October 31st, 2012 at 7:25 pm
Most obviously, while the real estate market has changed, and buyers and sellers are reacting appropriately, the lenders and their processes have not changed. In other words, regardless of how popular a house may be, the buyer of that property will still have to deal with today’s lending environment to get a loan. Of course, that means providing a ton of documents, answering round after round of questions, hoping the appraisal can be scheduled and comes in high enough and just getting the bank to prepare and forward loan documents to escrow. It also means, in most deals, that the loan process will take time, often more than we expect or more than we provide for in escrow. In truth, while I know it is possible to get loan approval in less than 30 days (and HSL has done it for us in emergencies on numerous occasions), a typical loan takes more than 30 days to process. This, of course, is dependent on the responsiveness of the buyer, and how quickly they provide documentation to the lenders, but on average, 45 days is probably a better benchmark. So, what should you do about this?
First, talk to your client about it before writing an offer with a 30 day escrow. If you represent a buyer, get them to your HSL rep before they find a house and have them processed through underwriting. Further, when writing the offer, manage their expectations. Tell them that loans are hard to get and that even if the deal has a 30 day escrow, the loan may not come through that quickly. On seller’s side, make sure to have this same conversation with your client. They need to know that the 30 days is a goal, but may not be possible in this lending environment. Then stay on top of the buyer, making sure they do everything possible to get approval quickly. You may want them to double app with HSL, so you have someone on your side who knows about the buyer’s financial situation. In either case, don’t be silent. Make sure that, at the beginning of the deal, your client understands that while everyone will do their best to close on time, the loan is unpredictable and may cause delays. That way, no one will be surprised when an extension is needed and no one will be angry with you. By properly managing the clients’ expectations, you are protecting both your deal and your relationship with your client. And that, of course, should be one of your main goals.
As always, please contact us with any questions you may have.
Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.
