Help, We Made a Non-Contingent Offer and Now Our Loan Broker Can’t Get us the Loan!

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Unfortunately, as our market becomes more active (i.e. pro seller), buyers make dumber and dumber decisions.  Case in point, a buyer of a Los Altos home (or you could use Palo Alto, Cupertino, Sunnyvale, or Mountain View) recently made an offer to purchase a home and due to the level of buyer competition, submitted an offer that had no contingencies.  This type of aggressive offer puts the buyer’s deposit immediately at risk (should he not be able to perform).

The buyer was told by his loan broker that he was pre-approved for the loan and that the financing was secured.  Unfortunately, that was not entirely true.  The buyer’s original loan fell through. The buyer and both the buyer’s and seller’s agents scrambled and were finally able to secure financing.   The transaction was saved.   However, it cost the buyer weeks of stress and several thousand dollars to get it done.  But it could have been much worse!

Buyers are conflicted when it comes to participating in multiple offer situations.  Do they include contingencies in their offer at the risk of not being competitive or do they remove any and all contingencies from their offer and hope everything works out?  It all depends on the details.

While I am not presenting a legal position on this topic, here are a few finance related issues a buyer might think about prior to submitting an offer:

  1. What are the conditions of the buyer’s loan approval?  Can they be met?
  2. What is the length of time it will take the lender to fund the loan?  Appraisal time frame, etc.?
  3. What are the experience and credentials of the loan broker?  Newbies don’t know what they don’t know.
  4. Does the lender focus on home purchases or refi’s (otherwise known as easy money)?
  5. In case he/she needs to increase the down payment, does the buyer have additional cash?
  6. In case the preferred loan doesn’t work, has the buyer thought of “double apping?”

Each buyer, offer, and situation is unique.  There are times when it can make sense to submit an offer with no contingencies, but one must have done his/her due diligence up front.  The buyer also needs the expertise that an experienced Realtor provides!

Interested in successfully buying a home?

Give me a call at 650 917-4250

I’ve been licensed and actively selling residential real estate locally since 1993.



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