[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
As I tell clients, the second most important date in a residential Purchase Agreement is the Written Statement deadline (the most important date? easy: closing).
Buried in the standard Financing Addendum, that’s the deadline for the Buyer — or more specifically, the Buyer’s lender — to notify the Seller that: a) the home has appraised at a price that supports the Buyer’s mortgage; and b) lists the remaining conditions that the Buyer must satisfy to close the loan.
The Written Statement is hugely significant not just because it verifies that the Buyer’s financing is nailed down, but because it also marks the date past which the Buyer’s earnest money becomes non-refundable, if the Buyer subsequently won’t (or can’t) close.
All of which begs the question, “what should Sellers do if the Written Statement is late?”
When vs. If
At least in my experience, it depends on the explanation being offered by the Buyer’s agent, and how long the estimated delay is.
At one extreme would be a short delay (1-2 days) due purely to an administrative issue that can be readily verified — for example, the lender’s loan processing center in Florida is closed due to Hurricane Colin (actually happened this week).
Also helpful: if the Buyer’s agent is in close communication with the listing agent (representing the Seller), and in the interim makes available another third party who’ll vouch for the Buyer’s finances (for example, the Buyer’s brokerage rep).
Which leaves the decidedly less happy scenario.
Namely, an open-ended delay, for an unspecified reason, with little or no communication from the Buyer’s agent.
When the issue is IF the Buyer can get financing rather than WHEN, instead of prolonging the pain, Sellers may instead opt to cancel the Purchase Agreement (their prerogative), and go back on the market as soon as possible.
See also, “You Mean There’s No Deal AND the Buyer Gets Their Earnest Money Back?!?“; “Pre-Approval Letters and Written Statements“; “Pre-Approval Letters vs. Written Statements“; and “The Second Most Important Date in a Home Sale“.