Appraisals - If value comes in at Value but with Conditions a buyer is not able to cancel due to the Appraisal Contingency. They must get a loan denial from the lender. The lender will deny the loan due to the fact that they can not loan on the home with those conditions.

A few quick facts: Since 1941 there have been 73 years where home have appreciated, 1 year where home values stayed “stagnant” or the same, and there have only been 7 years where values have gone down. Most of those down years were 2%-3%. The numbers are on our side and the Housing Market does not show signs of crashing.

Sandy Krestan

Things that we should be paying special attention to and making sure that our Buyers and Sellers are protected. This is how we go above and beyond for our clients.

The Prequal

• For Buyers: this is the time to put our best foot forward and show the sellers how qualified we are.

• For Sellers: this is how to protect their assets/equity.

• We need to do a thorough check of Prequals when we receive them from buyers or when our buyers receive them from the lender. Here are a few sections to pay special attention to:

  • If the buyer is getting DPA (down payment assistance) we need to make sure that they lock their loan very quickly. Typically within the 10 day inspection period. The reason for this is that in today’s market and financial climate these programs are coming and going very quickly. This means that they may qualify with this but during the escrow that program could be taken away and then they may not qualify anymore.

  • DO NOT ACCEPT a prequal that says the lender has not checked the buyers credit. This is a Huge red flag!

  • DO NOT ACCEPT is the interest rate says “Market Rate”. In today’s market interest rates are changing almost daily so what the market rate is now when a buyer gets qualified could be very different than the day they try to lock their rate. This could cause cancellations.

  • Check the date the prequal was given and make sure that it is up to date.

  • Check the expiration date of the prequal and make sure that it does not expire anytime during your potential escrow.

  • ALWAYS call the lender and ask them questions.

    • Are there any red flags when you did automated underwriting?

    • When does the credit report expire?

    • Have they submitted all the documents and have they been reviewed?

    • What are your current underwriting turn times?

    • Do you have an appeal process for Appraisals? If so, what are the turn times? Have you appealed an appraisal before?

    • Do you send the wire to Title the day before the funding date?

    • Will you be sending a weekly LSU?

LSU (Loan Status Update)

• Keep a close eye on the first page and make sure that there are no changes from the original Prequal. Same buyers names, did they add or remove anybody?

• Correct COE Date?

• Same Loan Type?

• Lock expiration. Does it go past the COE Date?

• Have they verified where the downpayment money is coming from?

• Sent to underwriting?

Purchase Contract

• Remember that the lender must send the docs to Title and get a clear to close 3 days before COE. If they have not done this then we need to CURE them to make sure that we are keeping our clients best interest in mind. If we do not CURE then a buyer could cancel and keep their earnest money.

• Loan Denial reasons that are no fault of the buyer. Loss of Job is the only one.

• A buyer must submit a Full Loan application to their lender within 3 days of a contract acceptance.