It’s the week leading up to closing and everything is going smoothly. Or so you thought?! When the buyers agent calls and says the buyer can’t close due to financing, its enough to make your stomach turn. There’s already enough drama in real estate, so how you protect the seller from an all out melt down?!
Today we’re looking at how to use the “Ultimate Addendum” for your purchase contracts to take control of the approval process, verify important financial details, and provide you with a form of insurance against last-minute problems.
Use The “Ultimate Addendum” to ensure against 11th hour underwriting drama – and the top 10 things that make you crazy when you thought you were about to have a closing…
- The buyer hasn’t even applied for the loan yet, so no one knows a thing about them until you’re halfway through inspections.
- The buyer HAD great credit and ratios when they applied, but you find out 3 days prior to closing that they just bought a new boat / car / rental property, etc, screwing up their credit and or ratios.
- Buyer hasn’t disclosed that they’re ACTUALLY contingent on home sale, they are presenting as contingent on financing.
- Buyer’s down payment hasn’t been verified. Is it coming from gift money? A divorce or insurance settlement? Winning the lotto? Unseasoned funds?
- Buyer’s lender has only done a preliminary, ‘soft’ credit check, in underwriting it turns out they have credit issues to fix.
- Buyer is so strapped for their down payment that going over appraised value like their contract calls for will unravel your deal.
- Buyer’s employment hasn’t been verified at the time they wrote the offer and got themselves in contract. They’re underemployed, unemployed, self employed or otherwise challenging to get approved. Too short job history, unrelated history, etc.
- They’re not actually a US citizen or have other documentation issues.
- They are secretly FHA or VA and wrote conventional but don’t have a big
enough downpayment to close that way.
- The only way they can close is if you and / or the other agent chips in for
inspection or repair items, appraisal issues, etc.
- Buyer claims to be all cash but hasn’t sent proof of funds.
All this spells trouble before closing! It all boils down to the underwriting happening AFTER the inspections and appraisal in most cases. So how do you get in front of this and buy yourself more time to fix any issues? We call it the Ultimate Addendum!