. . . . Or One
[Note to Readers: 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.]
Realtors representing Sellers (better known as “listing agents”) tend to be a lot more focused on Written Statements ” and specifically, Written Statement deadlines ” than their clients.
There are two reasons for that: 1) it can be a technical subject (see below); and 2) most Buyers’ lenders meet the deadline, so there’s no problem ” and no need to concern the Seller.
However, that hardly means that the Written Statement deadline is trivial.
On the contrary, I refer to it as “the second most important date in the Purchase Agreement” ” at least in a financed (non-cash) deal.
That’s because it signifies when the Buyer has received final underwriting approval from their lender.
Not incidentally, it’s also the point in a deal when the Buyer’s earnest money become non-refundable ” that is, if the Buyer subsequently fails to close, the Seller keeps the money as liquidated damages.
Two Criteria; “The Golden Rule”
At least in Minnesota, the Written Statement is supposed to recite two things:
One. The lender has done an appraisal on the home (their collateral, in the even of default), and the appraised value supports the mortgage amount; and
Two. The lender has finished vetting the Buyer’s finances, and deemed them creditworthy.
Typically, that means reviewing the Buyer’s W-2’s (or 1099’s if they’re an independent contractor); recent tax returns (usually, last two years); bank and financial statements; and basically anything else the lender requests.
In other words, the housing market version of The Golden Rule: “whoever has the gold (mortgage money), makes the rules.”
And yes, to Buyers, it can feel very much like being scrutinized under a (financial) microscope.
There’s also a one word Written Statement that works equally well: “Approved!” (ideally, signed and on the lender’s letterhead).
See also, “Written Statements and Pre-Approval Letters“; “Pre-Approval Letters and Written Statements”; “Do a Real Estate Deal on the Back of a Napkin? You Could“; “You Mean, There’s No Deal AND They Get Their Earnest Money Back?!?”; and “The Second Most Important Date in a Home Sale.“