I received an offer on one of my listings a little over two weeks ago. The offer was hand written, the cover sheet was also hand written and a blank paper, no letter head and faxed in to my office. It was accompanied by a loan approval letter that said it was 100% financing and was required to close in 2 weeks or less. Are they kidding me?
The letter was from a loan officer and lender I had not heard of before. It also said it was a final loan approval. I read the letter and thought this a joke. I spoke to the real estate agent and she said it was serious and they could do it. I spoke to the loan officer and asked who the funding lender is. She said they were. I questioned how she could have a final loan approval without even a contract. As it turned out she didn't seem to know what a final loan approval was. This is going to be good.
My client indicated a desire to try to make this work. I said I would look deeper into their offer before we were to meet that day. The good news is, if this deal dies the home would not be off the market long. The bad news is it would be off the market and my client is ready to move.
I contacted three quality loan officers. Here is their response after hearing the verbiage from the loan approval letter:
- All three felt the letter was improper. No such thing as final loan approval at that stage.
- Only one had heard of the lender, none had heard of the loan officer.
- None felt 100% financing and 2 weeks was likely to possible. Local lenders had stopped doing 100% with other than portfolio loans and most were not doing them either.
I asked a couple of veteran REALTORS® and got basically the same results.
My seller did not want to lose this buyer, so here is what we decided to do. In the form of a counter offer, we added a provision that a loan officer of our choice would review the loan and report back to us as to whether the loan letter was real and the buyer was qualified to purchase the home. The seller to have 3 days to cancel the contract based on the results. The buyers reluctantly agreed and we opened escrow.
After doing a first class job of following up, our local loan officer reported back that they could make it happen. The local broker was owned by a financial group that was doing a portfolio loan and the buyer was deep in the process on another home before it fell out of escrow. So we removed that contingency the first day and the adventure began.
Let me take a step back a mention that in most of my purchase contracts we ask for 6 weeks and a possible 2 extension if needed. Normally we close in about 4 weeks with no real complications. In the lat four years I have had only one closing in 2 weeks with a loan involved and that was with a loan officer I know and trust.
The buyers waived the home inspection. The termite inspection, title report and survey were ordered immediately.
- The termite inspection came back with active drywood termites. A tenting was recommended and the soonest they could tent would be the week after our closing date.
- The survey found an encroachment, but we were OK, because there was a recorded encroachment agreement with the neighbor when he bought his home a few years ago.
- The preliminary title report found a lien against the buyer. The loan officer to her credit was able to petition the court to have it removed, because the debt was satisfied. She got it fixed that same day. A process that normally takes weeks or months.
Two out of three issues behind us; but what about the termites? The termite inspector indicated the possibility of structural damage. Structural damage was an absolute deal breaker for the buyers according to their agent.
I asked their agent, what it would take to satisfy the buyers, being the seller has already agreed to tent the home. They required evidence that there was no structural damage and proof the tenting was paid in advance.
It was Friday afternoon about 3pm, "pau hana" time in Hawaii (done for the week and going home). We have only two working days to get the loan docs signed to finish this sale. Desperately I called a local licensed contractor and told him my dilemma. He was at his home office doing estimates just up the road and agreed to meet me at the home in 20 minutes. After he spent some time checking the beam in question he determined the damage to be cosmetic and agreed to certify that in writing. Saturday we had a handyman come out and putty and repaint the beam.
On Saturday the buyers signed their escrow and loan documents after waiving the termite inspection. On Monday my seller signed escrow. Wednesday the loan funded and Friday the deed recorded. It closed 14 days from the day we accepted their offer. They could have recorded one day sooner.
Tomorrow I will be having flowers delivered to the loan officer. I completely amazed and delighted by this transaction. Everyone involved did their jobs to highest level. The loan officer came through in the clutch. The buyer's agent kept it moving forward the escrow officer, the surveyor, the termite company, the contractor, handyman, seller and the buyer's all stepped up to the plate to pull this off. It was fun being part of this.
In the past I have written posts about loan officers and real estate agents that were less than professional. It is nice to show the other side of our industry that makes up the majority.
Randy L. Prothero - Hawaii REALTOR®
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WOW!! I can't believe this one. Final Loan Approval at the offer (red flags) and it still closed???! These pros (yourself included) definitely went the extra mile to get it done!