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Charlottesville Home Sellers Face the Deaded Financing Contingency

October 18, 2008

The buyer financing contingency has left many sellers bitter and back on the market.  How can this happen?  The buyers had a pre-approval letter.  What went wrong?

As a mortgage broker licensed in numerous states and one that has come from direct lending institutions such as GMAC-Ditech.com and LendingTree.com, this issue is one that I could write a book about.  But I will try to keep it simple and to the point.

The reason why the financing contingency gets used so much is because most Realtors do not have access or foreknowledge of the mortgage process nor do they have access to mortgage lender guidelines to know what the reality is with respect to what a qualified borrower really is.    Couple this to the fact that lender pre-approval letters are all conditional until an underwriter reviews and approves.  Moreover, add in the fact that your loan officer is not an underwriter and his pre-approval may be incorrect..  The summation is a recipe for disaster.

So, how do I avoid this mess as a seller?
Well… you need to choose you Realtor wisely.  Selling your home is not just about a Realtor’s fancy marketing plan.  It is about a Realtor’s ability to also identifying quality offers and in scoring buyer risk should you accept an offer.  It is about having the where-with-all to ask a buyer the appropriate questions in the negotiation process in order to score buyer risk and eliminate financing contingencies.

Within minutes a knowledgable mortgage person can know whether or not a buyer is solid or not.   So, if you can ask for the following items in your buyer counter offer it will help tremendously: (related article click here)

  • credit report
  • ask how the buyers get paid( w2, 1099, or self employed) key questions to score risk. if there is 1099 or self employed income then risk goes thru the roof.  For more info on this drop me a comment and I will go thru why.
  • a copy of asset statement showing down payment.
  • require loan officer name, phone number and access to all loan information

This information can really help you sore risk and leave a prospective buyer no out with respect to a financing contingency escpecially when this information is used correctly.  Of course this information is useless unless your Realtor knows how mortgages work, current product guidelines and the knowledge of current programs available.

end

Roy Slater
Hathaway Real Estate
- Charlottesville Real Estate
- Southern California Real Estate

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Posted by rslater | Filed Under Mortgage Articles, Real Estate Articles | Tagged , , ,  

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