Contract expires. What would you do.

[Eddie Ziv]

I was suppose to close on that deal July 10. I'm buying a REO SFR all cash deal. The original contract called for June 24 to close. Then the seller asked to make it July 10. I agreed, signed the contract and put $1,000 cashier check as earnest money. On July 10 the sellers (The Bank) notified me that they cannot meat the deadline and asked for one week extention. We signed the extension. On Friday (7/17) the sellers notified my agent that they are having a problem with the title which aparently wasn't recorded properly. Now they want another two weeks extension.

So, what would you do?
1. Just give them the extension.
2. Give them an extension but demand price reduction, lets say 10%
3. Back off the deal all together,
4. Any other idea

[J Scott]

Hey Eddie -

I have an REO that was put under contract back on March 2 of this year. We were supposed to close end-of-March, then April, then May, then twice in June, and then again last week.

The bank still can't get clear title (they filed the Foreclosure Deed incorrectly), and I just keep extending the contract because this is a great deal.

So, I know what you're going through!

Btw, I have $10K tied up in earnest money, and am planning to ask for an earnest money reduction if we need to do another extension (just to get some of that back in the meantime), but in my experience, banks won't lower the sale price just because of title issues.

Have you asked the title company what the issue is? If you can find out the specific issue, you might be able to determine about how long it will take to resolve. If it's a serious issue, they may send it back to Fannie Mae to resolve the title problem, in which case it could take several months.

As others have suggested, determine how good a deal it is, and make your decision based on that. In my case, I would jump on this deal anytime I saw it, so there's no reason to back out. But, if you could be using the money to find another deal, it may not be worth waiting.

Keep us updated!