Both buyers and sellers come together at the closing table to finalize a real estate transaction. Until the closing is completed no one gets paid or the deed doesn’t get transferred. But at the last minute, at the closing table, what can be done if either party disagrees with costs on the HUD-1 Statement or with what property was to remain in the home?
Each party to the transaction could get remorse about the price he is receiving (seller) or about spending too much money (buyer) and decide not to close. In this case, the seller would get some or all of the escrow deposit, the closing attorney would get costs from the sellers (maybe), and the buyer would lose his deposit.
But the reality is that both sides have vested 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 because of a triple probate where luckily all the parties died in one state. On average most closings take somewhere in the neighborhood of 30 days or less for investors who have cash buyers and 30+ days for buyers who have to get conventional loans.
If the buyer is dead set on not closing, he will usually just not come to closing. If the seller gets a higher offer he will usually try and get out of the contract well before the closing. When the buyer and seller are at the closing table both parties are usually there with the intent of closing.
Our experience is that both buyer and seller should receive a Preliminary HUD Statement at least a day before the actual closing. This gives both parties the time to get charges transferred to the other party, negotiate expenses between seller and buyer, or request a reduction in the attorney’s costs or fees. This would be the time to get all the differences out of the way so when the closing occurs, it goes smoothly and closes quickly.
Our experience is that some investors use a ploy of waiting till the actual closing to re-negotiate various closing costs. The seller wants to close and may feel pressured but the reality is he can always say “no”. However, more often he is desperate to close especially double closing situations and even a price reduction is not out of the question.
In one recent instance, an investor had to close on a specific date or lose the seller side of the deal. The investor had re-sold the property to an end-buyer. The end-buyer was a professional wholesaler who was notorious for changing the deal at the closing table. The pro did it again to the new investor and robbed the new investor of of his profit on the deal. The pro practically threatened the new investor with the fact that the investing community was a small place and if he didn’t agree to a price reduction, he would spread the word about him! The new investor relented rather than get nothing by losing the deal, but learned a valuable lesson that large deposits are best and be prepared for anything at a closing.