remove the loan contingency which will be tomorrow. We put $50000.00, almost 11% of the total house price as EMD, and are scared to death if something happens and lender won't fund. Besides, the lender didn't know that the house has termine, because our agent tell us not to let the lender know. Please help us!
The contingency removal period is standard for the industry (See item 2.I. of the California Assn of Realtors purchase agreement) At some point the seller needs to know that the buyer is committed to the purchase. 17 days used to be ample time for you to do all your inspections and get an appraisal and a loan approval. If you do not have complete loan approval, you can always ask for a few days extra, but make sure you do this before the time has lapsed.
You may want to check in advance with you lender to see how long it is going to take in this market for an appraisal and 100% loan approval and counter the counter. for the needed time if over the 17 days. You can always not agree and that would give the seller the opportunity to cancel the agreement.
Also, note that on the California Assn of Realtors purchase agreement, item 14.C.3. it allows the buyer the opportunity to review any new or changed seller disclosure and have 5 days to remove the applicable contingency or cancel your agreement in writing. This prevents the seller from delaying disclosure until after the 17th day and then disclosing a material fact that may affect you decision to continue the purchase.
I am not an attorney. Check with your selling agent and their broker for more details.
The house is a standard sale (seller paid cash and has no loan). We are pre-approved for a 30-year conventional loan, but do not know as of yet if it is underwriter pre-approved or loan officer pre-approved. We would guess the latter though.
The home has been on the market for two months with no other offers. There is a similar home 2 years newer for sale with many upgrades for $2K more than this home's listing price. This is why we felt comfortable offering 5% less than listing.
Thanks everyone for the great advice.
If you're feeling undue pressure to take this deal, walk away. Home buying is already a stressful task! You don't need the extra pressures from your agent. On the other side of the coin, if this is the home you must have, your agent may be doing everything he or she feels needs to be done to win the bid. It's a competitive market in Sonoma County with many properties receiving multiple offers.
As for the loan and inspection contingencies, I agree with many of the comments already made. Make sure you know where your lender stands with your loan. You stated your offer, but you didn't state what kind of loan you are getting. Ever since the new rules imposed on lenders have taken place, the time it takes to close a transaction has gotten slightly longer. We are dealing with major regulatory requirements that have added 100 extra steps that need to be taken behind the scenes in order to make a loan sellable to the investor.
It's all about communication. Talk to your lender. FHA loans take longer to close vs conforming loans, but it's not impossible to close either one within your timeframes. You have to know what your lender is capable of doing. If your loan has already been truly pre-approved by the underwriter, not by the loan officer and you've completed all of the conditions the underwriter called for, then you should only need an appraisal and title to close this deal. Find out how quickly you can have an appraisal done and have your agent find out how quickly the title work can be completed.
I'm curious to hear back from you to see what you ultimately decided to do.
you will be hard pressed to find a seller especially in this lending envoiroment that will let you ride for the entire 30-45 days it will take you to close the loan... get qualified with a reputable lender and do what ever they say to get your deal through... and hang on for a bumpy ride we are back to old school days and loads of eyes looking over ever detail.. good luck
You rarely see the loan contingency remain in effect until the loan is funded except when it is specified to be so in the case of a purchase contingent on the sale of another property.
Anything is negotiable of course.
In a competitive market such as ours (at the lower and even low middle price ranges), those deal terms seem customary and normal. Considering we are in a seller's market (of sorts) with fewer than 3 months of inventory for sale they seem more than reasonable. Most sellers know that loans take longer to pull together these days.
If you run into difficulties, you may request an extension of the contingency removal timeframe, but the seller doesn't have to grant it. Unless there is another stronger buyer in the wings, and as long as your efforts seem plausible, they will likely work with you to extend the timeframe and close the deal. If your loan is not approved you would still be able to cancel the purchase without losing your deposit It sounds as though your agent and the seller are on track for the current conditions in our local market.
The counter offer is just that...an offer. You can choose to accept all the terms, counter back with more comfortable terms, or walk away....but remember once you've countered the counter the seller has the same options and may choose to reject your offer. These days it's a good idea to NOT remove loan contingency until you have FULL loan approval.....check with your lender. How solid is your loan. Can they get full approval in 17 days? Be careful, new underwriter guidelines are making final loan approval a real "nail biter"
A 17 day inspection period is the default time period on the purchase contract and it is typically the "normal" amount of time....with 21 days being the default for loan contingencies. If this is an REO...or a Short Sale...all bets are off. There is no "normal" ...although it is typical for the seller (the bank ) to allow only 10 days for inspections and 15 days for loan. It is also typical for a seller to ask the buyer to put "more skin in the game" by way of a larger deposit. Increasing your deposit to 3% at removal of ALL contingencies is pretty common, and will often be recommended by your Realtor, as it makes for a stronger offer.
Without knowing the circumstances, I would never suggest that you "find a new Realtor", but your Realtor does have a fiduciary duty to present your offer...as you want it to be presented. They also have a duty to thoroughly explain the process and provide you with all the information you need in order for YOU to make a decision you are comfortable with.
Hope this helps ~Allison
1) no appraisal issues
If you have an appraisal issue such as it coming in low your Realtor needs to ask for an extension and potentially a price reduction until the matter is resolved. If you are FHA and the appraisal comes in low the seller has to agree to the appraised value or else the deal is dead. FHA has a guideline that the buyer cannot pay a nickel more than the appraised value. You can try to do a 2nd appraisal which may or may not help depending on whether the first appraisal was inaccurate or there are no comps to support the value.
2) No Title/Escrow delays: I have had loans where we have everything we need but it takes 2 weeks to get the prelim. You can not release your loan contingency without a underwriter signing off on the prelim. I have seen prelims kill loans. If it takes a long time to get the prelim your agent needs to ask for a loan contingency extension due to title and escrow delays. If it is the sellers title company you have a leg to stand on. If it is a title company you or your agent picked out you have issues.
It is hard to say if you should walk from your agent. If you love the house and have a strong lender you will be fine. Most realtors I know agree to 17 days and ask for extensions if they hit snags. A lot depends on the listing realtor too. Some are known to be understanding and some not so much.
17 days can be a bit short now a days, especially if you are doing an FHA loan (requires at least 45 days), or even a conventional loan. With the new lending regulation where there is a lot of check and balances and disclosures from lender to buyer and how the lenders can not choose appraisers, there can be a lot of delays.
However, if you have excellent credit, great, stable income, lots of down payment, etc and your mortgage broker, your realtor and you are on top of things (turn around everything right away), it is very possible to remove contingency in less than 17 days. But everything have to be timed right.
Yes, 17 days can be short.; and I have not heard of sellers who are willing to take an offer where loan contingency won't be removed until loan is funded. Some of Santa Rosa's properties have multiple offers, when that happens, the seller is more in the driver's seat.
So, this goes back to the negotiation and which side is tougher and more desperate. Having a reputable, experience mortgage broker will definitely help in giving you confidence in your situation.
Frank Howard Allen Realtors
Marin, Sonoma Real Estate
That is a great question. The best person to ask is not your Realtor, but your lender. 17 days is pretty common these days for removing contingencies on conventional loans but not for FHA loans. Talk to you lender about these timelines and make sure he or she can realistically make that commitment.
As far as your deposit goes, are they asking for the 3% deposit as your initial deposit or as the total deposit after you remove your contingencies? Some REO banks like Chase, want to see 3% down at the start.
As far as inspection time lines go, 17 days should be more than enough time to get your roof, home, and pest inspections done. Additional inspections for septics, wells, HVAC, etc... may require more time so check with your agent on availability of inspectors.
If you have anymore questions, Please let me know. I would be happy to help.
Good luck with your offer.
Kenneth Schrier Real Estate Group
CPS Property Advocates
email - http://www.KenSchrier@aol.com
Web - http://www.KenSchrier.com
The 17 day contingency period is the standard period used in the CAR Residential Purchase Agreement. However, everything is negotiable. You should ask your Realtor if you haven't already to educate you on your market. How long are homes staying on the market in your target neighborhood and what price are they being sold for vs. listed. Many communities in the Bay Area are actually seeing multiple offers. Understanding your market, will help you make decisions on how much to offer and will also help you understand how much leverage you might have during the negotiation.
As far as achieving approval within 17 days, it is definitely possible, but depends on your lender and your circumstances. If you haven't selected a lender and received a pre-approval, it may be more difficult to get approval within 17 days.
April Tavares, GRI, ASP
Realtor, DRE License #01742179
We don't feel very confident about our agent's pricing advice.
It sounds like you feel like you should stop buying the house. If that is the case, maybe you should.
If you are not sure about buying it is better to stop before you have no choice but to buy or lose your earnest (3%) money.
Were there any comps within 3 miles? There are adjustments that can be made to accommodate different areas.
The listing price was $365,000 for a 2007 home. We made an offer of $350,000 with a $3500 deposit. Our agent provided a few comps within a block or two, but not many similar homes had sold within the last 6 months. Now our agent is telling us we are lucky that the seller is giving us 17 days instead of 10 days to release the loan and inspection contingencies. We don't feel very confident about our agent's pricing advice.