Both buyers and sellers meet at the closing table to finalize a real estate transaction. Until closing is complete, no one is paid or the deed is not transferred. But at the last minute, at the closing table, what can be done if either party disagrees with the costs of the HUD-1 Statement or what property would remain in the home?
Each party to the transaction could regret for the price they are receiving (seller) or for spending too much money (buyer) and deciding not to close. In this case, the seller would get some or all of the security deposit, the closing attorney would get the sellers’ costs (maybe), and the buyer would lose their deposit.
But the reality is that both parties have invested time and money to get to the closing table. It could have taken a few days or, in one case of mine, 53 weeks. This took so long due to a triple succession in which fortunately all parties died in one state. On average, most closings take about 30 days or less for investors who have cash buyers and more than 30 days for buyers who have to obtain conventional loans.
If the buyer is determined not to close, they generally will not close. If the seller receives a higher offer, they will generally attempt to terminate the contract long before closing. When the buyer and seller are at the closing table, both parties are often there with the intention of closing.
Our experience is that both buyer and seller should receive a Preliminary Statement from HUD at least one day before the actual closing. This gives both parties time to transfer charges to the other party, negotiate expenses between seller and buyer, or request a reduction in costs or attorney’s fees. This would be the time to eliminate all the differences so that when the shutdown occurs, it happens smoothly and closes quickly.
Our experience is that some investors use a tactic of waiting until the actual close to renegotiate various closing costs. The salesperson wants to close and may feel pressured, but the reality is that they can always say “no.” However, you are more often desperate to close double-close situations, and even a price cut is not out of the question.
In a recent case, an investor had to close on a specific date or lose the seller’s side of the deal. The investor had resold the property to an end buyer. The end buyer was a professional wholesaler known for turning the deal at the closing table. The professional did it again with the new investor and robbed the new investor of his profit on the deal. The professional practically threatened the new investor with the fact that the investment community was a small place and if he did not accept a price reduction, he would spread the word about it! The new investor relented instead of getting nothing by losing the deal, but learned a valuable lesson that large deposits are better and be prepared for anything at a close.
