For other Real Estate Agents - Should loan contingency period be 17 days ? Ors hould it be longer/shorter ? Discuss.

Asked by Ramon Limcolioc, Sacramento, CA Wed Feb 12, 2014

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14
Annette Law…, Agent, Palm Harbor, FL
Fri Jun 20, 2014
Ramon,
To address the REAL concern of your question the seller should insist on the buyer having a "Clear-to-Close" from their lender. This means the borrower has passed the lenders underwriting and no surprises pop up days before closing.

Further benefits are the buyer has the money and can compete very effectively with cash buyers and can close in a week if needed.

The 'Clear-To-Close' is a COMMITMENT from the bank.
Would that option be a better solution instead of the non-commitment banks present with their traditional products?
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Thu Jun 19, 2014
It comes down to how assertive your Buyers Lender is
and what the competition is.

In Sacramento if you are up against All Cash buyers you want to be short
on Contingency and be assertive on Price.

Good luck
Perry
0 votes
Shannon Jones, Agent, Seal Beach, CA
Thu Jun 19, 2014
The standard loan contingency period in the California purchase agreement is 17 days. But if the lender has a full package and moves quickly, there's no reason they can't have full loan approval and appraisal in hand within 14 days.
0 votes
Danielle Swe…, Agent, El Dorado Hills, CA
Thu Jun 19, 2014
In my experience, the loan contingency period is about 20 days. Ultimately, the many different factors based on the terms weigh greatly.

If I can help answer any other questions or elaborate on this one, just let me know.

Have a great day!

Danielle Sweet, ZipRealty, Inc.
Realtor(R), Licensed in CA, #01921756
dsweet@ziprealty.com
916.934.2120 | Fax: 877.625.2296
My profile: http://www.ziprealty.com/agent/dsweet
0 votes
JILL BERNI L…, Agent, El Dorado County, CA
Fri Feb 21, 2014
Although our Ca purchase contracts have a17 contingency period pre-printed in them, I have found that some lenders are really busy and can't always manage it. Despite this, I think its better to stay with the 17 days and ask for a extension from the seller if necessary. If you ask for more time in the offer, the seller may "assume" you have a buyer with qualifying difficulties and hesitate to accept the offer.
0 votes
Bud Zeller, Agent, Folsom, CA
Wed Feb 19, 2014
Depends on the terms, conditions and type of financing in the purchase agreement.
0 votes
Jaime Becker, Agent, Sacramento, CA
Wed Feb 19, 2014
Hello Ramon

I think the days of the frantic buying and shortening all the time periods, (which was big with the REOs) are coming to an end. Shortening time frames helped buyers look better on paper.

I don't think the loan contingency should be any longer than 17 days, that's for sure. For all parties sake. There are already enough variables in the transaction. 17 days is better for the buyer so they don't feel rushed through the process and the biggest purchase of their lives. Anything shorter is helpful for the seller because the sooner they know the better so they know they aren't wasting much time.

Shortening the loan contingency can also put everyone in a hard spot trying to meet unrealistic expectations in case there are any time delays along the way, which happen often, thus you may now end up with unhappy or worried clients.

So going into it, ask the lender how well qualified they are and how responsive are they when something is needed. This could help determine how quickly the loan process may go.
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Josh Perkins, Agent, Castle Rock, CO
Fri Feb 14, 2014
Depends on which side of the deal you are on. If you are representing the seller, the tighter the deadlines, the better, because it keeps the buyer more honest and it keeps them from abusing the deadlines. If you are representing the Buyer, the longer you can extend that date, the better for them, because it gives them a potential way out of the deal fairly deep into the process if they need to get out of the deal due to financing issues. I would say that generally 17 day loan contingency period is considered pretty short, and a more common loan contingency would probably be in the 21-25 days range.
0 votes
, ,
Thu Feb 13, 2014
This is a great question as most of the work in acquiring a loan is done prior to contingency removal: Appraisal, Conditional Loan Approval, and Inspections. Given the fact that it is feasible to complete a full loan now within 25 days or less, it is often just better to try to leave the loan contingency in until funding. Many Listing Agents don't pay attention to this and it is very nice to have in place. In addition, the stigma about about "until funding" can often be overcome with a larger deposit.

If you need a contingency period, then 17 days is fine and that is plenty. It is definitely exciting to go many fewer days as it can be a challenge to get a slower buyer to get disclosures completed, appraisal portal opened, appraisal ordered, and any issues handled that might come up that need to be negotiated.
0 votes
, ,
Thu Feb 13, 2014
If you are having issues with a loan I would be more than happy to help. Just send me an email.

Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
0 votes
Jcruce, , Roseville, CA
Wed Feb 12, 2014
From a lenders perspective, I want to make the agents I work with and myself look good by delivering on the 17 day expectation. To do so, I require that I submit a full loan package, minus the sales contract, to underwriting in order to receive a property contingent loan approval. This is not note worthy. What is note worthy is actually working all non property facing loan condition to completion prior to the buyers getting into contract. If this is done completely then the only items left from a lenders perspective is the submission of the inspections, updated paystubs and asset statements, and signed loan disclosures. I've only had 1 deal in the last year that took longer than 17 days. It was because the buyer changed from a self employed consultant to an actual employee 1 week into contract.
0 votes
James Tan, Agent, elk grove, CA
Wed Feb 12, 2014
From a buyer's perspective, when making an offer, if we extend the loan contingency to be longer than 17 days, it may project the wrong image to the Seller. In a competitive situation, that may mean the difference between getting the offer accepted or rejected. James
0 votes
Christopher…, Agent, Tarrytown, NY
Wed Feb 12, 2014
It really depends on the lender involved, how quick they work, and the appraisal turnaround. We have 30-45 days in NY.

Chris
0 votes
Jason Walter, Agent, Sacramento, CA
Wed Feb 12, 2014
That really depends on the relationship you have with the loan officer. I always have a discussion with the loan officer to see what is a realistic expectation on when we would be able to remove loan contingencies.
0 votes
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