Monday, October 1, 2007

Close on Time or We All Die

Things were going so smoothly and then it happened . . . .

The dreaded two days before closing on our last apartment property. I was bombarded with e-mails from the buyer's agent about Section 8 deposit refunds, telephone transfers, you name it (my agent bailed--although we're still paying a small commission, so I took over the sale of this property months ago).

I had explained to title and the agent that I would like to complete as much as possible long before the closing date--Oct. 3rd--since we were signing a distant close. This requires at least two extra days of overnighting the closing docs back and forth to and from title. I was assured repeatedly that I didn't need to rush anything along because they had until Oct. 1 (according to the contract) to close. We finalized the HUD (Housing and Urban Development closing statement) last week, and I told the attorney handling the file that any other documents could probably be signed well ahead of time. I had just done this on the OH property.

Well, today he tells me that they are working hard to make the last FedEx pickup and that I should have my husband (the LLC manager) sign tomorrow and overnight back--there's the deed, HUD (which does not need a wet, or original, signature to close), and other docs needing to be notarized. OK, let me get this straight: I have been working with these people for weeks, waiting to have my husband sign and notarize everything that doesn't require a last-minute signature (like the HUD), and they wait till the last minute. Whatever! As long as it closes on time, I'm good---stressed, but good. I tell you, juggling the sale of under-performing properties is the best weight loss program ever! With my stomach full of knots, there's not much room for candy or Big Macs (same thing).

Now, about that "we have until Oct. 1 to close" detail. As you know, we're closing on the 3rd. "Well, how did the buyer get away with that?" you ask. Most people in real estate wouldn't blink an eye at closing two days late. As a matter of fact, they would be grateful to close that soon after the deadline. Not me!! This is my technique to always closing on time--always--never late until now. Shhh. It really is my secret, but I'm willing to share.

First, I treat the deadline on the contract like the world will disintegrate if title (the escrow company for you who only do business in California) doesn't close on time. The buyers need to be on notice that I have every intention of cancelling the contract and keeping their good faith deposit as of midnight after the day it's supposed to close. That's why I always try to up the deposit when negotiating a sale price.

Second, I always get the name of the title, or escrow, agent and contact them directly during the process. They get to know me real well. I have a feel for their competency during our first conversation. This is important because the less competent they are, the more of their job that I have to do. The bottom line is that they don't have as much of a vested interest in it closing as I do. That point never escapes me.

So I harp on that closing date like my life depends on it. With apartment sale #2, we have not had the upper hand in the entire process. The buyer is a company (remember the pariahs in a prior post) run by a man who is so cheap that I would hate to be one of his tenants with a toilet problem. He smelled the scent of desperation on my part and I folded. HOWEVER, after all of the contingencies had been satisfied, he thought I'd just roll over and let them close whenever they pleased. I don't think so.

Knowing that I was getting hot under the collar about the late close, the buyer conceded to take possession of the property on Oct. 1st (under a management agreement, upon the advice of our attorney) and transfer the utilities to his company's name. I asked for him to pay my mortgage interest for those two days because it was their lender's delay and not mine. He said that not only would he not pay my interest, but he would not prorate the rents he collected, either. I drew the proverbial line in the sand and dared the agent to cross (my posture had improved since we closed the other deal). We had upped the deposit to $10,000 (which isn't really very much in this industry) for this very reason and I told her that I would have my attorney cancel the contract on Oct. 1st and keep the deposit. The buyer conceded and agreed to pay my mortgage interest for those two days. That's the inside scoop--and I won't go into the other troublesome details.

Sometimes it's easier to start at the end, and that's what I've done here. I hope to give you all of the joyous ownership details about this property in the near future.