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

12 Replies

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.

Luckily interest should be lower if anything. Does the seller's bank have an online portal? Would the the title company accept that, or that plus the seller leaves $5-$10k in escrow until the payoff arrives? Does the sellers bank offer priority service. Can you find some one at the sellers bank to take pity on you and work on it personally even if it isn't their job?

I guess I’d start with the seller leaving additional funds in escrow with the title company if the seller can prove recent balances. (Last few statements.)

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.

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.

@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.

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.

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.

"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.

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.