Scrambling to a Successful Closing of the Deal

Oops, The Buyer Had No Funds on Closing

The property was sold and scheduled to close within three weeks. The Seller’s lawyer tendered on closing but no closing occurred as the Buyer did not have the money to close. The lawyer tendered the closing documents to prove that the seller was ready and willing to close, giving the seller the ability and option to take legal action against the buyer for damages if needed.

An extremely stressful situation that led to multiple extensions of time to raise the funds

The buyer thought she had the mortgage approval yet no funds were forthcoming on closing. The seller had already moved all her belongings to another home she owned and now the unsold home sat empty. Luckily, the seller didn’t need the money to complete another purchase. 

The seller agreed to extend the closing by one week to allow the buyer time to come up with the needed mortgage. The Seller then agreed to a second one week extension and again the buyer was not in no financial position to close. Under her lawyer’s advice, the seller refused any further extensions.

An Unintended Extension and Mission Accomplished

In talking to the buyer’s REALTOR®, the seller’s REALTOR® suggested that his in-house mortgage agent be given an opportunity to find a lender willing to approve the buyer for the needed mortgage. The buyer agreed.

The desire to help in arriving at a solution unknowingly formed an agreement between the parties to continue to pursue a closing, creating an unintended extension in time. With a lot of diligence and know-how, the mortgage agent found a lender who agreed to the mortgage with 10% down instead of the 5% proposed by the buyer.

 A Happy Ending

The buyer came up with the extra 5% needed, the transaction closed and everybody did breathe a sigh of relief. Unearthing that the buyer has no mortgage to close at the eleventh hour can sometimes happen. In many cases, and in spite of closing extensions agreed to, buyers may scramble to find a fast mortgage approval, but it’s rare. No mortgage to close can occur for many reasons.

Here is one of the most common. The mortgage is approved at the maximum the buyer can borrow. Between approval and closing the buyer makes substantial credit purchases for furniture and appliances. The lender does a final credit check, sees the buyer no longer qualifies and won’t advance the mortgage funds—something to avoid.        

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