Delayed Closing due to Seller demand letter...options?

Question

Hello All,

Currently at the end of escrow on our first REI. Everything was smooth sailing. Great interest rate and funding - check. Inspections - check. Documents signed by us - check. Wired our down payment - check! Loan ready to funded - check! Loan funded - STILL WAITING! Apparently seller's escrow company requested the demand letter for payoff over a week ago and they "usually get it in 24-48 hours". However, it's being said that someone in the office may have contracted COVID so now everything is backed logged. I feel for the situation, but now I'm faced with my great interest rate expiring by close of day tomorrow. This ultimately effects my bottom line and depending on a new interest rate, could cost me thousands of $$ over the term of the loan, not to mention every day I can't get into the unit to do needed upgrades to get a renter and my first payment is due 8/1. I've been in contact with my agent, who is wonderful and helpful. I just wanted to reach out to other on BP to see other perspectives of my options? Since this could ultimately be a change in my funding "change in interest rate terms", could I all together terminate the sale? Any input and perspectives appreciated.

Summer Noyes · Answer

Thanks everyone. Apparently the universe heard me and the demand letter came and the loan is being funded this morning! I guess I own a real estate investment property now. Now the real hardworking starts. Thanks again.

Marian Smith · Answer

@Summer Noyes  I paid off my mortgage with a teller at the drive thru.  I had a check for $41,000 the day after the mortgage was auto deposited and the teller told me it would be a minute then came back and said I needed another $5.15 for a days interest for a total payoff.  Besides, can't you use a calculator and have title get a refund if overpaid.

Mark H. · Answer

On my last mortgage we had a delayed closing due to a seller's lien release.  I ended up buying my rate back with points.  Might also be an option....

Mary M. · Answer

Also, if you have to buy the rate down, have the seller credit you for the cost since this delay is on their side.

Steve Morris · Answer

"I mean, how much do you expect the interest rate to change if it does? Enough to make the whole deal not pencil out anymore?"

Here's the problem today, you lose the rate lock and banks are a lot more nervous than 90 days ago.  This is reflected in rate quotes which have gone up a lot and until we resolve COVID will stay up.

Jenni Utz · Answer

I'm sorry you are going through this. Real estate transactions can be difficult for this very reason. You do everything right on your end, but there are multiple parties that could mess up. In this situation, if it is going to cost you money, I would go back to the Seller and negotiate they pay for some, if not all of the increased fees.

Michael Noto · Answer

I find people are using COVID as a convenient excuse for not keeping up with how busy real estate related businesses have gotten over the past few months. Not saying this is happening in your case, but I definitely see it being added with the convenient excuses that lenders and lawyers use to try and explain away them being late for deadlines.

Kyle J. · Answer

Bumps in the road happen sometimes and closings get delayed. I wouldn’t go nuclear and try to cancel the entire sale this close to the goal line though.

I mean, how much do you expect the interest rate to change if it does? Enough to make the whole deal not pencil out anymore?

If it helps, your first payment shouldn’t actually be due 8/1. Since you’ll be closing in July, your first payment shouldn’t be due until 9/1. So that should give you some breathing room and take that concern off the table.

Steve Morris · Answer

Apparently seller's escrow company requested the demand letter for payoff over a week ago and they "usually get it in 24-48 hours".

Think someone at title may have screwed up.  I closed a deal last month and getting payoff not a problem even though she had to ask 3 times due to date slips.

For COVID, need to submit the letter sooner and call more often.  Finding out at this late stage is pretty sad.

Bill B. · Answer

NP. GL.

Delayed Closing due to Seller demand letter...options?

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