A real estate contract extension is a mechanism by which the buyer (or seller) can receive a little more time to see the deal through. It’s a way to keep the transaction viable and to see it to final settlement if circumstances arise which might or do delay it. But, it’s not necessary a simple thing to do. Remember, you as a buyer expect certain things from the seller just as the seller expects certain things from you. In other words, you’re not in it alone and both parties have their own interests at heart. So, let’s take a look at residential real estate contract extensions.
Reasons for Real Estate Contract Extensions
Real estate contract extensions are a way to give one or more parties the time to tie up loose ends. It could be that your financing is being delayed for one reason or another. Or, the home inspection reveals one or more material defects and time is needed to make necessary repairs. Another common scenario is the home appraisal doesn’t support the agreed selling price.
“One of the most important aspects of a real estate contract is the time frame that is built into it. After all, when the contract’s language says that “time is of the essence,” it means it. While time frames are important, there are a number of legitimate reasons that you might need to change them as a part of a real estate transaction. Although you probably won’t be able to do it unilaterally, the odds are very good that you can get more time if you legitimately need it.” —San Francisco Gate
Of course, there is always the very real possibility of a sudden and unexpected change of circumstances. This can mean a death in the family or a last minute business trip. There might even be a tropical system moving in and that holds up the insurance underwriting. Basically, there are numerous scenarios which might arise to cause the need for a contract extension.
Ways to Get a Real Estate Contract Extension
First of all, don’t worry about going for a real estate contract extension. These are quite common, so there’s nothing abnormal about it. In fact, about 10 percent of all residential contracts fall through, on average. Here are a few things you can do to get a real estate contract extension if the circumstances warrant it:
- Contact your buyer’s agent. The moment you hear something that would cause a delay in the closing date, you need to immediately contact your buyer’s agent. Regardless of what it is, you must take action right away because any hesitation can really cause a whole host of more problems.
- Get in-touch with the listing agent. You’ll also need to contact the seller’s listing agent (your real estate agent will do this for you). Or, you might need a conference call to explain what’s going on and why there’s a possibility for a delay.
- Agree to sign an addendum or amendment. Now, just because things have changed for you and interrupted your timeline doesn’t mean the seller will readily agree to a contract extension. So, make assurances about your commitment and agree to put it into writing. Go over the details carefully so both parties are totally in agreement and in-the-know.
- Carefully go over the “notice to perform” clause. Typically, there’s a “notice to perform” clause in the contract. It places certain responsibilities on both the buyer and seller. You need to make sure that this clause isn’t violated in any way.
If you’re going to buy a new house here in the Orlando area, please don’t hesitate to phone me at 407-616-7286, I’ll be happy to speak with you.