7/18/2012

Top Ten Legal Mistakes Home Sellers Make-Part III

Verifying the buyer's finances.

The standard contract form used by California REALTORS says that the buyer must provide verification of their financing and/or funds to close within 7 days after the contract is entered into.

But why wait until then? The seller shouldn't have to find out a week later to find out the buyer may not have the upfront pre-approval, or that there may be some other doubts. The buyer's motivation should be such that he or she is ready to provide all that information with their offer to the seller, and in fact, the seller may have required their agent to request this in the MLS listing.  It only makes sense to find out as much as possible in the beginning, at least that one contingency can be out of the way. All too often, it turns out the buyer can't get a loan when it's time to fund. There are underwriting issues, or appraisal issues, that may come up that were unforeseen by the buyer, but sometimes not enough of the right questions were asked in the beginning. 

So why overlook the easy things up front, such as having your agent contact the buyer's lender for a direct conversation, and getting copies of statements (via the buyer) showing source of funds if it is not submitted with the offer? And, does the buyer currently own other property that he's not selling that could impact financing; or, is their source of closing funds in a liquid account? Seven days after a contract is entered into is not the time to learn about some uncertain source of buyer funds or fuzzy loan approval, the seller should want to know as much as possible beforehand.

These are just some of the reasons for verifying the buyer's finances up front. For more questions, please contact me or visit www.juliahuntsman.com.



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