extremely lengthy closing, what do i do?

Question

hello to everyone. i have a question regarding a closing that is taking far too long. i have a flip house here in western new york. i finished it and put it up for sale in late august 2014. signed a sales contract with the buyer on november 11th. since then, he, the buyer, has given me a long list of repairs he wanted done on the place, which i did, including replacing the roof, myself, in the middle of december. now, since the repairs have been completed, i thought the closing would take place, as scheduled, on january 5, 2015. that date is written right in the contract. since then, he has " waffled" around with his VA loan, switched to a different bank and type of loan, and, as you can imagine, postponed the closing multiple times. i have heard from my agent and attorney on rare occassions that they need " this" or " that" from me. the latest thing they wanted from me was a letter indicating when the roof was completed. they already know this. i re-read my contract. i have what i believe are numerous reasons to cancel the sale. every week i hear " it should happen next week." i have been hearing that since mid january and here it is late march. also, within the contract, i have found a clause that allows me to demand a closing within 7 days of any notice i give them. should i contact their attorney and envolk the 7 day closing or notify them of my intent to cancel the sale effective immediately if we do not get a closing soon? any advice would be greatly appreciated. thank you

Randi Plevy · Answer

You need a new attorney who understands that every day a Seller doesn't close it costs that Seller money.  Fire this clown, hire an investor friendly attorney, tell your new attorney to determine whether the Buyer has a loan commitment or not.  Your contract very likely requires the Buyer to get a commitment within a certain number of days from contract signing.  If the Buyer has not, ask your attorney to cancel the contract in writing.  Then have your attorney call the Buyer's attorney and tell him if he ever gets his commitment, and the house is still available, you will be willing to enter into a Time of the Essence contract with him to close within 30 days.  If he doesn't close, he loses his deposit.

Lynn McGeein · Answer

When you say your attorney seems upset, do you mean he will charge you for any work he has already done?  I know investors do not have the same protections as owner-occupant buyers and sellers, but I would think he would be fine as long as you close it through him when it actually does sell.

Personally, I would send the notice.  It will at least get the buyer moving one way or the other, although I'd likely agree to sign an addendum for any new delay if buyer just needs 2 more weeks or something, although I would add the "time is of the essence" clause (not a lawyer, no legal advice) to avoid any future delays.   I would not market the property until you are out of this one, though, at least not openly on MLS, unless you disclose it's currently pending and any offer would be a back-up.   At least it's a good season to have to market it again, if that is required.

David Avetisyan · Answer

Mark,

It's clear you are in a tough situation, and torn between ideas.

This would all depend on your market, and the likelihood of relisting, and  finding a new buyer.  It seems like you have done many upgrades, and did mention finding a new buyer wouldn't be difficult.

Given the above, my recommendation is as follows: You relist the property, and have your representatives on the MLS, only in the agent remarks, note, 'accepting backup offers.' This is a less common practice in SoCal, but with a buyer who is a hassle, it's exercised.

Further, you have the buyers contacted, and they negotiate a deadline, with mutual  compromise.  Hopefully by the deadline you'll have a new buyer lined up, and either they close, or you move into a new escrow.

Just my thoughts.

Wayne Brooks · Answer

Your buyer is having problems qualifying go for the loan.  If you can resell easily, have them put up a large non refundable deposit with a hard closing date, or cancel it.

Mark Elliott · Answer

thanks. larry t. i checked with my attorney this last monday. he said i certainly could cancel the contract if i wanted to, but he seemed " pissed" that i would even mention it. within the contract it states that the buyer must bring to my attention any changes in his financing and such. he has never done this, i had to hear of it thru a friend of mine who is kind of wrapped up in this thru my agent. he is a broker and works with my agent. i have never heard anything from their attorney and my attorney never speaks to me unless i call him. i don;t mind selling the place to this guy, i just think he is stalling for some reason. i had other people who were interested in the place before this guy made an offer. i could sell it again in a heartbeat if i relisted it. i just want this thing closed on so i can move on

Larry Turowski · Answer

@Mark Elliott Ugh!  Been there, and I know other investors have.  I had a closing that took six months due to snafus.

You really have to weigh the likelihood of this closing to canceling and putting it back on the market.  I'd check with your attorney and ask him how long it would take to cancel.  If it can be done quickly, then spring is a great time to sell.  You may be able to put it on the market even before it cancels.