The single biggest mistake people make, especially first time buyers, is that they often don’t do a home inspection; something I strongly encourage; it’s important to get a professional in there to check the house to make sure it’s structurally sound. Most people – probably 80-85 percent – take that advice and get a home inspection, but too many don’t, claiming they’re “handy,” or they have a family member who is a contractor. In some cases, they know the house is a wreck and they plan to gut it, so they don’t really care.
The problem is, many people see the house, fall in love with it aesthetically and make an offer on the spot. They might do so despite the fact that the house may look good what they didn’t look at was the condition of the roof, the foundation, the boiler, the heating system, the electrical system; stuff that you as a layperson wouldn’t know to look at or calculate into a reasonable offer. Many clients come to me and say they want the seller to repair any number of things and I have to warn them that they may lose their deal because the Seller may find another buyer who may not ask for any repairs. It is very important that a buyer communicate with their realtor after the home inspection to review any issues that they may have with the condition of the property. The realtor will assist them in determining and possibly negotiating with the Seller for either a repair or possibly a credit. This should be done before contracts are drawn as it will save time and make the whole home buying process a lot smoother.
Another major issue we have with clients has to do with the closing date, which in New York is usually referred to as an “on-or-about date”, which is not a hard date and this confuses many clients. If the on-or-about date is July 15, that isn’t necessarily a closing and possession date. That date can come and go and you may not be any closer to closing, and there’s a specific procedure to go through to force a party to the table if they’re reluctant to come to terms with us.
Part of the problem is, especially as a buyer, there is a tool in New York called the time-is-of-the-essence letter, which is basically what I call a “Be there or Be Square” letter, in that it sets a specific date to close or else they will be held in default. The idea is great in theory but from a buyer’s standpoint, it’s like a barking dog with no teeth, since the only remedy for a buyer is either demand specific performance in the contract, which is a fancy way of saying you want the house, or to sue for damages which is extremely difficult. Suing for damages is also not something most buyers want; they want the house. Therefore, it’s not the best tool for a buyer, although it does carry a little weight.
What do we do? Well, if we have an on-or-about date of July 15th, we explain to our clients that this date is not written in stone. I will take the time to explain to clients when they sign the contract the ins and outs of closing dates and what we can do as their advocate to enforce their rights however in NY the courts take enforcement of time-is-of-the-essence closing defaults on a case by case basis; they will look at the totality of the circumstances to make a determination if the other party was being unreasonable by not showing up at the table.
How Often Do Delays Occur in Closing?
Delays occur a lot more often these days than in the past; in fact, we’re looking at deals in which, even with financing on the table, delays are happening probably 3 out of 5 times. The delay may be due to the seller’s not being ready to close and give possession, there’s a C/O issue or, on the flip side, the buyer’s having trouble getting their loan underwritten and clear to close with their lender. With the low rates recently, lenders are swamped with loan applications and if they are not fully staffed the lender may run behind in their underwriting and in clearing loans to close.
Delays happen frequently, and for a variety of reasons. It’s a mistake to rely on specific time tables when it comes to the home buying process.
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