Waiting on a Government Clearance Nearly Killed the Deal

Waiting on a Government Clearance Nearly Killed the Deal

Government clearances are a way of life in Northern Virginia.  With the Federal government being the primary source of employment in our area, we are used to dealing with issues that can arise with them in a real estate transactions, particularly how they can affect a seller's ability to conduct a Short Sale.  However, it was in 2007 that I learned first hand how they can practically destroy a purchase.

I was representing buyers that were relocating to Northern Virginia for a job. That job was dependent on a top level clearance that had not yet come through for my buyer.  When they found the home of their dreams, they needed two months for their financing contingency.  The clearance process had started months prior, but was running about six months.  We figured my buyer had two more months to wait.

The seller of the home didn't like the two month financing contingency and was ready to outright reject the offer. After all, he had a very desirable home and my buyers were not the only ones interested.  The only reason I think the seller didn't simply reject the offer was that he had met my buyers.  And the buyer waiting on the clearance had composed a handwritten letter commenting on the Civil War collectibles in the home. 

As days passed and the Listing Agent was receiving another offer, I recommended a proposal to my buyers.  Clearly, the seller was worried he'd be taking his home off the market, in the hot spring/summer market, only to lose the deal if the buyer's clearance didn't come through.  The only thing my buyers could offer was money for the consideration of taking the home off the market.  So here's what we came up with:the fact that it was also a passion of his, and using some quote from a Civil War hero to bring the letter to a poignant close.  The seller had also met my buyers.  Hard to say no when you've met someone in person, but not impossible, and we were about to find that out.

Half of the $10,000 deposit made by the buyers would be non-refundable thirty days after ratification, paid to the seller.  However, the seller had to automatically give another thirty days for loan approval.  If not approved in that time frame, the entire earnest money would be paid to the seller and the contract would automatically become void.

The seller agreed, if the earnest money was paid directly to him and not either the listing or selling brokerage, or title company.  The buyers were okay with that.  They wrote the check to the seller and we all prayed for a speedy end to the clearance.  We got our wish.  The clearance came in three weeks and the buyers lost none of their earnest money.

As a post script, three years after the settlement, when the buyers were closing out the bank account from which they had made the earnest money check, they were told they still had $10,000 in the account.  Turns out, the seller never cashed the earnest money check, though it had been credited to the buyers on the HUD-1 settlement statement from his side of the transaction.  They contacted him, only to find out he had passed away just months after the settlement.  They immediately made things right with his widow and wrote her a check for the $10,000.  

Thinking outside the box in this case meant my buyers putting their money where their mouth was.  It was the only way to make the seller feel the same confidence as my buyers that the clearance would come through and take the chance on the deal.