcooper@lasvegaswinner.org
0 votes
Pacita Dimac…, Agent, Oakland, CA
Tue May 31, 2011
How will this affect your loan? Your fixed rate?

And what guarantees do you have that the seller will move forward with the sale?

Best to close escrow -- rent it back but for no more than 60 days, otherwise, it becomes an investment property and your rate/payment could be higher.

In your state, do you have forms to give notice to buyer to perform? I suggest your realtor take care of this ASAP.

Good luck
0 votes
Carmen Brode…, Agent, Scottsdale, AZ
Wed May 25, 2011
Don't feel pressured to give them the extension. Offer to rent it back to them and close on time.
0 votes
Dp2, , Virginia
Wed May 25, 2011
Like David, I'd also offer to close this sale, and do a lease-back to the current seller for that 120 days.
0 votes
David Cooper, Agent, Los Angeles, CA
Wed May 25, 2011
Close the escrow now and rent the house back to them for the 120 days. In my experience, you have no deal
and I wouldn't dream of giving them the extension. I think a letter from a lawyer might be appropriate if you really want this house.


David Cooper! Las Vegas Bank Owned Foreclosure Investor
Save 20% and more.. For Freee Daily List
email: davidcooper@lasvegaswinner.org or Call +1-7024997037
0 votes
Kelvi Cunnin…, Agent, Manhattan, KS
Wed May 25, 2011
Reflecting the comments before mine, I think we are all shocked at the request for such a lengthy extention! A common length of time from accepted contract to the closing table is typically 30-45 days. Of course we have all experienced longer at times, but then 120 days for an extension? What is the effective date of contract? I would have your Realtor DRILL the seller or seller's agent to get some real answers for this extension. It sounds like something could be fishy, so I'd do everything in my power to find the smell. Sellers do not usually want to wait this amount of time or extend closing at all, so this is strange. What are the other details of the situation?
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Wed May 25, 2011
Welcome, yes please keep us updated, it's fun to learn how "different" transactions can be.
0 votes
Ken, Home Buyer, Scottsdale, AZ
Wed May 25, 2011
Thanks to everyone who has posted a response back here. I certainly appreciate the amount of feedback that has been, and will be provided. From the notes, it is obvious this is not a normal practice and many people, including us are scratching our heads.

Great feedback for us to consider as we navigate this possible minefield, Again, thanks to everyone for participating and to those yet to post!!! As this moves forward, I will advise of the outcome.
0 votes
Mike Cooper, Agent, Winchester, VA
Wed May 25, 2011
That's quite an extension for a seller to request. I guess the bottom line is do you need to move in now, or is 120 days from now OK. The seller definitely needs to cover your loan lock fees and any additional fees you incur. I guess I would want to know why he needs the extension. The answer to that might be reason to walk away.
0 votes
Melissa Carp…, Agent, Gilbert, AZ
Wed May 25, 2011
Hi Ken,

Situation sounds a bit odd that a seller needs that amount of additional time to close. I know you mentioned that this is a regular sale so I'm assuming it is not a short sale. I would definetly want a clearer understanding for the delay because that is out of the norm for a seller these days and would definetly need more information to better understand where the seller is coming from and why.

Good luck.
http://www.arizonarealestateresource.com
Melissa Carpenter
Real Estate Pro
480-332-4903
0 votes
Ron Thomas, Agent, Fresno, CA
Wed May 25, 2011
It doesn't sound like a "rent-back" situation because the Escrow hasn't closed. It is still their house. 1.) WHY are they asking for the extension; because their new house isn't ready for them? 2.) What are YOUR loses; 4 months rent? An increase in your interest rate because the lender is not going to hold it for you? Moving expenses? make a list: Have your Realtor present a bill for YOUR expenses for the extension. This is assuming that you still want the house.
0 votes
Elizabeth Ho…, Agent, Peoria, AZ
Wed May 25, 2011
Shane makes a great point that there is huge liability when allowing a seller to say in the home after COE. Additionally, would be making sure that they had their insurance changed to cover contents.
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Wed May 25, 2011
Be careful with a rent back clause, particularly if you are buying it as owner occupied, as most owner occupied mortgages require taking occupancy within 60 days. Rent back clause's also create a tenant-landlord relationship, which is another area you will have to navigate (particularly if they refuse to leave the home after the rent back period).
0 votes
David Cooper, Agent, Los Angeles, CA
Wed May 25, 2011
Ken. I would cancel the escrow and ask for your deposit back. I bet the seller will close in a minute. Tell him you will close escrow and rent the house back to him. You can always rewrite the offer since the seller would have to relist the home and try to find another buyer.

David Cooper! Las Vegas Bank Owned Foreclosure Investor
Save 20% and more.. For Freee Daily List
email: davidcooper@lasvegaswinner.org or Call +1-7024997037
0 votes
Elizabeth Ho…, Agent, Peoria, AZ
Wed May 25, 2011
Ken,

A normal request for extension from a seller would be a week or two. I would question the motive, is this from maybe a home that they have purchased? Ask your Realtor to get all the facts to make a smart decision on the extension.

Additionally, you can always ask for compensation if this change will effect you financially.
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Wed May 25, 2011
Ken, to further add to the concerns that Roswell brought up if you are using financing and have a rate lock expiration date... is that the entire loan approval could be null & void and you'd have to start over again. Appraisals are only good for 120 days with most loan programs, so 120 days from now the appraisal would need to be re-done, etc.

Before you agree to this extension, I'd evaluate what waiting 120 days means for you and your situation. What costs it will mean, what logistics it changes in the closing process from here on out.

Like all of the other agents say, you'd really need to be personally involved in this transaction in order to give you specific advice. You may feel sympathetic towards seller and go easy on them, they may have been rude the entire time and this is your change to return the favor/teach them a lesson, etc.
0 votes
David Rosen, Agent, New York, NY
Wed May 25, 2011
As a buyer you can't get compensation per the contract but you are entitled to enforce the sale by suing for specific performance. I think if they can't spell out their reasons with a clarity a 7 year old could understand then likely they are having sellers remorse and will jerk your chain 120 days from now too.
0 votes
Barbara Woyak, Agent, Scottsdale, AZ
Wed May 25, 2011
Ken, I think your instincts are correct, something just does not seem right with this request. You and your agent need to ask more questions and get answers that make sense to you. Otherwise you are probing in the dark.
If everything is on the up and up they should be willing to share with you why they need such a lengthy extension.

Barbara Woyak
Keller Williams AZ Realty
Barbara@BarbaraWoyak.com
0 votes
Roswell Moore…, Mortgage Broker Or Lender, Scottsdale, AZ
Wed May 25, 2011
Doug,

You bring up a good point...if an appraisal was required for this purchase, it will be out of date - a new onewill also be needed if this is the case.

All the best,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct
http://www.ezAZloan.com

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund in-house, FHA (down to w/a 580 score), 203k, VA, USDA, Jumbo to 90%, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779 | AZ BK 0903725
0 votes
Joseph Domino, Agent, Scottsdale, AZ
Wed May 25, 2011
I agree with the others that this is unusual and I would want more information regarding their need for such a long extension. But more importatntly, how much is this extension going to cost you?

Will you need to pay additional rent? Will your financing change? Will the market change in 120 days?

No one wants to cause undu hardship, but a deal is a deal.
0 votes
Doug McVinua, Agent, Gilbert, AZ
Wed May 25, 2011
In all the years I have been in Real Estate I have never seen a normal seller ask for a 120 day extension. Seems to be a back story that is yet to come out, concern might be they changed their mind to sell, file BK, void the sale?

Lots of questions around the debt, would seem selling a property would be significant debt reduction for many.

What condition is the home in 120 days out? New Inspections, cost etc?

Arizona Homes for Sale by a Guy from Iowa
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0 votes
Roswell Moore…, Mortgage Broker Or Lender, Scottsdale, AZ
Wed May 25, 2011
Hi Ken,

This sounds like a cash purchase. If so, thankfully you don't have to worry about a lock extension or interest rate increases over that 120 extension.

If this is a financed purchase, one of the many items you you might want to discuss with your real estate agent about this situation is the possibility of your rate lock extension costs being covered by the seller.

Good luck,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct
http://www.ezAZloan.com

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA (w/a 580 score), 203k, VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779 | AZ BK 0903725
0 votes
Dagmar Mouri…, , Chandler, AZ
Wed May 25, 2011
Ken, you need to fully understand the reason the seller requests an extension because you don't want to wait another 120 days just to find out that the seller cannot complete the deal for whatever reason. Read your contract if it says something regarding this situation. Lenders usually have their own addendum and unfortunately those typically are written to protect the seller/lender.
Web Reference:  http://www.azbestrealty.com
0 votes
Wade Kawaha…, Agent, Phoenix, AZ
Wed May 25, 2011
Since you don't own the home it would be unrealistic to get any daily interest from the seller, but ifyou were to extend the coe for that length of time, Idon't thinkit would be unreasonable for you to request a reduction in price or some other concession from theseller. Especially since it sounds like they are being monetarily compensated from the extension.
0 votes
Laura Myers…, Agent, Scottsdale, AZ
Wed May 25, 2011
I personally don't have all details but in all my years have not heard of a request like this. As a buyer you do not have to agree and that length of time is execessive. The seller had other alternatives. So much could occur in 4 mos. A leaseback is the only short term idea I can say but even then we do for 30 days with insurance and other details covered but if you go longer it could be considered investment which changes your loan etc. Advise your Realtor of what you want to do but realize your situation is negotiable not a must say yes request.
Good luck
Laura Myers
AZ Real Estate Consultants
0 votes
Ken, Home Buyer, Scottsdale, AZ
Wed May 25, 2011
The reason we have been provided for the seller requesting the extension has to do with delays in their debt reduction actions they are undertaking (sounded very confusing). And it is not a short sale. We are open to the extension, but are not sure what the "normal" practice is when seller requests extension.

If I had requested extension, I know I would be paying some form of daily interest to the seller.

We are working with our realtor thru this process, just thought I would look for further insights. THANKS
0 votes
Shanna Rogers, Agent, Murrieta, CA
Wed May 25, 2011
Hi Ken,

You and your Realtor need to discuss this. You don't have to grant the extension but I don't know the particulars of the situation so I don't know if you want to or not. Why would you extend it? Particularly for that length of time. A few days, or at the most a couple weeks MIGHT be ok but 120 days? Another option may be to let escrow close and do a rent back to the current owners (assuming you have no need to move).

Good luck.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes
Paul Welden, Agent, Scottsdale, AZ
Wed May 25, 2011
Ken,

You really need to be address this question and concern with your Realtor. Isn't one of the reasons you hired him/her was to advise you through the Real Estate process? Besides, no one here knows your particular situation, whether you want to grant the extension, the reasons behind the seller's request and any real important details of your transaction.

So, call, email, text, contact your Buyer's Agent Realtor right away.
0 votes
Donald Keys, Agent, Scottsdale, AZ
Wed May 25, 2011
Why is the Seller asking for such a long extension?
0 votes
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