Vetting the Buyer’s Finances
Prior to closing, at least, the best evidence that a (non-cash) Buyer can financially perform is a Written Statement from a reputable lender.
Typically given by the Buyer to the Seller a couple weeks after the deal has been struck, it says that the lender has: a) completed vetting the Buyer’s finances, credit, employment, etc.; b) received an appraisal supporting the loan amount; and c) based on a. and b., finished approving the Buyer’s loan.
Contrary to what some Sellers believe, the Pre-Approval Letter that customarily accompanies the Buyer’s offer says none of those things. See, “Pre-Approval Letters and Written Statements.”
But what do Sellers have to go on before they receive the Written Statement?
Such things as a fat (or skinny) earnest money check; how big a downpayment the Buyer is putting down; and whether the Buyer seems to check out based on an initial conversation with their lender (my first call after receiving an offer on one of my listings).
But to that list, I’d add one more anecdotal factor: financially strong Buyers often want fast(er) closes.
Telltale Signs
Of course, cash Buyers can close immediately after the Inspection Contingency has been removed and the title work has been completed.
By contrast, Buyers who need to obtain a mortgage need more time.
How much?
The standard is 3-4 weeks for the Buyer’s lender to complete underwriting.
However, an especially strong — or confident — Buyer is often willing to accelerate that timetable.
Because the Seller has the option of cancelling the deal if the Buyer misses the Written Statement deadline, committing to a quicker deadline is a bullish sign.
And if the Buyer washes out?
The Seller gets the bad news sooner rather than later, allowing them to move on to a stronger Buyer.
P.S.: Corollary to the above: financially weak Buyers seldom push for an accelerated closing timetable.
