Why you don’t close on Mondays
You never close real estate deals in California on Monday. Why?
To close a deal, the escrow company generally needs to receive the funds from the buyer and the buyer’s bank the day before. Since you can’t wire money over the weekend, closing on a Monday would require that the buyer and the bank wire in their funds on the preceding Friday.
What would be so bad about wiring on Friday for a Monday close?
Two things, the first small and second potentially major:
- The lender would expect to be paid interest for the two days the money sat in the bank over the weekend. Now, two days isn’t the biggest deal. But remember that, in the early days of a loan, your mortgage payment is nearly all interest. So wiring in on Friday would cost you 2/30 = 7% of a mortgage payment. If you’re talking about a large mortgage, that’s a lot of money.
- What happens if the building burns down over the weekend? You’ve borrowed the money from the bank on a property that is suddenly not what you thought it was. Your insurance doesn’t cover you, because it hasn’t kicked in yet (you’re not the owner). So what happens? I honestly don’t know. But I can promise you it will require a bunch of very expensive lawyers to figure out.
So, you don’t close on a Monday. And, since you’re not closing on Monday anyway, don’t let anyone pressure you to wire your own money in on Friday either (see reason 2 above). Just wire it in on Monday for a Tuesday close.