When selling a home, it's not uncommon for your buyer to ask for more time before closing. This request to extend the closing date might be due to financing, inspection, paperwork delays, or life changes, among other reasons. It’s frustrating, yes, and may leave you wondering what it means for your plans and your timeline.
But it’s good to note that closing delays are a common occurrence, and a buyer’s request for an extension doesn’t always signal a problem. They likely need more time for financing, paperwork, or personal matters, as we’ve discussed in the first part of this blog. As the seller, there are things you can do to make the most of the situation. By understanding your rights, potential costs, and having a response strategy, you can safeguard your interests.
The impact of closing delays on the seller
That said, there can be real financial and personal ramifications when you agree to extend the closing date. As the average seller, here are the most common ways you can be affected:
Additional mortgage payments, taxes, insurance, and utilities
Extra funds are going into home maintenance
Rescheduling movers and extra storage fees
Stress and uncertainty
Risk of more delays after the first request
Here's how you can respond as a seller: Your best options
When the buyer wants to extend the closing date, your trusted and knowledgeable real estate agent will help you work through several options. As the seller, you can either allow it, negotiate new terms, or demand the original deadline, depending on your priorities.
What it is: This is the simplest approach, where you agree to the new date without adding conditions. It's frustrating, yes, when the buyer needs to move the closing date. But if you can accommodate the request just to keep the sale alive, it’s generally to your advantage. Your real estate agent can negotiate a new closing date with the buyer’s agent that generally will add an additional 10 to 30 days to the closing date, giving the buyer more time to tie up their loose ends.
Pros: Keeps the sale alive, so you won’t have to go through the trouble of putting your home back on the market, finding a new buyer, and going through the entire selling process again.
Cons: You will have to shoulder the costs of the delay without compensation, such as housing expenses, etc.
Best for: Sellers who aren’t in a tight timeline
In this approach, instead of outright accepting and extending the closing day date, you are adding conditions like daily fees, increased earnest money, or cost coverage to protect your finances. This keeps the deal alive without putting you at a disadvantage.
A ‘per diem' penalty
What it is: You’re granting the buyer an extension, but with the contingency of a per diem penalty. A per diem penalty is a fee charged to the buyer, both for the inconvenience of delaying the closing and to help cover the additional mortgage, tax, insurance, and utility payments the seller needs to make as a result of the postponed date. The per diem penalty usually adds up to one-thirtieth of your monthly housing expenses.
Pros: It covers your extra costs brought about by the delayed closing.
Cons: It could be risky if the buyer is already financially strapped. They may walk away from the deal, so be flexible and open to negotiations.
Best for: Sellers who are impacted by the extra costs after the closing date is extended.
Adding a ‘Time is of the essence’ clause
What it is: Unfortunately, there's no limit on the number of times a buyer can ask for an extension on the closing date. In this case, you can give the buyer one last chance and grant an extension that includes a “time of the essence” clause. With this clause, both you and the buyer decide on a hard closing date, and if the buyer doesn't meet this deadline, the seller can walk away from the sale.
Pros: This contingency creates urgency for buyers, setting you to close by a certain date before your patience reaches the end of its rope.
Cons: If the buyer doesn’t meet its hard deadline, the deal may fall through.
Best for: Sellers who are willing to offer one last chance for an extension
What it is: If the delay is unreasonable or doesn't suit you and your timeline, you can decline the request and enforce the original contract.
Depending on your contract, it’s common to grant at least one closing date extension. But if the buyer fails to complete their contingencies by the final planned closing date, you can then back out of the sale.
Pros: You may be entitled to the buyer’s earnest money deposit if it’s the buyer who broke the agreements of your contract to close on time. You will be putting your home back on the market, and hopefully find a better buyer.
Cons: Lost time, costs, and expenses brought by the delays
Best for: Sellers with backup offers or those unwilling to accept delays
Bottom line
Closing delays are undeniably frustrating, but remember that they are often just a bump in the road. Whether you're dealing with a financing hiccup, an unexpected repair, or a buyer who simply needs more time, don't think of it as a dead end. The key is to stay calm, be flexible, and have open and honest communication. The right real estate agent can help you navigate these delays, weigh your best options, and move forward with the sale with as little stress as possible.
