Don’t Accidentally Start a Fire
From start to finish … the dates and chronology of a Real Estate Contract have become increasingly important to the outcome of the transaction. This is certainly true here in my Will County, IL housing market, as well as across the nation.
But as of late, I’ve received some Real Estate Contracts with some time-frames written into them that have beenabsolutely impossible to meet. To offer an analogy, they were a smoldering fire just waiting to burn.
Perhaps my most clear-cut example of this was a recent loan where I received the freshly negotiated contract on my desk mid-afternoon on a Tuesday, and then received a call from the Seller’s attorney early the next morning wanting to know if I had the loan Clear to Close yet.
The return to a healthier housing market has brought competition back amongst Buyers for desirable sales properties. That’s a positive. However, I’m now beginning to see Closing dates on Contracts being used as bargaining tools. Dates being used in efforts to enhance the desirability of a Buyer’s offer … the strategy being that a quicker Close might catch the eye of a Seller and deem the Buyer more attractive.
Listen, I “get it” and see the temptation to do this. However, arealistic Closing timetable in the present market is 45 to 60 days out. Banks, Lenders, title companies, attorneys, appraisal companies, etc. just don’t have the staff to keep up with the present demand or get things done faster. (Beware of those that say they do or can.) And don’t look for this problem to go away anytime soon.
My opinion is that we don’t have all parties to the transaction in sync right now, and the system is broke. I’m sure many will wholeheartedly agree with me in that assessment. With Lenders, such as myself, needing to see a finalized fully-executed Contract before I can ultimately achieve a FINAL LOAN APPROVAL … the whole mortgage process has been slowed way down.
So what’s the answer? There IS no pat or quick-fix answer for these scenarios. But ALL parties and entities involved in a transaction must demand and strive for more realistic Contract Closing dates. My message to my Buyers is this …
Start the formal Loan Application prior to offering to buy a Short Sale Property or a Foreclosed Property. Start in ADVANCE of waiting/hearing of Bank or Seller Approval. If you don’t, you run the very real risk of NOT receiving your Loan Approval on time and delaying your Closing.