Closing nightmares

[kam]

I like to be prepared. I actually thrive on knowing everything that can happen so I'm not surprised when it happens. That said - share your stories (your own or of those you know) of when closings make the sale of the house fall through.

Mine:

1) A friend was at her closing and the rep from the mortgage company found out the house was a "flip" house. The entire thing fell through after that (not sure why that mattered).

2) Another friend was at the closing and the fair estimate of the closing costs exceeded the quote by over $3k. She didn't have that on hand and couldn't write a personal check. The closing was only postponed though.

3) My hairdresser's closing was delayed by over 2 weeks because of the mortgage company. She was doing an 80/20 loan. The mortgage agent locked the 80%, but went a little crazy shopping for the 20%. Her credit was pulled over 20-30 times to get a rate and the agent never actually locked anything in. Because her credit was impacted by the number of times the report was pulled, her final lock-in rate was over 10%. They ended up borrowing from her parents.

This isn't meant to scare anyone - more to prepare for anything that comes! Share if you want ;)

[boilermaker]

Our closing was delayed because of an error by the closing company on the final paperwork. The taxes on the house had been adjusted and 2004 was the first year that the county recognized that there was a house on the property (the house was biult in 2001). But 2004 taxes weren't billed until Jan 2005. So the old owners were reponsible to pay us for 10 months of 2004 taxes, then we would pay the tax bill when it showed up in January.

Even though the previous owners gave the closing company a copy of the letter stating the new taxes, the company used the 2003 tax bill...a difference of several thousand dollars. The sellers didn't catch it but we refused to sign the papers and transfer the money until it was fixed. Big mess as we had the movers scheduled to bring our stuff to the new house the following Monday (closing on a Friday).

So my lesson learned, if you are scheduling movers or transitioning between houses or apt, give yourself a few days in case something goes wrong.

[amorey]

We almost lost our house because it was a “flip” house. If you have an FHA loan, there’s a law that says the seller must own it for 90 days. An investor had bought and fixed up our house and had only owned it for 60 days. We’d given improper notice on our apartment, so we’d be homeless if the deal fell though. We ended up renting the house from the seller for 150% of what our mortgage would have been for a month. It sucked, because we had planned to close two weeks before we had to be out of our apartment and refinish the hardwood floors in the house. We moved in, lived there for a month, and then moved everything into the basement and refinished the floors while we stayed with my in-laws.

[Kimberland30]

3) My hairdresser's closing was delayed by over 2 weeks because of the mortgage company. She was doing an 80/20 loan. The mortgage agent locked the 80%, but went a little crazy shopping for the 20%. Her credit was pulled over 20-30 times to get a rate and the agent never actually locked anything in. Because her credit was impacted by the number of times the report was pulled, her final lock-in rate was over 10%. They ended up borrowing from her parents.


OT but this is REALLY scary. We are going to be doing a 80/20 mortgage too. I thought that credit checks for vehicles and home purchases aren't looked negatively on your credit report? I'm going to freak out because we just bought my DH a car last year...and we're in the process of getting our paperwork to send to the lending company tomorrow. :confused:

[LRL]

Our closing was delayed by about two weeks because the seller lives in Canada (property was in a trust, the trustee was the niece of the trustor who had recently passed away). Documents were signed, but we had a problem with identification of the trustee. Trustee needed to have documents signed by a notary public- and apparently whatever type of signature verification used in Canada would not suffice. We had to wait until the seller could get to the US Consolate to have a US Judge (to our understanding) notarize the documents.

We have a friend in the process of buying a condo. Her closing is currently delayed as she was given the old CC&R's for the association, and apparently since those were enacted, there has been a reduction in the size of dog you can have. She might not be able to bring her dog, so they are in the negitiation process right now with the condo association.

[kam]

OT but this is REALLY scary. We are going to be doing a 80/20 mortgage too. I thought that credit checks for vehicles and home purchases aren't looked negatively on your credit report? I'm going to freak out because we just bought my DH a car last year...and we're in the process of getting our paperwork to send to the lending company tomorrow.

What they say and what actually happens are different things - I asked my next door neighbor (she's a realtor) and she said that a reasonable amount are allowed as long as it's during a reasonable time (a month or so). The agent ran the report 30 times over 3 months and it was pulled for the same creditors more than once. I would make sure you discuss with your agent.

We have an 80/20 too and actually got a fantastic rate (I almost passed out as the 20% is generally higher) - that said, we were very clear from the beginning that we didn't want it run 20 times (they ran it maybe through 4 different lenders).

[amorey]

I found a little more info on the credit score thing on My FICO (http://www.myfico.com/CreditEducation/FactsFallacies.aspx):


Fallacy: My score will drop if I apply for new credit.
Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called “inquiries”) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

So it looks like the long time period was key to causing that problem. Normal rate shopping is okay.

[thedoorchick]

We bought an investment property last year (a duplex). We signed everything and waited around for the loan to fund so we could get the keys. I ended up sitting there nearly 2 extra hours because the lender at the last minute decided we needed a "common wall agreement," which as near as I could tell involved some kind of agreement between 2 different owners of 2 sides of a duplex. But we were buying the entire property! Who was I supposed to sign an agreement with, myself?

All ended well, but I wasted a lot of time. And over something so silly!

[SiValleySteph]

We were set to close on our house in a few days and were at the lenders office when he came in and told us there was a problem. There was a mistake on the plans (new construction) and the square footage had been overstated. The garage space had accidentally been included in the "living space" square footage. The closing was postponed while the builders conferred with their lawyers and the architect's lawyers over liability and such. We didn't end up closing on our house for another 2-1/2 months!!! :eek:

Luckily we were able to convince our apartment complex to cancel our move-out notice and let us stay on. It all worked out fine in the end and we ending up getting a small amount of money for the inconvienence. If we had closed before the discrepancy was found (as we were originally supposed to but did not due to being out of town over Christmas), I believe we would have received a large sum of money (based on what our neighbors who had already moved in said, they were not allowed to disclose the amount).

The builder did say we could get out of the contract with no penalty, but that would have done us no good as we're in a hot area - prices were going up, it was still a good deal - so we went ahead and have been very happy with the house.

[SiValleySteph]

You know what is funny, I had forgotten about this until I read this thread and it's only been 2-1/2 years!

[Tanya]

Our closing was delayed because of an error by the closing company on the final paperwork. The taxes on the house had been adjusted and 2004 was the first year that the county recognized that there was a house on the property (the house was biult in 2001). But 2004 taxes weren't billed until Jan 2005. So the old owners were reponsible to pay us for 10 months of 2004 taxes, then we would pay the tax bill when it showed up in January.

Even though the previous owners gave the closing company a copy of the letter stating the new taxes, the company used the 2003 tax bill...a difference of several thousand dollars. The sellers didn't catch it but we refused to sign the papers and transfer the money until it was fixed. Big mess as we had the movers scheduled to bring our stuff to the new house the following Monday (closing on a Friday).

So my lesson learned, if you are scheduling movers or transitioning between houses or apt, give yourself a few days in case something goes wrong.
The same thing happened to us. We bought a home that still had the construction loan on it in June 03. The taxes the title company used were from the year before, and even though they knew full well that year the taxes would be doubled, they couldn't just go on an estimate, they had to go on actual prior taxes. They wanted us to take it up with the sellers after closing :eek:. I asked why they couldn't just get the sellers to write us a check for the tax difference for the 1st half of the year? They were in the next room. DH was ready to just get it over with but I refused to go forward until we got something in writing. The agent finally went in the next room and got a personal check from them even though that was "against the rules" since buyers cannot leave closing with money in hand. Whatever, I knew I would never see our money if we had to get it from them, they were losers.

[daener]

Okay, now I'm nervous. We are scheduled to close tomorrow morning....movers are coming on Thursday. I hope all goes well!! But I second knowing as much as possible about what CAN go wrong. When we closed on the house we sold last October, the close was delayed by more than 2 weeks because the buyers' financing "fell through" at the last minute. Yeah, right. We had a shoddy real estate agent was more like it.

[kam]

Good luck daener! I've found that, in the stories I've heard, that a delay is usually a result of someone not doing their job (or not doing it well). Hopefully everything will be fine!

[julietchicago]

Ugh, I hate hearing these nightmare stories! I am a Realtor and have seen some pretty nasty stuff happen. That is why it is soooo important to have a great attorney, Realtor and lender. I can't stress this enough...ask for referals from friends and family!!! This is the best way to find a trustworthy person to work with and knowing you were a "referal" to them makes them work even harder to keep you satisfied.

;)

[smiles33]

We just purchased our second home a few months ago and had to sell our 1st home and we had 2 very frustrating delays. First, our title company waited a week before even starting to process the paperwork, leaving the application sitting on top of a desk. I later found out all they needed to do was print the electronic file and schedule the signing. ARGH! Then, the seller decided to go to Mexico the week we were supposed to close! So we waited another week for him to fly back to sign everything....Had to delay the movers twice!

[daener]

Great news! Our close went off without a hitch. Just two hours of listening to our attorney and signing a jillion papers. It was so easy - we are so lucky! Our mortgage rep even came by and brought us a bottle of champagne. Couldn't have asked for a better experience!! It's great to know that things CAN and DO go smoothly sometimes.

[kam]

Congrats daener!!!

I had actually attended a closing with my parents when they bought their land in VT and I remember it being just as you described (except for the champagne ;)). My parents wanted both their kids to know what it's like to own something and what the closing was like. I guess that's why I was surprised to hear so many horror stories.

[singerwife]

Everything was fine for us, except that the morning of the walk-through...the previous owner's moving van had.just.shown.up.

All their stuff was there, unpacked. The guy wanted to work out a side deal of renting the house back at $50 a day for however long it took them to move. (Um, no. They had 45 flipping days to work this out.)

We were nice because it was an older (now dead) woman and her family, but the closing was on a Thursday, and we drew up a last-minute clause that said for every day past Saturday, we'd charge them an extra $1,000 per day. They had to put a $1,000 check on the table for us to hold in trust.

Pain in the butt. They left the place FILTHY. (As in, we had to replace the appliances filthy.)

I was prepared for last minute financial snafus, I just wasn't prepared to kick people out. My advice is that if you can schedule the walk-through a day or so before the closing, try that.

[Brady]

Everything was fine for us, except that the morning of the walk-through...the previous owner's moving van had.just.shown.up.

All their stuff was there, unpacked. The guy wanted to work out a side deal of renting the house back at $50 a day for however long it took them to move. (Um, no. They had 45 flipping days to work this out.)

We were nice because it was an older (now dead) woman and her family, but the closing was on a Thursday, and we drew up a last-minute clause that said for every day past Saturday, we'd charge them an extra $1,000 per day. They had to put a $1,000 check on the table for us to hold in trust.

Pain in the butt. They left the place FILTHY. (As in, we had to replace the appliances filthy.)

I was prepared for last minute financial snafus, I just wasn't prepared to kick people out. My advice is that if you can schedule the walk-through a day or so before the closing, try that.

Ditto. Very similar experience here. Our seller didn't decide to pack her stuff until AFTER our closing. We had to have her pay rent to us for the extra days it took her to get out of there (and it turned out her realtor had to get a moving service to move her out!!), we then got in and found the place a disaster- she left the food in the fridge, she didn't vacuum, stuff was still in closets, etc. We ended up getting her realtor to pay for a maid service and rug cleaning. Our experience was really bad, it was our first home purchase and needless to say, we learned a LOT.

Her realtor also had to go pick her up for the closing, they showed up over an hour late, she left the closing at one point and had to be retrieved to get back in there to finish. We also had our loan fall through a week before closing as the underwriter wouldn't sign off as my husband had only been at his new job 2 months.. they had to rewrite it all under my name and we ended up having to pay PMI.

Ugh. At least we have now pretty much had all the worst case scenerios thrown at us, so hopefully our next one will be a cakewalk compared to that disaster. This was 2.5 years ago.. I'm probably even forgetting some of the stuff that happened!

[southerner]

brady Either you knew or it's a freaky ass coincidence, but Kim is closing today. Weird!

Hope it went well Kim :D

[Oakley]

I have a horrible closing story as well! We just closed on our 3rd house and that went fine- unless you count not knowing how much you had to bring to closing until you're driving there (it was only $65!). :rolleyes:

Anyway, the nightmare closing was on our 2nd house. We were in the horrible position of selling a house and buying a house- and you know that never works out smoothly!

Since we were in the FL market, the appraisals were being looked at very closely since prices were skyrocketing. Our house we were selling underappraised and we actually had to have it appraised a second time in hopes of bringing in the price up (it did). Then the house we were buying underappraised. The sellers almost refused to sell- they wanted us to give them $8000 at closing- um, NO!

Finally we all came to an agreement- delaying the closing by 2 weeks of course.

Then at closing, another nightmare. When we closed on our house we were selling, we were short $6000 and wouldn't have enough money to buy our house. :eek: Our REALTOR ended up loaning us the money- lucky for us she had the money! Then the sellers never showed up at closing and we signed all our papers and left. We got to the house and it was FILTHY. Totally disgusting. These people were pigs.

I can only say that it is so nice to be in a brand new house- no former owner dirt!

Hope everyone else has smooth closings! I definitely recommend having an attorney. It would have saved us!

[mb1197]

All these stories of how houses were left filthy really remind me of why my realtor advised us to do our final walk through the morning of our closing. We did our walk through to make sure everything was in order and went straight to our closing. Smooth as silk thankfully! :D

[mindy]

We are going to be closing in 2 weeks its our first home and after hearing all these stories I am a nervous wreck. No one is living in the house right now so atleast I know its not filthy because I have been in there tons of times the only thing that worries me is me ending up having ot come up with more last minute money because that could be a problem.