Facebook
YouTube
LinkedIn
You are here: Home » 2017 » September

WHEN IS BUYER “APPROVED”?

I received an offer on one of my listings recently, and when I presented the offer to my client, they asked why there was a financial contingency in the contract if the buyer was already “approved” for their loan? I explained that there are different types of approvals, and different levels within each type. I don’t have space to go into all of them, but I wanted to cover the most common misunderstanding about an “approved” buyer.

 

When a lender issues a pre-approval letter for a buyer, there will almost always be some conditions to the approval. These conditions can may be really basic and easy to meet. For example, let’s say the buyer has submitted all their bank statements and paystubs, but they will receive new ones within a week, and the lender wants to see those when they are printed and confirm there are no big changes. Or the conditions could be more difficult to meet. For example, let’s say a buyer’s credit report shows a bunch of old unpaid accounts from various sources. The buyer believes they were all paid off years ago, or that some are not their accounts. In that case the buyer needs to find the proof they were paid, or verify somehow that the information in the credit report is incorrect.

 

Depending on the buyer’s and lender’s confidence to clear these conditions, they may say that the buyer is “approved” and the buyer may even remove their loan contingency when the time comes. But the loan won’t fund and we can’t close the escrow until all the conditions are met. There have been situations in the past where a buyer had a super-clean, full loan commitment from a lender, but then the buyer lost their job before closing. Continued employment would be a “condition” of that approval.

WHEN IS IT REALLY CLOSED?

We use words in real estate that can be confusing.  One of the biggest areas of confusion is around when the transaction is actually CLOSED. Each of the steps below can take hours or even days. There are cut-off times during the day for some of these things to happen. This means that sometimes being even just a few minutes late on any of these can delay closing by a day or even a few days if it’s before a weekend.

 

“Approved for docs” – This means buyer’s lender has cleared the conditions of their approval enough to where they will print the buyer’s loan documents in the very near future.

“Docs are in title” – The loan documents have arrived at the title company and they are ready for buyer to sign.

“Buyers have signed” – The buyers have signed their loan documents.

“Docs are at lender” – The signed documents have arrived at the lender’s office and they are reviewing them for accuracy.

“Docs are approved” – The lender has approved the signatures and will wire funds at the next available opportunity.

“Lender funds have been sent”’ – The lender has sent a wire with their funds to the title company.

“Lender funds have been received” – The title company has received the wire.

“Clear to close” – Everyone that has a say in the matter says it’s OK to close the escrow.

“Deed is at County” – The grant deed has been delivered to the County Recorder’s office. (Technically ownership passes as soon as it’s stamped as “received.”)

“Confirmation received” – Later that day the County confirms with the title company that the grant deed was received.

“Wire sent” – The title company has wired out the Seller’s proceeds.

“Wire received” – The money is now liquid in the Seller’s bank account.

Return to top of page

Contact Us

  • Sharp Realty
  • 320 Fairview Ave.
  • Brentwood CA 94513
  • P: 925.240.6683
  • F: 925.524.2302
  • E: info@SharpHomesOnline.com
  • DRE# 01858431