I want to buy your house! But…

Ahh the ‘buts’ or the contingencies. As a proud home seller, you received the offer and if everything goes well, you’ll close escrow  in 30 days…

99.9% of all offers are made with contingencies: Inspection contingencies and loan contingencies are the usual mile stones. While inspection contingencies are easy to negotiate, the loan contingency can be a very different story. About 5 years ago, acquiring a mortgage loan was a very easy process and just about anyone could qualify. Today, with more than 1 in 7 mortgages 60 delinquent or worse, banks have begun to tighten lending qualification requirements, making the simple loan approval a thing of the past.

What this means to buyers and sellers is a potentially longer escrow process with more challenges and hurdles to jump through along the way. Many buyers schedule the moving truck and pack their bags, only to come to a sudden and screeching halts days before closing due to additional pre closing lender conditions related to income, credit and appraisal. New last minute lender conditions have become especially prevalent with conforming loan amounts over $417,000 and Jumbo loan amounts over $655,000. Ironically in my personal experience, traditionally difficult FHA loans have become easier and quicker to close.

In our area, just about everything happens on the day of closing.  The loan gets funded on the eve of closing, the escrow closes/records, the sellers moved out and buyers move in. While that has been the traditional picture, sellers might consider a different strategy. One option to consider is to deliver possession to the buyers 1 or 2 weeks after close of escrow. This means that the seller has more latitude in coordinating their packing and moving process, with less pressure to vacate the day of the sale. While this may not be the ideal situation for all buyers and sellers, it does lessen the potential stress that could occur if there were any last minute lending or funding issues that delayed the closing date.

Of course, the above applies to a regular sale, in case of a short sale, the majority of the home owners have stopped paying their mortgage anyway so in their case it would mean that they can stay in a home ‘for free’ longer.

To keep everything in perspective, the above are just hurdles in the sales process, things to expect and opportunities to find good solutions for all parties. In the grand scheme these are minor.

Mirjam