The first time my husband and I sold a house in Plainfield, we didn't have the first clue about real estate. We thought after we accepted an offer, it was a done deal, and we'd be seeing everyone again real soon at the closing table. Oh, how naive!
Unfortunately we found out about two weeks, and a houseful of boxes later... that our buyers did not receive the "commitment letter" from their lender.
I guess I should back up a bit first and tell you a little bit more about the commitment letter. It's basically a letter from the lender or mortgage broker that you have chosen, declaring that you have have been approved for a mortgage for the requested amount of your loan in order to close. Without it, the deal is dead in the water. Most likely there will be a mortgage contingency attached to the contract if you are obtaining financing, which protects your earnest money in the event that you cannot get approved.
When you sign your contract to either purchase or accept an offer on your next Plainfield real estate transaction, it's important to understand that the date for the commitment is going to be under close scrutiny by all of the attorney's and agent's involved in the transaction. If a buyer cannot get financing by the date noted on the contract, it is often a red flag to the interested parties that there is a problem with the buyers ability to obtain financing.
Lending institutions are changing their guidelines daily. There are no guarantees when it comes to financing these days.
Our buyers could not commit to close within the time-frame needed to make the purchase of our new home in Plainfield happen. We didn't get to move into the beautiful new home that was waiting for us. About 2 months later someone else bought it; and in a huge way, I'm glad. We didn't know it at the time, but my husband was about to be laid off from his job after 9-11.
A similar situation happened to me just this month with the buyers for one of my listings. The commitment date on the sales contract was for February 15th, and we were scheduled to close on February 20th. When the commitment date arrived instead of receiving an approval, we received a request for an extension, which pushed the closing back by as many days. My sellers, Shelly and Mike Naples, had already written a contract to purchase another property in Wheaton, that was contingent upon the closed sale of the home.
On February 18th we received another request for an extension, and at this point everyone was more than a little nervous that we wouldn't be able to get this transaction to the closing table.
In order to protect the purchase of the other house from unforeseen delays in the closing of their house, I scheduled the purchase of their new house two weeks later on March 5th... and are we ever lucky that we did! We needed every second of those two weeks to make sure that the scheduled sale of their home still happened. Thankfully Shelly and Mike had a place to stay for those two weeks or this transaction might not ever have happened. Those two weeks kept this sale alive.
We closed on the sale of their home on February 29th, which after all of that, still wasn't the end of the story. Since this year is leap year, leap day, wasn't recognized by the computers at the title company. The closing had to actually take place on two days, and as of yesterday afternoon, the Naples' have officially SOLD their home!
This is a perfect example of how many things actually happen between signing the contract and making it to the closing table, and as you can see from these two examples, you never know how things will play out.
It's important to keep close tabs on the process of obtaining commitment letters no matter what side of the transaction you are on. If for any reason a commitment letter isn't issued there isn't much you can do about it, but at least it relieves both parties of their obligation to the contract and allows everyone to move on.
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