By putting money into escrow, you can save a deal with unfinished repairs.
What happens when a repair request can’t be completed before closing? In real estate transactions, sometimes the seller doesn’t have time to finish a repair before the closing date. This situation is especially common during the colder months since the weather can affect what work can be done. Today, we’re going over what you can do when repairs aren’t completed to make sure both parties get what they need from the transaction.
Let’s say you want to close on a property quickly, but it needs a new water heater. If the heater isn’t available or the contractor is busy, you can agree to escrow the funds for closing. This means the seller will hold the funds in an escrow account at 1.5 times the total amount. Once the work is finished after closing, the title company will pay the vendor and pay the remaining funds back to the seller.
“Keep in mind that the escrow account might need to be approved by a lender. ”
One thing to keep in mind is that the escrow account might need to be approved by a lender. The escrow money could affect the loan, so make sure you double check with the lender that everything is accounted for.
While 1.5 times the cost of the repair is common, it isn’t a hard number. Depending on the details of the work, this number could change to accommodate extra tasks. Work with your agent, title company, and lender, to make sure the numbers make sense before moving forward with this strategy.
If you have questions about this topic or anything else, please call or email me. I am always willing to help!
