Q: We have a purchase offer on our house. The offer came almost two months ago and was accompanied by a letter from the buyer's lender stating they were qualified for a loan necessary to buy our house. Needless to say, we were elated.Now, two months later we still have not closed because the buyer's credit worthiness is now in question. What can we do, if anything, to help get this over with?A: That is such a good question, what can you as the seller do? Unfortunately, I can answer that in a short simple phrase: Nothing but wait.You did not mention any specifics of your purchase contract but since you indicated the buyer started out "qualified" for the loan, but are now nearly two months into what is usually a one-month process from contract acceptance to closing, I am presuming you signed a contract extension to allow the now "prospective" buyer more time to get back in the saddle and on track to get to closing.Many people feel the Colorado real estate contract to purchase real estate is very top heavy on protections for the buyer, possibly to the detriment of the seller. In your case, if the buyer and/or their Realtor presented you with a contract extension, there is really nothing you can legally or ethically do to move the process along as long as you are within the agreed contract period.The letter the lender offered on behalf of the buyer at the time of the initial purchase contract should be based on the lender having done some serious, as the law community might call it, "discovery" of the buyer's financial qualification. Sometimes that letter actually states things the lender has done like pulled a credit report, verified income, looked at the buyer's debts and credit delinquencies. However, much more often than not, the letter simply states something like: "This letter is to confirm that you are approved for the purchase of a home with a purchase price up to (the amount)." Notice that a statement like that from the lender does not indicate what that approval is based on.It is after the fact now, but since we hope your question will serve to also educate others, if the letter you received had wording similar to the example above, you or your Realtor might have been advised to call the lender. With that call, one of you could have asked: "Have you done a credit report on this applicant; and, if so, are you satisfied with their credit score and credit history or issues such that they financially qualify to buy this property?"You could ask if the lender had verified income prior to writing the letter or did they just have a verbal statement from the buyer something like "oh I make 'x' and I will get you my paystubs next week."Back to your question of what can you do: Wait patiently; you or your Realtor can keep in active contact with the buyer's Realtor and/or lender and hope the buyer wants to buy your house enough that they get whatever financial blemish cropped up taken care of by your expected, revised closing date. If it turns out the buyer cannot qualify for the loan after all and you do not want to, or are not in a position to, offer them seller financing, you may be faced with putting the house back on the market. One small consolation is that there are significantly fewer homes on the market this year in most price ranges than there were at this time last year. Knowing that, aggressive marketing coupled with the lower inventory may be likely to bring you another buyer. Then you can do more "due diligence" than just accept a lender letter at face value.Doug Van Etten is an associate broker with Keller Williams Colorado West Realty and is also the founder/organizer of the Real Estate Investors Network (REIN). Van Etten has been helping homebuyers, sellers and investors with their real estate needs since 1992. Contact Van Etten at DougVE@kw.com or 970-433-4312. For information on the REIN, info@REIN-WesCO.org.
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