Purchase agreement mistake? Can I fix it?

JamieMarch 29, 2011

We received 2 offers within 3 weeks of listing on March 1. There were many showings. We accepted the second offer last week. The buyer is seeking an FHA loan and has already conducted the inspection.

Unthinkingly, we accepted an offer that gave the buyer 45 days from date of signing to secure his loan. Now, during a hot selling time, we sit on our hands. My house is still on the web and the sign is still up. To any casual observer it is getting stale, rejected, and undesireable. Yet it was hot when we accepted the offer last week. I'm sure there would have been more offers coming. The house is in a family sub with 2 excellent schools and it has 4 bedrooms -- our buyer is someone who will want to get his kids into those beds and schools well before the first day of class.

I don't know anything about getting an FHA loan -- where the pitfalls or milestones are -- so I don't know exactly what to ask. I asked the realtor when the appraisal would be, and I asked him if he could get progress reports on the buyer's efforts to secure financing. He said the appraisal might be tomorrow, but I don't think it will be. He said he phoned the loan office in response to my question, and that his impression of the loan officer was "excellent". Neither a fuzzy appraisal date nor the sterling friendliness of the loan officer addesses my real concern. I need to pin down specific questions so I can learn what chance this thing has of going forward-- what would those be?

I want to know whether this thing is moving, and if not, why not, and to reduce the time my home is in contingent status.

Any suggestions?

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Your listing agent should address your concerns, the agent should have the same concerns you do. Ask your agent to explain FHA to you and give you concrete answers. You should know when the appraiser is coming, you will be selling your house to the appraiser, also. Your agent should retrieve recent comps for the appraiser's review. Also you can do a simple one page sheet showing all the improvements to your house. Your agent should be working with you, then you can relax.

    Bookmark   March 29, 2011 at 9:19PM
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Oh man, my buyer trying to get an FHA loan was what caused my whole deal to fall through TWO DAYS before closing. I'll tell you what happened to me. It may or may not be helpful.

My buyer was pre-approved. Her credit was sterling, she qualified for a property more expensive than mine, she and her husband have good stable jobs. I was worrying about my property appraising high enough because it's a horse farm. I was worried the appraiser would compare it to another property with a house, ten acres and a shed out back. I have a horse farm with a barn you could live in and I wanted to make sure he'd value that correctly. I called my buyer's lender to make sure he understood what kind of property this is. He assured me he understood and the appraiser he was sending was local so he would understand as well. It appraised out on the money. So I thought everything was a go. Two days before closing the bank suddenly decided to decline the mortgage. They said the buyer couldn't get an FHA loan because of the agricultural zoning and because of the "income producing nature of the property"--it's a horse farm and she could give riding lessons if she wanted to. Don't forget, at the very beginning, I called her bank and told them what kind of property it was. The mortgage broker basically said, "Too bad." Our zoning official in the county said she never heard of such a thing. This whole area is zoned agricultural and many people get FHA loans. I called FHA themselves. They said they don't have anything against agicultural zoning or horse farms--it's the way my buyer's lender was interpreting their rules. They suggested my buyer could try to get an FHA loan through another lender but by that time, my buyer got cold feet and I lost her.

Another thing to watch for--in the beginning of this process, my buyer's bank told her she wouldn't get the loan unless we put heating units in each bedroom upstairs because we don't have duct work. We refused to do it because it's warmer up there than it is downstairs and felt it was a waste of money and told buyer from the beginning, we already fixed everthing we're going to fix. She asked us to buy them and she'd reimburse us at closing. We put that in the contract. But now there's no closing so we are out that money, almost six hundred dollars. Later we found out that was wrong too. FHA doesn't make you put separate heating units in--only if the space is a certain amount of degrees colder than the other living space. Which it's not. Her lender interpreted that wrong too. FHA has a website. Go read their stuff so you know what to be on your toes about. Don't forget, FHA is not giving them the loan. They are only insuring it.

What does that mean, 45 days to secure the loan? To get the loan commitment? To close?

    Bookmark   March 29, 2011 at 11:43PM
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Thanks, Love.

I just returned back here from reading about the FHA process. I feel a little better from having seen the bullet points of process at fha-home-loans.com.

I have a funny/bad feeling about the buyer. In my case, if the house doesn't appraise high enough, at least I might be able to get back on the market sooner than if I had to wait the entire 45 days. The website says their appraisal process is 1 - 4 weeks.

"If a firm committment for such mortgage cannot be obtained withing 45 days... this offer can be declared null and void.."

It was stupid to accept those terms; the negotiations over price had turned in our favor and we glossed over the rest of contract, including the term in which we agreed to include the bedroom drapes that were custom made to match pillows and dust ruffle and have traveled with us through 4 moves. Not happening. Didn't even read that paragraph.

    Bookmark   March 30, 2011 at 12:00AM
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I dunno what the norm is in your area, but it does take time to get a loan commitment. you could put 2 weeks, which sounds great, but he won't have it in 2 weeks. probably the soonest would be like 30 days.

I'm not saying don't worry, but do you have a reason to beleive there is a problem here? did your attorney say 45 days is unusually long?

    Bookmark   March 30, 2011 at 12:02PM
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A loan commitment isn't issued until everything has gone through underwriting. Considering the extra hoops to jump through for an FHA loan, 45 days sounds normal to me.

The last home I bought i think it took 3 weeks to get the loan commitment statement from my lender, and that was for a conventional loan. I thought we were doing good, considering you first have to get the home inspection, then the appraisal, and then go through underwriting.

    Bookmark   March 30, 2011 at 2:29PM
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Changing it at this point would require the agreement of the buyer if you have an otherwise valid contract.

There are rarely free 'do overs' in contracts.
You agreed, you signed.

You can be sued for failing to hold up your portion of the agreement.

    Bookmark   March 30, 2011 at 2:37PM
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That's where a 'sale pending' sign helps a little, I think. It at least makes it look to a prospective customer that your property isn't "stale". If you had two offers so quickly, I don't see where more won't follow, should this fall through.

I understand your concern.........but what is............is. When I sold my last residence, I had two immediate offers on it as well. One conventional and one FHA. They were essentially for the same amount of money, I went with the conventional loan because I had the same fears you did. It's easy to get worked up about something not come to pass, relax and ride it out.

    Bookmark   March 30, 2011 at 8:37PM
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You folks are balm for my nerves. Thank you.

The appraiser came today to gather data. And my realtor cc'd me on the list of 15 very recent comps (some even fsbo) with our square footage that he gathered and forwarded to the (loan officer? appraiser? not sure who the person is). He noted that ours was the lowest price of of all. He says he's going to bring this deal to close.

If anyone can, he probably will.

I feel a little better tonight.

    Bookmark   March 30, 2011 at 10:22PM
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My advice would be not to take those window treatments down w/o some agreement from the buyers.

    Bookmark   March 31, 2011 at 9:44AM
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