Tips for buyers facing a seller's market
By JEFF LAZERSON / CONTRIBUTING COLUMNIST
You need every advantage you can get as you scout for your Orange County dream home in this low-interest rate, tight inventory market. So, I conducted an informal poll, asking real estate agents to weigh in.
One practice from the olden days that is rarely used anymore is a face-to-face presentation from the buyer’s agent to the property sellers (with the listing agent present).
It can be your big advantage, allowing the sellers to learn more about you. It’s not just the price you’ll pay or your loan qualification that matters to the seller. It’s also a question of your worthiness to take over their sanctuary. And, what legacy do the sellers provide to their good neighbors via the new owner: stand-up community members or dirt bags?
Jeanie Cooper of Seven Gables Real Estate was able to elicit cooperation with the listing agents on two occasions by making sure all sellers on title were present at the purchase presentation. She had her buyers outside.
“Get a counter (offer) from the seller. Take it to the buyers in their car in the driveway and get it signed or another counter. And, you’ve got the sale,” said Cooper.
The residential purchase agreement or RPA that California Realtors use has boiler plate language requiring the buyers to have their appraisal completed (at least at sales price) and cleared in 17 days and their loan contingency approval done within 21 days.
About half of the agents polled thought that was sufficient. About half thought the timelines needed to be extended.
“(Sellers) need certainty to plan their life. You have to keep (buyers’) feet to the fire,” said Phil Immel of Immel Real Estate, agreeing with the current boiler language.
The reality is borrowers don’t always shop ahead for their mortgage. Or, they are slow to bring their earnest money deposit to the escrow company. So, contingency time is lost.
Mortgage companies, which are responsible for disclosing title and escrow fees, are at the mercy of the escrow companies to get those numbers. On average, we lose two to five days due to slow escrow responses.
Every loan file has at least one unanticipated challenge to get to loan contingency clearance, which also causes delays. If a loan file has 500 pages of documents and 10 pages have question marks, that loan isn’t ready for final Closing Disclosures.
Show the sellers you are organized and ready to proceed with your loan. But ask for three more days on the appraisal contingency and five more days on the loan contingency upfront.
Usually, it’s your earnest money deposit that is at stake if you sign-off on these contingencies before the contingencies are cleared and your escrow doesn’t close.
Lastly, don’t be afraid to ask for time extensions if necessary.
James Bangar of Berkshire Hathaway HomeServices cited a case when the buyers’ home inspector recommended they consult a structural engineer.
“To refuse a buyer’s request for an extension of the due diligence time period may be the basis of a future arbitration proceeding or even lawsuit after the sale has been consummated,” he said.
Jeff Lazerson - Mortgage Columnist since 2011