Mike’s Real Estate Show

As much as I don’t like the “loan contingency to remain in effect until all loans are funded” clause in the CAR (California Assoc. of Realtors) contract, I can’t really see forcing a buyer into a situation which is a loose-loose for all parties. I think you need to set expectations of all parties to the transaction. This means informing the Seller to ask for a “rent-back” period AFTER the close of escrow to make sure all loans are funded and the transaction has closed. You can try and get a deposit if you insist on asking for a removal of loan contingency before a loan is funded but what does this really get you? If the folks can’t perform because underwriting guidelines have changed or the particular lender has gone belly-up, do you really feel, ethically, your Seller is entitled to keep the deposit? And we all know how messy going after a deposit can be. At your advice your Seller has arranged to have a moving truck show up, cancelled utilities, phone, change of address, etc so YOU can say you are a good negotiator?!! I believe in this market we do not need “brinkmanship” with our buyers/sellers but cooperation on all levels and anticipation and realistic vision of what can go wrong. I had a transaction which required the Buyer to remove their loan contingency just as we started entering the crazy loan landscape we now reside. The selling agent told me “we are removing our loan contingency subject to funding.” Huh? I replied he was altering the contract with contingency removal which is not really kosher. He honestly did not know what to do and I concurred as he didn’t want to risk his client’s deposit. We finally agreed to close the deal NOW! All physical contingencies had been removed and even though we had a long list of items needed to be done, we accelerated the close, got the 100% financed loan funded and closed and then went to work on the list of items. Granted, this was a leap of faith on the Buyer’s part but they really wanted the house. We finally got the last two items completed last week to the Buyer’s satisfaction. We could have drawn a line in the sand, started posturing and beating our chests and threatening lawsuits but realized our client’s interests could be achieved by just getting the deal done. New game, new rules!