Your Buyer may have had a pre-approval letter and then:
1.) He did something to alter his credit rating (missed a payment, bought a car...)
2.) The lender may have changed the rules of the program under which your Buyer was initially pre-approved (raised the required score, lowered the acceptable ratios...)
If I were you I would want to know more about his "poor credit" before I would consider taking my home off the market for another 3 weeks. Rather than consider offering a 3 week extension, why not offer him a 24 hour extension to give him time to procure a valid pre-approval letter from Bank #2 #3 or #4?
Good Luck with your decision!
Yes, your agent should have contacted the lender listed on the preapproval to determine if it was indeed a legitimate approval. However, sometimes, even when preapproved, mortgages are declined. Sometimes a buyers financial situation may have changed, between offer and closing.
In our region, no, it's not the Realtor's responsibility to prequalify the buyers' finances... we leave that up to their lender. But it is the Realtor's responsibility to make sure that you have a valid preapproval before accepting that offer.
At this point you can decline the extension and put back on the market as available rather than the pending status it has now. In my opinion poor credit is poor credit and lenders dont very alot in the numbers they require.
I personally would decline the extension and move on so you dont lose any other potential buyers. I would also suggest your agent put in the agent remarks on the mls listing that buyers need to submit a pre-qual letter or verification of funds with offer to keep this from happening to you again. That way if they dont have it they can get it before taking you out of the game while things get addressed with lenders. You may lose a couple of people who would have looked at your home, but if that is the reason why it is not such a bad thing really, is it?
Of course, it is still subject to a favorable Lender's Appraisal....It is your call in regards to giving an extension to the buyers to reapply elsewhere, but if their FICO score is below minimum standards...it won't matter where they go. On the other hand, a Local Lender (Bank or Credit Union) that services their own loans may be willing to be lenient on a judgement or even Debt to Income Ratios...Find out the reason for the first denial and proceed accordingly.
I am sorry for your experience. Good Luck
However--and you're not going to like this--you ask a couple of times about who is "responsible." Ultimately, you're the seller. While your agent should have advised you on the importance of the purchaser being able to qualify, what were you doing? You're the seller. Did you ask your agent: "Does the purchaser have a prequalification letter from a lender?" Or "Is the purchaser preapproved for a loan of this amount?" Or just "Do we know whether the purchaser can afford my home?"
Or even more broadly, when you received the offer, did you ask: "Is this a good offer?" You probably did, your agent probably said yes, and you probably left it at that.
I'm not picking on you, but while there certainly is responsibility on the part of your agent, you were the one to make the decision.
I wouldn't be quite as pessimistic as Scott sounds. Different lenders have different programs and different criteria. At this point, your agent should be in contact with the buyer's agent to follow the process closely and to advise you on what to do next.
If a buyer gets turned down with 1 company, it is doubtful anyone else will be able to give them a mortgage. You need to insist on a preapproval, not just a prequailification letter. if teh buyer did not provide proof of tehir ability or inability before the deadlin on your contract , then you may be able to keep teh deposit. If you are not sure or have questions, you should consult an attormey for at least the first free meeting to get some direction and advice where to go from here. good luck with your sale.