Trying to get a loan funded can be incredibly frustrating these days. Are we really at the mercy of the lending institutions? Are there other ways to get escrow closed? With short sales we do need cash or cash-to-new-loan to close, but with all other transactions, we don’t have to wait on the banks!
As I write, we are two months past close of escrow (COE) on one of my short sale listings. This is not good news for any transaction. It’s catastrophic once you have short sale approval from the bank, and you only have a limited time to close.
The buyer, who provided an approval letter, and even proof of funds, is now on his 4th lender to try and get the loan pushed through. Every time we thought we were ready to order docs, the lender would come up with another condition that needed to be met, or the program just happened to evaporate completely overnight.
I sort of imagine the underwriters sitting in front of a pile of fortune cookies. A loan application floats across their desk, they look at it, hold it reverently in their lap for a minute . . . their eyes roll back, drums beat softly in the distance, an arcane chant begins to form across their lips and they reach for a cookie. With eyes slightly glazed, they open the oracle:
- Ask for proof that borrower’s 2nd male child has a GPA over 4.27
- Have borrower provide transcript of his most recent past life regression
- Have the borrower’s 2nd cousin once removed sign a letter stating that they never kissed and are not now engaged to be married.
Wouldn’t it have been a little easier to stick to conventional lending principles from the beginning?
But my point is this . . . instead of feeling powerless and going postal, buyers and sellers can get transactions closed through intelligent use of the installment sale, seller financing, carrying paper, etc. I believe as agents we need to open our minds to these techniques.
Our lack of familiarity with seller carry back financing can cost our clients dearly in terms of lost transactions. And aren’t we all happier when escrows close? It’s just a matter of evaluating each transaction carefully, and determining the risk/reward.
What’s the least amount the seller needs to walk away with? What’s the most money a buyer can put down? What does the underlying financing, if any, look like?
We can help our clients dramatically increase their chances of closing transactions if we educate them about all of their options. Let’s not be caught refusing to present a seller carry back offer to our sellers!