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Buyer Beware - Don't Remove Your Loan Contingency - PODCAST

By
Real Estate Agent with BrokerInTrust Real Estate Cal BRE #01345507

Like sand through an hour glass so are the days of our lives so does the mortgage business change. We all have done some pretty quick thinking lately to keep up with the recent changes in the mortgage industry.

Living and working in Calabasas, CA, which just happens to be the headquarters for Countrywide Mortgage has made the the media hype here even worse. No, the sky is not falling and yes there are things we can do to protect our buyers in the event that we have another mortgage episode.

I’m advising my buyers not to remove the loan contingency until their mortgage actually funds. You can listen to my podcast by clicking below.

Those of us that have been in the real estate business for more than a decade know that they’ll keep turning that hour glass over and over. New mortgage products will be developed, life and real estate will go on just like the sand through the hour glass.

Click to hear the podcast. 


RPA
For some reason the Podcast is not showing up on Firefox. If you can't see the icon to click for the Podcast click here and you can listen to it on my Pumpkin City Blog.
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Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services
That is an interesting provision in your form.  We have nothing like that in New Hamsphire and I think even in this market a seller would not go for that approach.  
Aug 30, 2007 03:31 PM
Lizette Fitzpatrick
Lizette Realty - Richmond KY - Lexington, KY
Lizette Realty, Lexington KY MLS - Kentucky Homes
Wow! We don't even have a contingency like that built into our contracts. All we write in is that it is contingent upon the buyer obtaining proper financing. Some do fall through before closing. Usually we just get pre-qualification letter from the lender w/ the offer. Anything can happen along the way to a closing. 
Aug 30, 2007 03:33 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Nice idea Tracey, I like your mode of thinking!!!
Aug 30, 2007 04:07 PM
Harold Watts
Teles Properties - Palm Springs, CA
Palm Springs Real Estate Blog

Tracey,

Great podcast!!  We now have to protect our buyers from all the changes in the mortgage industry.  I just closed an escrow 2 weeks late when the Countrywide "mortgage meltdown" occurred.  The lender assured us that everything was in order, and we removed the loan contingency. Long story short, we had to go to another lender to complete the transaction because Countrywide's last minute demands were ridiculous!!

I am now checking the little box on the Purchase Contract to remove the loan contingency when the loan is funded. Thank you for the the insightful post.

Aug 30, 2007 04:48 PM
Rick Grand
nowhere - Eugene, OR

Tracey,

I couldn't agree with you more. I inform my clients that due to the volatility of the market that they need to protect themselves. It is increasingly important for those clients with the iffy credit. Because if something slightly changes with loan guidelines it could dramatically affect their mortgage or even disqualify them. Definitely cover your bases!    

Aug 30, 2007 04:51 PM
Tracey Thomas
BrokerInTrust Real Estate - Calabasas, CA
CA Real Estate Broker

Joan - If you're in a buyer's market, you'd be surprised at what a desperate seller will agree to in order to sell their home.  Of course this doesn't work in ever situation, but if you can write this in to the contract, you could possibly become a hero over night should the mortgage industry take another nose dive.  As Realtors we want the transaction to close, but if the deal does fall apart, you'd want your buyer to get their deposit back so they could buy a home somewhere down the road.

Lizette -Not removing this contingency only assures that the buyer would get their initial deposit back.  If you sign off on all the contingencies and something goes wrong with the lender, most likely your buyer loses a big chunk of money here in CA.

Jason -Dahling just trying to cover everyone's butt.  Now if I was the listing agent I probably wouldn't go for that, but that's another podcast entirely.

Harold - What you wrote in your comment is the exact reason that I started checking that box in 2I.  I had hysterical buyers for two weeks while we found them new financing.  You want to talk about terror and sleepless nights.  And this sort of thing always happens to the nicest people.  In the end we worked it out, but I don't want to relive that again.  Yikes!

Rick - I know what you mean about the loan guidelines.  It's pretty scary when the borrower has less than perfect credit.

Aug 30, 2007 05:12 PM
Paula Henry
Home to Indy Team @ HomeSmart Realty Group - Avon, IN
Realtor - Indianapolis Real Estate - 317-605-4174
Tracey - When I was in California - I loved the 17 day loan contingency. Today - I would not want my buyer to face the penalty should thier lender shut down. Great info for the CA buyer!
Aug 30, 2007 05:34 PM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!
We do not have that clause in our contract here. We would add it as an addendum. Great post Tracey. Where do I go to hear your podcast? Katerina
Aug 30, 2007 05:35 PM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

We don't have that here either...we have to put specific dates due for pre qual; conditional loan commitment, fulfilling the conditions by a date, and final loan approval.

Aug 30, 2007 05:56 PM
Glenn Gaspar
eXp Realty - Long Beach, CA
REALTOR
Tracey, Thank you for helping me remove some old habits.  We so often go into automatic pilot when filling out our RPA-CA, that we forget about incorporating changes based on the market condition.  I am going to pass this information onto my fellow agents in our Long Beach office.
Aug 30, 2007 06:59 PM
Desiree Daniels
RE/MAX Tri County - Robbinsville, NJ

Couldn't agree with you more.   People put way to much weight into a pre-approval letter and with the industry changing and having funding issues you have to CYA at all times.  Have a great day!

Aug 31, 2007 01:27 AM
Tracey Thomas
BrokerInTrust Real Estate - Calabasas, CA
CA Real Estate Broker

Paula - Yes, we have to protect our buyers in this uncertain market.

Katerina - That was my first Podcast, I just wanted to see how it felt.  I think it's good because people can listen instead of read so they can multitask....clean off their desk when they're listening.  If I decide to do more, they'll be on iTunes.  Still thinking about it.

Sally - If we don't write in a specific date, the purchase agreement has defaults.  When the escrow instructions are generated, they compute the exact date from when the contract was signed.

Glen - I know what you mean, we have switch gears here a little now.

Desiree - CYA kind of rhymes with pay day, Right? 

 

 

Aug 31, 2007 12:51 PM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!
I use firefox. Is that why I can not see your podcast? 
Aug 31, 2007 03:36 PM
Tracey Thomas
BrokerInTrust Real Estate - Calabasas, CA
CA Real Estate Broker

Hi Katerina, yep that must be it.  Click here and you'll see it.  I promise! 

http://www.blogcalabasas.com

I'll have to work on this Firefox issue. 

 

Aug 31, 2007 03:39 PM
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Tracey Thomas

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Service Areas

  • Calabasas, CA
  • Thousand Oaks, CA
  • Oak Park, CA
  • Sherman Oaks, CA
  • Westlake Village, CA
  • Encino, CA
  • Woodland Hills, Woodland Hills
  • Tarzana, CA
  • Agoura, CA

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I believe there is more to Real Estate than showing property and taking listings. I have over 25 years of marketing experience plus I'm a self proclaimed computer nerd and love Real Estate technology.

I invite you to contact me regarding the sale of your home. When called upon, I will show up, on time and prepared. You can be sure that a one hour investment talking with me will yield at least one or more priceless ideas!

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