Buyer wants us to extend loan contingency until funding?

Asked by 4532, 95350 Thu Dec 22, 2011

We are 28 days into escrow. We close in approximately two more weeks. I extended the loan contingency until Saturday but our buyers are now requesting another extension, until funding. They have not received conditional approval yet. I am not very comfortable doing this but my only other option is to send a NBP and then cancel the sale. Any suggestions?

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Ron Thomas, Agent, Fresno, CA
Thu Dec 22, 2011
Do you want to sell the House?

Or is this not your goal?

On new Offers, we are not using the traditional 17 day Contingency:
The way the Lenders are now working, we often cannot get a solid committment from them, and then, too often, they change their minds! And don't tell them that they cannot do that!

We are entering the Loan Contingency as "end of Escrow": It has become a fact of life.

So, back to the first question; Do you want to sell the house?

Merry Christmas
1 vote
LUXURY HOME…, Mortgage Broker Or Lender, El Segundo, CA
Mon Jan 2, 2012
In my opinion on answers received I believe Ron Thomas is the only one that really understands today's lending environment. TU Tom. .... Happy New Year, Rudi
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0 votes
LUXURY HOME…, Mortgage Broker Or Lender, El Segundo, CA
Mon Jan 2, 2012
I disagree with the majority. This is not 2005/2006 when anyone that had a heartbeat and could fog up a mirror would receive a loan. Can anyone say Bank of America/Countrywide?

Today lenders perform their due-diligence to the max. Not only on the borrowers also on the subject property. No one with certainty can say what stipulations may appear during the final audit after underwriting and funding has given the clear.

If the seller wants the financing contingency to be removed the earnest money deposit will be refunded. should the borrower not wish to "roll the dice."

Then I suggest the borrower completes the loan process to receive an approval with property to be determined. Should the seller not receive a new buyer within that period of time they may begin negotiations again on the purchase price if the buyer is still willing to do so. ... Best wishes, Rudi
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The Medford…, Agent, Fremont, CA
Sat Dec 31, 2011
There are ALWAYS conditions – some of them are pre-doc conditions, others are pre-funding conditions. If there are still pre-doc conditions, they are right to be a little nervous about releasing their loan contingency. If prior-to-funding conditions are the only ones that remain, I’d ask that the contingency be removed.

By the way, this happens ALL the time. As stated below, 17 day contingency removals have pretty much gone the way of the stegosaurus – especially when dealing with an FHA or VA loan.
0 votes
4532, Home Seller, 95350
Tue Dec 27, 2011
The buyers got conditional approval today but still refuse to release loan contingency. I don't know what their conditions are, their lender won't tell us. We just got a generic letter stating they were approved but they are working on conditions and we will be updated as to the closing status later. Does a conditional approval usually mean that the loan is going through? Their contingency extension expired days ago and I am trying to decide whether to send a NBP. My agent doesn't want me to. She says that at this point there is no reason.
0 votes
Heather Paul, Agent, Santa Monica, CA
Mon Dec 26, 2011
One option would be to do this but after your agent has spoken to their lender and has a good idea it will go through. If there is a chance this sale will go through, I would recommend going with it, starting all over and putting the property back on the market will extend how long it will be to close, ask the buyers lender to speak with your agent and update them, I always speak with the lender of the buyer when I am the listing agent, this gives us a better idea if the deal will go through. Also, talk to your Realtor, they should be right by your side through the whole process. Have they removed all other contingency's except the loan contingency? If not, have your Realtor send them a contingency removal form that removes all contingency's except the loan contingency, if not-start over and try again.
0 votes
Harold Sharpe, Agent, LAKE HAVASU CITY, AZ
Fri Dec 23, 2011
All things are a negotiation,.....
In addition to below,....
What do you get if you give???
Perhaps you can request to continue marketing the property as active and give a 48 hour notice if you get an offer, Perhaps you should put a time limit on the whole deal as well.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes
Rocky G.H. H…, Agent, Ripon, CA
Thu Dec 22, 2011
The primary reason a buyer doesn’t remove contingencies is to protect their deposit, especially if their worried about getting the loan.

I suggest you speak with the buyer’s lender directly. This should give you a good understanding of where things are at. The only other option would be to send a NBP. Remember this is not a cancellation; it just opens the ability for you to cancel. However, you could make them angry and they could just cancel on you – so be careful if you don’t have another buyer waiting in the wings.

Also have your agent contact the previous buyers or interested parties. This should at the very least provide comfort.

A good lender will always be able to meet the Loan contingency period, but it largely depends on if a buyer has provided all the required documentation on time. It may be a bit different in Fresno and I’ll be the first to admit, there are several business people that don’t put in the extra effort these days.

I think after speaking with the lender, you'll come away with a better understanding of where everything stands.

Hope this helps!

Rocky G.H. Hawrysz
Prudential California Realty
(209) 444-6610 – Direct | | | License No. 01468373
0 votes
Oggi Kashi, Agent, San Francisco, CA
Thu Dec 22, 2011
Do you have a back-up offer? Do you have other interested parties ready to take this buyer's place? If not, then you need to work with this buyer. In the current market buyers and sellers need to work together to make the lender happy and successfully complete the transaction.

In order to urge the buyers forward a little, you might try holding new open houses and showings to attract other parties for a back-up position. When the buyers see this they will realize you have lost confidence in them. The thought of competition might make them push harder with their lender.

Best of luck,

Oggi Kashi
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to error and omission, and not warranted.
0 votes
Steven Ornel…, Agent, Fremont, CA
Thu Dec 22, 2011

Details are important in this situation. Ask your Realtor® to get the details straight from the Buyer's Realtor® or Mortgage Broker on WHAT EXACTLEY the issue is. Then discuss how to proceed with your Realtor® based on fact as opposed to speculation.

0 votes
Lacey Fisher, Agent, Modesto, CA
Thu Dec 22, 2011
There is a middle ground here- give them a 7-10 day extension on the contingency instead of giving them until funding. That way they feel comfortable and your hand isn't forced with a notice to perform. Once the conditional approval is issued you can ask them to release the contingency. Good luck!
Lacey Fisher
PMZ Real Estate
209-614-3303 direct
0 votes
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