Another question: "How Quickly do we need to close the transaction?"

"How quickly do we need to close the transaction and provide the funds?"

This is another question my buyer has, and another great one. The second part of the answer is straightforward; the other not so.

Let's start with the easy part, the question about when funds must be paid. In most of our transactions here in San Mateo County and the Silicon Valley areas of California, a buyer writes a check for 3% of the purchase price at the time an offer is made, made payable to the escrow company. I present a copy of the check along with the offer, to show the seriousness of the buyer. That check is either held by the buyer or by our office until the offer has been accepted and we're in contract. At the point we typically have 3 days to get the check to the escrow company, where the check is cashed. The balance of the buyers' down payment needs to be in escrow 1 or 2 days prior to recordation, at which time the buyer owns the house. (It has been my experience that lenders now often want verification that the buyers' funds are in escrow before they send the loan proceeds, thus the need for 2 days in advance.)

The trickier part of the question, "how quickly do we need to close the transaction" varies depending upon the situation:

  • house vacant - usually a short close of escrow helps strengthen an offer. In our area that could be 15 days if it's an all-cash offer; 30-45 if a loan is involved (I always talk with the lender to verify they can meet my terms--I structure my buyer's offer to succeed, and don't promise something we can't deliver!)
  • owner in home, perhaps in contract to purchase another home - I learn what timing would be ideal for the seller, and see how closely we can meet that. The seller appreciates that, believe me.
  • owner in home but hasn't yet purchased a replacement - a longer close of escrow might be advantageous here, perhaps 45-60 days, plus allow the seller to remain in the home for an additional month, at the buyer's cost of loan principal, interest, property taxes and home insurance. Variations of this strategy are many, but the idea is to hit upon something helpful and possible for both buyer and seller.
  • the property being purchased is part of a 1031 delayed tax exchange - in this case, knowing whether the seller has identified the replacement properties and how far along they are in the procedure is essential--there are very stringent time requirements that must be followed to the letter when working with exchanges -- a flexible buyer, able to delay close of escrow or speed it up as necessary, is a treasure and one with whom the seller will wish to work.

People celebrating successful transactionPart of my job as your agent, and to bring about a successful transaction, is to learn what would help the seller the most, and make you offer the most appealing, at a price and terms that work for you. Many time, favorable terms will overcome a less-than-hoped-for selling price and bring a transaction together, with goodwill on all parts.

And in the long run, that goodwill is a huge benefit and smooths out many a bump in the road to home ownership.


 

--- Come for a visit; Stay for a lifetime!

Lottie Kendall, Realtor®

Today | Sotheby's International Realty

San Carlos, California, 94070

CA BRE#01215160; 650-465-4547

Lottie@LottieKendall.com;

www.LottieKendall.com

www.SFCondosForMe.com

 

 

Comment balloon 12 commentsLottie Kendall • January 29 2011 12:20AM

Comments

This is a great article, and it is helpful how you outlined the different factors that impact the length of escrow and how long it will take to close. Thanks for posting, Lottie!

Posted by kaira over 6 years ago

You wrote a good blog post Lottie.  Thank you for sharing your thoughts!

Posted by Sarasota & Manatee Counties FL, QuickFreeMLS.com - Listings In Paradise (SaraMana Properties - QuickFreeMLS.com) over 6 years ago

Kaira, I'm glad you found it helpful. Let me know if you'd like to see more of this type of article. Best to you,

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

Hello John -- thanks for stopping by, and for your kind words. The client who asked these questions isn't the first to do so!

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

Gosh, they have to have 3% at the time the contract is written...we only typically have to have 1%.

Cindy in Indy

Posted by Cindy Marchant, "Cindy in Indy" , Realtor, Fishers Real Estate (Keller Williams Indy NE 317-290-7775 www.marchantteam.com) over 6 years ago

I know, Cindy. It's tough here. A very modest home might cost $800,000, so we're talking about a $24,000 deposit. It's tough breaking into our market.

Do you up the 1% after contingencies are removed?

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

Lottie - As in my business the answer to a simple questions usually brings up several of our own questions to be able to arrive at the answer!

Posted by Nevin Williams, Raleigh Mortgage Pro (Sierra Pacific Mortgage Raleigh) over 6 years ago

We don't...it is 1% until we close.

Posted by Cindy Marchant, "Cindy in Indy" , Realtor, Fishers Real Estate (Keller Williams Indy NE 317-290-7775 www.marchantteam.com) over 6 years ago

Good afternoon Lottie thanks for sharing your time frames on closing a property and how fast.....Make it a great day.

Posted by Paula Stills, Full time Real Estate, Ready when you are! (RE/MAX Real Estate Results) over 6 years ago

I love those questions, Nevin--they open the dialog!

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

Cindy, isn't it interesting to learn how differently real estate is practiced in various areas? Relocating buyers have a huge mind shift to make, and it's up to us to help them do it.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

Hi Paula. Thanks for stopping by. Are these similar to what you see in your market?

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) over 6 years ago

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