The Person I Sold My Property to Couldn't Close on Time. Here's What We Did

Recently, I sold some land. We had purchased the property with the goal of getting a mortgage loan and building a home on it. Unfortunately, the pandemic got in the way and then we decided we would rather buy a home in a different neighborhood, so we opted to sell the plot instead.

We got a good offer after a few months on the market, which would allow us to walk away with a reasonable profit, and we scheduled our closing date. Unfortunately, when it came time to close, our buyer had a problem. They were from out of the country and they claimed they didn't realize how the process worked and would not be able to get the money to their U.S. agents on time in order to close on schedule.

Naturally, we got a little nervous about this unexpected delay, and we were wary of their request to push back closing by two weeks. We didn't want to walk away from the offer, but we also didn't want to keep our land as pending and end up missing out on other potential buyers only to have the deal fall through.

So, we came up with a plan that would allow us to comply with their request for a delay while still reducing our risk.

This was our approach to a request to delay the closing

In order to protect ourselves, we requested that the buyer immediately release all contingencies and increase their earnest money or escrow deposit. Because they had originally agreed to a quick closing, we had allowed them to make the sale contingent on the land being suitable for their building purposes -- and they had the entire time until close as their due diligence period.

But since we no longer wanted them to have an "out" since they were extending the closing, we asked them to remove the contingency. This way, they would be legally bound to follow through on the contract. There were no more outs for them, and they would have to close or they would lose their deposit and we'd potentially be able to sue them to force them to follow through on the contract.

We also asked them to increase their escrow deposit by an additional $20,000. Since they were paying cash for the property, there was no reason they shouldn't be able to make this money available before the closing if they were serious about following through. Their original deposit had only been $5,000, but by adding an additional $20,000, they now had $25,000 on the line that they stood to lose if they didn't follow through.

Here's why this worked out well for us

By making sure that the buyers had no out and by demanding a larger deposit, we put ourselves in a good position. They would have to close or lose a lot of money, so we were OK with pushing the closing back for them since we had renewed confidence they would close the deal.

If you are selling a property of your own, it's important to remember that things don't always work out as planned. It can pay off to offer some flexibility to a buyer so you don't lose out on a deal. But you need to protect your own interests, too. A larger deposit and a short period to satisfy contingencies can help you ensure that a buyer doesn't force you to take your home off the market for a long time, only to back out on a deal in the end.