Does the seller's payoff figure ever just not arrive before you need to make a written offer

Question

Been watching this pattern for a few months now. I scope a default lead, request the payoff through the servicer, and the clock on the auction keeps moving while I wait. Three leads this year where I had a number from the county records that was somewhere close, but the actual payoff came back different enough to matter, once by 9,200 and once by 14,600. The 14,600 gap was on a property in Macomb County where I had already walked the property twice and spent about 600 on a preliminary title pull. I ended up not making an offer because I couldn't get the real payoff before day 31 and the auction was day 38. Seller signed with another buyer at a number I think was too thin, but I don't know what they knew that I didn't. What I actually want to understand is whether people make written offers with a payoff contingency built in, or whether they just absorb the gap risk and adjust the spread they're targeting to account for it. I've seen both described but never with specifics on how the contingency language actually sits with a motivated seller who's already nervous about the timeline.

grantwoz · Answer

Macomb County timing pressure is real, I've seen that same servicer lag stretch past 30 days on conventional loans there. I'm still a trainee so I haven't written a ton of these myself, but I've been in the room on a few deals where the investor used language roughly like "offer contingent upon verified payoff not exceeding X, buyer to receive payoff statement within 5 business days of acceptance or contract voids." What I noticed is that sellers who were already 60-plus days in default accepted that language faster than you'd expect, because they were more afraid of losing the offer entirely than they were of the contingency clause. The one deal I watched fall apart wasn't because of the contingency wording, it was because the investor set X too tight and the payoff came in $8,400 over, and he hadn't built any cushion into his spread to absorb even part of that. The investor who ended up closing it apparently came in with a slightly lower purchase price but a wider payoff ceiling in the contingency, which actually gave the seller more certainty about the deal surviving.

Does the seller's payoff figure ever just not arrive before you need to make a written offer

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