My office is where deals die. Mind you, not through malpractice, and not through some unusually unlucky set of circumstances. In my real-estate focused law practice, I'm involved with the ground-level of activity of buying and selling: statistics are reported only after deals pass successfully through offices like mine. Currently, I am sad to report that the majority of transactions that reach my desk pass away, not through.
In the past week, I have had buyers' attorneys request extensions of the mortgage contingency deadline for the following reasons: "holdup due to market tightening", "lender requested further documentation", and "buyers are seeking additional resources." Cracking the purposely imprecise code of lawyer-speak, I've deduced these prospective purchasers are "frantically trying to improve credit scores", "claiming to have a combined income of $125K but only able to verify $59K", or "attempting to get parents to act as co-signers."
While buyers dally, sellers fret. They can't realistically make offers on move-up homes or retirement villas or pay off their creditors. They are betting they won't be losing time by treading water with sub-par buyers, and compulsively chart interest rates. I hear at least once a day from a seller asking: "If interest rates rise before closing, can my buyers back out?"
Yet those are just the deals in the throes of dying; many have already donned the toe tag. Last week I sent back the downpayment of a buyer who had been halfheartedly attempting to obtain a mortgage since March. With no other buyer in sight, and five other "for sale" signs on their block, my clients reluctantly granted the buyer's first few lackadaisical requests for a contingency extension. But after more than 100 days, my clients accepted my adage that "sometimes a bad buyer is worse than no buyer", and cut Ms. Sluggish loose. She didn't gripe or plead for more time at the end, which confirms my suspicion that by about the second month she knew all hope was lost.
A different transaction met its maker when the buyer's 97% financed mortgage application was rejected. The lender didn't deem the documented income of the buyer as "solid", shared the mortgage broker, but if the rejected borrower could find another 17% to put down, the deal could easily be revived. My clients miserably instructed me shut off the respirator and refund the deposit, understanding that a man who had less than $7,000 to put down on a house could not suddenly make $45,000 materialize.
Still another deal saw a house in contract for $395,000 appraise for $380,000. My question as buyers' counsel as to whether the seller would drop the price another $15,000 was met with an impolite inquiry about my sanity. Never mind that if the contract conked out my clients would walk away after having lost just $400 on an appraisal, while the sellers' plans to be in Colorado before their kids started school would be obliterated. As soon as the "are you crazy?" verbiage finished flying, the deal promptly joined the not-so-dearly departed list.
The list of lifeless real estate transactions far outweighs the vigorous contracts in my workplace. Both the underfunded buyers who were always time wasters and those that started the process with the best of intentions are finding themselves on the sides of hospital beds, trying to gauge the gasps of an allegedly stabilizing patient. Nearby are all the anxious sellers, raptly watching the monitors and praying their loved ones don't flat line.