April 4, 2017 marks a big day in the real estate industry and we hope brokers, agents, buyers, and sellers are up on the changes. There are big changes to real estate sales contracts, notably the financing clause that will change the way contracts are negotiated and processed.
In the past, most finance contingency contracts had a clause that said buyer had a certain number of days to obtain a loan commitment. Lenders rarely use the commitment word any more, so it was changed to loan approval.
Big Changes to Real Estate Sales Contracts
Something else changed as well. The buyer now has 30 days standard to obtain financing. If they do not obtain it, they should notify seller or seller’s agent in writing because seller can cancel the contract. If buyer fails to request an extension or terminate the contract, it is assumed they have loan approval and their escrow deposit could be in jeopardy. I am writing this article prior to the April 4th unveiling, so we haven’t seen the entire clause yet. There has been a flurry of activity on Realtor websites informing agents of the upcoming changes, so hopefully agents are aware.
We are not attorneys and we are certainly not giving legal advice. Readers should be aware that there are big changes to real estate sales contracts in Florida and pay attention to timelines.
The agent you choose to work with as a buyer or seller will become even more important than it has in the past. Not only will your agent need to be aware of these changes, they’ll also need to have systems and assistants to track and monitor timelines, and communicate with your lender. A buyer can put themselves in legal jeopardy by simply not adhering to deadlines or communicating in writing as to the progress of the loan.
Hire a Full-Time Agent
Hiring a full-time agent is more necessary now than ever. Part-time agents cannot keep up on market changes and inventory, nor have the skill, expertise, experience, and systems to keep up with contract changes that can place your escrow deposit in harm’s way. We suggest you take a hard look at the agent you’re going to work with and ask questions about their knowledge of these contract changes and what systems they have in place.
Keep in mind, ultimately, it’s your responsibility. You’re the buyer. It’s your money. You could lose the house and/or your escrow deposit by failing to timely communicate the process of your loan.
This may affect buyers in other ways too. Let’s say a seller finds a buyer willing to pay more for the home. The seller does not have to extend the financing clause if the buyer cannot obtain in the specified days. If the seller has received no notification at all, the seller can cancel the contract within a 3-day window period after the buyer’s Loan Approval period has expired.
The seller seems to have picked up some rights and the buyer now has more responsibility to notify the seller about the loan process. This places more responsibility on the lender you choose because now timelines are more important than ever.
Choose the Right Lender
Our team works with several lenders. We work with lenders who not only offer great rates but also are known for service and meeting timeline commitments. Interviewing lenders and evaluating their performance reputation will now be more important than ever. Each buyer’s situation is different. Talk with a lender who has experience with the type of loan you’re going for and a track record of working with buyers with similar income and circumstances as yours.
If you are thinking of buying or selling real estate in SW Florida, always call the Ellis Team at Keller Williams Realty. Knowledge and experience matters more than ever and we can refer you to lenders who can get the job done. If you’re a seller, it pays to work with an agent who understands the market, has the muscle to market your home, and can help you evaluate which buyer’s offer is the best one to take. You don’t have to accept an offer simply because it’s the only one you’ve got. Don’t forget our Free MLS search site www.LeeCountyOnline.com
Call us 239-489-4042 and let’s talk.
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