Stuck in escrow because of a signature

Buying & Selling Real Estate
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Stuck in escrow because of a signature

Ankush Ratwani
Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes

Hey BP community,

I wanted to see how others would handle this situation. I am currently stuck in escrow as I have a 3/2 SFH under contract that was listed as an estate (i'm assuming passed down to the children as the owners have passed), and we are now currently 2 weeks passed the anticipated closing because one of the children will not sign the paperwork. My attorney and agent note that the sellers attorney and agent have been slow in responding/and giving minimal information on the situation. Our side of it notes that there is not much we can do at this point besides trying to keep reaching out. We could back away at any point and get my earnest money deposit back. I hate to lose this deal as its a good BRRRR that was a diamond in the rough, with the potential to get all of my money out of the deal and positive cash flow. I currently have a private lender (deed of trust) and a private loan that needs to be paid back so time is money. I also paid my contractor a deposit, which I can get hopefully get back if we back out.

How long would you guys wait for the signature before backing out? 

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Whitney HuttenPro Member
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y

@Ankush Ratwani That sucks!  I had a closing similar to that last year.  The property was inherited by 4 siblings, 3 wanted to sell, 1 got cold feet at the closing table.  While the deal was great, I too had sunk/holding costs.  

I would "fear set" this.  What is the worst that could happen if you waited?  Are you ok with the worst possible situation?  If yes, wait it out.  

If no, then do something.  Doing something could be just reaching back out and letting them know a timeline to complete the transaction (make sure you can get your construction deposit back or transfer it to another deal).  If the timeline is not complete, you will cancel the deal (since this weekend is a banking holiday, maybe give until Thursday next week so closing documents can be redrawn).  

There is POWER in making decisions.  Right now, you probably feel powerless to an extent.  There will be other deals out there.  In the end, I'd take a slightly different approach than Russell, as you are losing out on velocity of money right now heading into the sales season. 

Personally, I'd ask what do they need to close and give a polite deadline (not an offensive ultimatum). For my deal earlier, the deadline strategy worked, and I closed 3 days later.  

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    I dont understand why you wouldnt wait til whenever is needed to get the deal done if its a good deal?  If you want to invest in real estate, that means dealing with people and problems.  If you dont want to deal with people and problems, thats why we have the stock market for passive investors.

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  • Ankush Ratwani
    OP
    Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes
    6y
    Originally posted by @Russell Brazil:

    I dont understand why you wouldnt wait til whenever is needed to get the deal done if its a good deal?  If you want to invest in real estate, that means dealing with people and problems.  If you dont want to deal with people and problems, thats why we have the stock market for passive investors.

     Russell, thanks for the response. I have no problem waiting at this point and understand that this means dealing with people and problems. I really wanted to see how others would deal with this situation, in addition to waiting, as theoretically the child of the estate could sit on this forever. I do not have direct contact with the said person and trust that my agent and attorney are advocating the best they can. 

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Ankush Ratwani That sucks!  I had a closing similar to that last year.  The property was inherited by 4 siblings, 3 wanted to sell, 1 got cold feet at the closing table.  While the deal was great, I too had sunk/holding costs.  

    I would "fear set" this.  What is the worst that could happen if you waited?  Are you ok with the worst possible situation?  If yes, wait it out.  

    If no, then do something.  Doing something could be just reaching back out and letting them know a timeline to complete the transaction (make sure you can get your construction deposit back or transfer it to another deal).  If the timeline is not complete, you will cancel the deal (since this weekend is a banking holiday, maybe give until Thursday next week so closing documents can be redrawn).  

    There is POWER in making decisions.  Right now, you probably feel powerless to an extent.  There will be other deals out there.  In the end, I'd take a slightly different approach than Russell, as you are losing out on velocity of money right now heading into the sales season. 

    Personally, I'd ask what do they need to close and give a polite deadline (not an offensive ultimatum). For my deal earlier, the deadline strategy worked, and I closed 3 days later.  

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  • Ankush Ratwani
    OP
    Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes
    6y
    Originally posted by @Whitney Hutten:

    @Ankush Ratwani That sucks!  I had a closing similar to that last year.  The property was inherited by 4 siblings, 3 wanted to sell, 1 got cold feet at the closing table.  While the deal was great, I too had sunk/holding costs.  

    I would "fear set" this.  What is the worst that could happen if you waited?  Are you ok with the worst possible situation?  If yes, wait it out.  

    If no, then do something.  Doing something could be just reaching back out and letting them know a timeline to complete the transaction (make sure you can get your construction deposit back or transfer it to another deal).  If the timeline is not complete, you will cancel the deal (since this weekend is a banking holiday, maybe give until Thursday next week so closing documents can be redrawn).  

    There is POWER in making decisions.  Right now, you probably feel powerless to an extent.  There will be other deals out there.  In the end, I'd take a slightly different approach than Russell, as you are losing out on velocity of money right now heading into the sales season. 

    Personally, I'd ask what do they need to close and give a polite deadline (not an offensive ultimatum). For my deal earlier, the deadline strategy worked, and I closed 3 days later.  



     Thanks for the response Whitney. Worst case is just continuing payments on this personal loan which I was going to pay back on the refi. In addition to losing the velocity of money waiting for this. I suspect my private lender will be okay with the situation as long as its not drawn out over a several month time frame. I think setting a deadline within the next few weeks is a good idea as it might push there hand. It is an all cash offer so i accepted them to initially jump at this. As this is my first deal, and one that took awhile to find, there is some emotional attachment to losing the deal. I need to look at the big picture and if this does not work then move on. 

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Ankush Ratwani Great!  For accountability, post your date here or on a post-it on your bathroom mirror.  Make sure you have it well documented what will happen on that date both for you and them.  Then, don't sit around and go find another deal!  Keep your momentum up.  If you find a better one, then you can switch up OR find someone to help you take down that deal :) 

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  • Ankush Ratwani
    OP
    Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes
    6y
    Originally posted by @Whitney Hutten:

    @Ankush Ratwani Great!  For accountability, post your date here or on a post-it on your bathroom mirror.  Make sure you have it well documented what will happen on that date both for you and them.  Then, don't sit around and go find another deal!  Keep your momentum up.  If you find a better one, then you can switch up OR find someone to help you take down that deal :) 

    Very good advice Whitney. I found out from my agent it is a matter on there end with one of the children trying to get more of the cut after the final purchase which is between the siblings and the probate attorney. I have decided to hold out for now to see if this will get settled within the next few weeks. I set up a good team with this deal having an infinite CoC upon refinance. 55k purchase, 26k rehab, ARV 120-130k, cash flow around $150. I hope to post this deal when its done as I learned a ton and hope to get feedback on ways to scale after.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    6y

    Where is this property? Likely not in DC based upon those numbers.

    It sounds like you don't have an enforceable contract at this point... so start focusing on that. If you do have an enforceable contract, it's time to take action to force the sale and leave the PR to deal with the heirs and their drama.

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  • Ankush Ratwani
    OP
    Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes
    6y
    Originally posted by @Tom Gimer:

    Where is this property? Likely not in DC based upon those numbers.

    It sounds like you don't have an enforceable contract at this point... so start focusing on that. If you do have an enforceable contract, it's time to take action to force the sale and leave the PR to deal with the heirs and their drama.

    Very good guess that the property is not in DC, its in Fayetteville NC. The market has become really competitive with foreclosures being bid up.  I was able to find a property that was for sale by the seller who received the property as an estate from his father who passed away, and wants to cash out not being able to handle the renovation that needs to be done (roof, plumbing, flooring).

    In an attempt to make this enforceable, I was able to get discuss this with the sellers agent and the updates which is that they are in probate court to remove one of heirs as they were all under the contract. I was assured that it would be only another 2 weeks. While not ideal, i know this is the price to play for finding a good deal with multiple types of distress that I could capitalize on. 

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  • Justin Tahilramani
    Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
    6y
    Originally posted by @Ankush Ratwani:
    Originally posted by @Tom Gimer:

    Where is this property? Likely not in DC based upon those numbers.

    It sounds like you don't have an enforceable contract at this point... so start focusing on that. If you do have an enforceable contract, it's time to take action to force the sale and leave the PR to deal with the heirs and their drama.

    Very good guess that the property is not in DC, its in Fayetteville NC. The market has become really competitive with foreclosures being bid up.  I was able to find a property that was for sale by the seller who received the property as an estate from his father who passed away, and wants to cash out not being able to handle the renovation that needs to be done (roof, plumbing, flooring).

    In an attempt to make this enforceable, I was able to get discuss this with the sellers agent and the updates which is that they are in probate court to remove one of heirs as they were all under the contract. I was assured that it would be only another 2 weeks. While not ideal, i know this is the price to play for finding a good deal with multiple types of distress that I could capitalize on. 

    How confident are you on your ARV? Fayetteville can be a tricky market if you are not familiar with the area. If you numbers are accurate - I would stick with it. Lots of Fayetteville peeps on BP that can help you determine if this is really a "diamond in the rough" or a pig in a poke. @Alexander Felice @Shelby (Osborne) Johnson

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  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    6y

    Is this property in waters edge by chance?

    Numbers seem ok, I would close a deal like that assuming I liked the location and what it was....but nothing to fall in love over.

    My advice is to keep moving towards the next deal, if you find something better you can take it, if not you can hold on for this one. Always take the position of optionality in your investing strategy when possible.

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  • Ankush Ratwani
    OP
    Rental Property Investor · Washington, DC (washington dc) · Member since 2018 · 34 posts · 23 votes
    6y
    Originally posted by @Alexander Felice:

    Is this property in waters edge by chance?

    Numbers seem ok, I would close a deal like that assuming I liked the location and what it was....but nothing to fall in love over.

    My advice is to keep moving towards the next deal, if you find something better you can take it, if not you can hold on for this one. Always take the position of optionality in your investing strategy when possible.

    Solid advice Alex, i'm sure you know that the bidding game has got out of control in the area and its impossible to make the numbers work like they use to but that's no excuse. 

    Its around the Myrtle Hill area near country club dr. The ARV is based on a combination of the CMA (which noted it to be 130-140k), but more realistically the reason I offered on it was I looked at the recently sold homes on zillow and 2 properties adjacent, similar square feet (1430), and 3/2 sold for around 120k within the last year fully remodeled.

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