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A delayed home closing brings a lot of consequences. Take a look at some of the big problems to be aware of if your house doesn’t close on time. [[{“value”:”
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At the end of last year, I bought a house. I had been trying to buy the house since the middle of last year, but unfortunately a series of problems occurred and because the sellers took a long time getting liens off the property, we didn’t end up closing on the home until mid-December. This was three months after our initial expected closing date of mid-September.
The delayed closing complicated everything. If you’re buying a house and something prevents you from closing on time, you could also experience similar issues. Here’s what happened with my closing.
1. We couldn’t move into the home right away
The most obvious problem caused by the delayed home closing was that we did not own the home at the time we expected to. This meant we were not able to move into the property. Now, this wasn’t a huge deal for us because we had another house to live in — but if you don’t have another place because you’ve sold your current home or given up your apartment lease, this could be a major issue.
Imagine having your boxes packed, your house sold, and being ready to get into your new home — only to find out that the sellers aren’t ready to get out. It’s easy to see why this could be a costly disaster.
2. Our mortgage rate lock expired
There was another big problem that I didn’t really think about until I came face to face with it. I was getting a mortgage to buy the home, and my mortgage was locked in at a pretty competitive rate (for the time). Unfortunately, my mortgage rate lock was only good for a limited time, as rate locks usually last for 30, 45, or 60 days.
At first, we negotiated with the sellers to pay a fee to extend our rate lock. But because rates were going up rapidly and our closing was delayed for so long, this soon became impractical because lender fees to keep the rate were adding up to tens of thousands of dollars. So, ultimately, we had to let the rate lock expire.
We got lucky and were able to lock in again when rates dipped at close to the rate we’d originally been promised by the mortgage lender. But all the lender fees still had to be paid.
3. There were extra storage costs to pay
The last big issue was that our possessions were in storage — and we had to pay to keep them there for an extra three months. Since all of our furniture for the house was in storage, we have a pretty big unit that costs us over $500 a month — so the delay cost an extra $1,500.
This would have been worse if we’d had to pay for another temporary place to live, but it was still a big hit to our personal finances.
What are your options if your closing is delayed?
In our case, we didn’t have many good options because we really wanted this house, the sellers were not willing to make too many concessions, and we weren’t willing to walk away. We also couldn’t really sue for damages because the sellers owned the house in a limited liability company (LLC) with no other assets, and there were so many liens on the house that there wasn’t any money left over.
Now, this was a unique situation — but delayed closings aren’t. And if you experience one, you’ll have some choices to make. You could:
Negotiate with the sellers to pay as many fees as possible and wait it out until closing. This can be a good option if you have sellers willing to play ball, but we really didn’t.Walk away. If you have another place to live and don’t really care about getting the house, you could do this. But you’d probably be out money for inspections and appraisals, plus you would have wasted a lot of time. And if you’d already given up your old place, this might not be practical.File a lawsuit. You could sue the sellers for specific performance, which would require them to follow through on the contract and close. This only works if they can close (if, for example, they’re just delaying because they want to). We couldn’t make our sellers close because they had to deal with the liens first. You could also sue for monetary damages if the sellers have money to pay them.
Ultimately, none of these choices are great. So your best bet is to work with a real estate agent who helps you do due diligence before you make an offer to try to reduce the chances of problems cropping up that lead to a delayed closing. We knew we might have issues but wanted the house anyway. If that’s not your situation, steer clear of homes with outstanding liens or other problems. Otherwise, you could end up in my situation — which wasn’t fun.
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