Don’t Remove the Loan Contingency Until the Loan Has Funded

Just a quick suggestion for Agents and Buyers in this jumpy market:

Don’t remove the loan contingency until the loan has funded.

I recognize that some agents have always taken this approach. Others—I am of this school of thought—believe that once in Contract it’s best for both sides to determine quickly whether or not there is a deal. Sellers don’t want to waste time with a buyer who picks apart the transaction, and buyer’s agents want their clients to quickly satisfy themselves as to the condition of the property and the financing terms. Does anyone want these decisions to drag out only to blow up at the end. Of course not.

But this market has presented a new challenge: lenders who leave borrowers twisting in the wind, lenders who suddenly meet “unprecedented disruptions” and cannot, or will not, fund a previously approved loan. This is happening with alarming frequency..

If you are a listing agent, counsel your sellers to be flexibile and patient. Request more detail about the lender involved, the borrower’s qualifications, Fico scores, or the type of financing involved. But if you can’t be a little adaptable in this market, your buyer may decide to leave the party before it gets started.

So, I’ll say it again:

Don’t remove the loan contingency until the loan has funded.

Share This