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Isabel Elses…, Real Estate Pro in Lawrenceville, GA

Agents when you represent the buyer do you keep asking for an extension on the Due Diligence

Asked by Isabel Elsesser, Lawrenceville, GA Fri Aug 27, 2010

over and beyond 14 days. Until the loan is approved? I don't think many sellers would sign it for loan approval.

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At the end of the day, manipulating the time frames from the buyer side is easier than it is to prevent it from the seller side - it all boils down to how well agents know the contracts.
0 votes Thank Flag Link Thu Sep 30, 2010
In Florida almost all contracts are 'As-Is' with right to inspect. I have never seen a contract situation where the Seller agreed to an extension of the Due Diligence of more than 24 hours. The seller knows that this contingency period is 'the out clause' for the buyer...and wants it out of the way ASAP. So, the deal becomes 'hard'.
0 votes Thank Flag Link Mon Sep 13, 2010
I use the financing and appraisal contingency exhibits to cover loan approval and low appraisal issues. The due diligence period is for the buyer's inspection. I don't know any seller who would allow the buyer to extend the due diligence period until 48 hours before closing. If I was representing the seller, and that kind of offer was submitted, I would advise them to reject it.

Best of luck to you!
Web Reference: http://www.DesariJabbar.com
0 votes Thank Flag Link Sun Sep 12, 2010
Hi Isabel, In NY we use attorneys on both sides and they will usually approach the seller for an extension. It has become so common here that the listing agent and sometimes attorney, set that expectation up front. A lot of the time the buyer is at the mercy of the bank, but if it is a holdup from the buyers lack of diligence then that is a different story and every seller will react in their own way.

Sincerely,

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
Legends Realty Group
914.406.9023
0 votes Thank Flag Link Fri Sep 10, 2010
Another way to get what you want--technically without asking for an extension--is to include a clause where the buyer will waive all of the contingencies in writing, and can do so up to the closing date.
0 votes Thank Flag Link Fri Sep 10, 2010
Isabel:

We are charged with protecting the consumer. If my clients mortgage commitment has not been met and the seller will not sign the extension then I tell my clients we must void the deal and get our monies back. The seller needs the buyer as much as the buyer needs the seller and in this market I would say the seller needs the buyer more since there are so few buyers.

The other recommendation I have is to ask you banking professional for realistic expectations of time and set the dates according to that. I am pretty sure in this market 14 days is to short and you are probably looking at 21-30 days. Best
0 votes Thank Flag Link Fri Sep 10, 2010
The easiest way, especially with a rookie or inexperienced agent on the other side, is to write the due diligence until just about the closing date. I've done that several times or included a stip that says that and ties expiration of DD to closing date....."DD will end 48 hours before closing date and if closing date changes, DD time frame will change with it..."

It's amazing (for al the wrong reasons) how naive many agents are when it comes to writing and understanding contracts.
0 votes Thank Flag Link Fri Sep 10, 2010
Giving the seller an occasion not to turn down your offer is important. Most sellers will naturally give you 10 days for inspections and 21 for financials.
It is always better, as said, to tie in other contingencies into the 21 days, but they must be relevant to the timing, not inspections or making of requests for repairs after 16 days. Except the seller is really desperate to sell to anyone.
0 votes Thank Flag Link Fri Aug 27, 2010
And yes - do use the financing/appraisal contingency exhibits with the purchase & sale!
0 votes Thank Flag Link Fri Aug 27, 2010
10 days is usually sufficient time for inspection and due diligence. Loan approvals/appraisals I typically ask for a longer time frame (30 days) b/c the lenders don't do final approval until AFTER they have the appraisal. And even ifyour appraisal comes back at the sales price the under writer can still ask for changes/down grade it or even ask for a second appraisal. Additionally - most lenders are doing additional credit/employment verifications 2 days before closing. I do keep in touch with the listing agent to let them know where we are in the process - including full loan application is made and appraisal ordered and received but not reviwed and accepted by underwriter. It hasn't been a problem thus far. As a listing agent - I explain to my sellers that the lending process is hampered by lenders/underwriters and set timelines in the contract for having loan application completed/appraisal completed. FHA condos can be a bit trickier b/c even if a condo is FHA approved it can be declined.

Good Luck!
0 votes Thank Flag Link Fri Aug 27, 2010
No. I utilize the Financing Contingency Exhibit which covers loan approval. I ask for 21 days and then the contract extends that 7 days if needed.
Web Reference: http://www.jmccallum.com
0 votes Thank Flag Link Fri Aug 27, 2010
Why would you do that? Great for the buyer as it maintains the option to bag but lousy for the sellers for the same reason.

In most cases, 14 days is ample time for due diligence, 21 is fine for appraisals.

Hank
0 votes Thank Flag Link Fri Aug 27, 2010
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