Standard financing contingency

Asked by Bernadette, Maryland Thu Aug 30, 2012

How many days would be reasonable for Financing contingency, how many days for Appraisal contingency, nowadays? I am seller. thank you

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8
Bruce Lemieux, Agent, Gaithersburg, MD
Thu Aug 30, 2012
Right now, record low interest rates have created a big backlog for re-fi's. 14-21 days has been a reasonable time frame to get an appraisal back. *Right now*, 21 days is about the shortest timeframe (if the buyer really hustles to get it ordered with a local lender, then you can get one back between 14-21 days).

Getting a financing contingency removed is trickier. It's typical to have these set at 28 days, however, these contingencies continue after the deadline, unless the buyer takes the action to remove it. The challenge for a buyer is that lenders will tell you that the loan is approved through underwriting, but they'll always have conditions tacked on -- like verification of employment and credit just before closing, etc. As a seller, to get any real protection from financing contingency contract language, you must complete a lot more due-diligence on the buyer's qualifications before you actually ratify.

That's a long answer, but I most sellers think that if they get past the number of days on financing, then they're home free. And that's simply not the case. The buyer can have ton's of exits out of a contract based on financing.

Hope that helps. Good luck.
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1 vote
Hi Bruce, Thanks for your post but I don't understand how the contingency continues after deadline. If this is the case why is there a deadline? ie a number stating so many days after date of ratification.
Flag Tue Jul 7, 2015
Russ Ravary, Agent, Commerce Township, MI
Wed Mar 6, 2013
Usually 30 days is the common number in Michigan. The banks should know by then
0 votes
The Roskelly…, Agent, Gambrills, MD
Thu Aug 30, 2012
Hello Bernadette,

Typically you will want to allow 5 days for the buyer to make full loan application and no more than 30 days for full loan approval. If your buyer is trying to close within 30 days you can request that it be sooner, but with current loan and appraisal regulations...unless you are dealing with a 20% down conventional loan it's taking the full 30 days right now.
0 votes
Bernadette, Both Buyer And Seller, Maryland
Thu Aug 30, 2012
thank you for all your prompt & valuable replies
0 votes
Jody Seibert, Agent, Bel Air, MD
Thu Aug 30, 2012
Depends on how far out your close date is for the financing contingency - usually 3-5 days prior to close date. FHA loans are taking about 45-60 days to close conventional 30-45 days. The number of days for the appraisal to be ordered, on a standard sale, I'm seeing anywhere from 10-20 days. Again, many other events will affect this date as well. Best of luck in the your home sale!
0 votes
Pat & Steve…, Agent, Westlake, OH
Thu Aug 30, 2012
In Northeast OH it's usually 45 to 60 days for closing a normal transaction (if we can call any transaction "normal" today). The financing contingency can be around 30 days. There is no appraisal contingency, as the buyer has no control over the appraiser.
0 votes
Rick Reed, Agent, Gaithersburg, MD
Thu Aug 30, 2012
For appraisal I see 14-21 days, for financing 21-30 is typical.
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Thu Aug 30, 2012
45-60 is pretty common in this area now.
0 votes
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