Waiving finc contingency -- what are we risking?

[Anonymous]

Could the experienced home buyers here help me understand exactly what we are risking if we waive finance contingency? Sounds like that contingency is only "live" for a certain period of time within the 30-day contract, and then falls away, is that correct? We aren't worried about qualifying for the loan. Not possible we'd lose our jobs, for example, while working to close contract. What really worries me is the time involved in getting to close with the lender. The best quotes we are getting is from a credit union that isn't as quick-draw as the local private lender folks who work on commission. What happens if, for example, we are fully approved but it takes more days to close, pushing beyond the 30 days or whatever specified in the contract. Do we risk losing our EMD then? Exactly what are we putting on the line if we waive financing?

I think I understand the others. Inspection: obvious, and we can do a pre-inspection to get around that. Appraisal: if it comes in low we make up the difference. But financing...not 100% sure I fully understand the ins and outs of waiving it, and would really appreciate some been-there-done-that advice.

[Anonymous]

For financing contingency, if you have 20 days, then you have 20 days to get the letter of commitment from the lender. If you do not, you can lose your earnest money.

Usually if you pass this and then they take longer to close, that is very normal. There is usually a settlement date in the contract that is part of the terms. At this point depending on the condition (for ex title search taking longer) the seller will agree to an extension because it would take much longer to find a new buyer and relist. If they pull out you can lose your EM.

[Anonymous]

Would these two scenarios be the two main risks:

(1) Lender takes too long to close --> seller takes EMD and moves to #2 bid and/or re-lists
(2) Something pops up in the process to get home insurance, e.g., insurer decides will not insure until house has a new roof, or other such major financial expense. We can't get a loan without that and don't have the extra cash for big expense --> seller takes our EMD and moves to other bidder.

Any other major scenarios?

[Anonymous]

Anonymous wrote:For financing contingency, if you have 20 days, then you have 20 days to get the letter of commitment from the lender. If you do not, you can lose your earnest money.

Usually if you pass this and then they take longer to close, that is very normal. There is usually a settlement date in the contract that is part of the terms. At this point depending on the condition (for ex title search taking longer) the seller will agree to an extension because it would take much longer to find a new buyer and relist. If they pull out you can lose your EM.

This is not correct.

If you don’t produce the letter then the seller has the right to give you a 3 day notice that if you don’t produce the letter they will terminate the contract and refund the buyer their EMS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:For financing contingency, if you have 20 days, then you have 20 days to get the letter of commitment from the lender. If you do not, you can lose your earnest money.

Usually if you pass this and then they take longer to close, that is very normal. There is usually a settlement date in the contract that is part of the terms. At this point depending on the condition (for ex title search taking longer) the seller will agree to an extension because it would take much longer to find a new buyer and relist. If they pull out you can lose your EM.

This is not correct.

If you don’t produce the letter then the seller has the right to give you a 3 day notice that if you don’t produce the letter they will terminate the contract and refund the buyer their EMS.

That’s true if OP has a GCAAR regional contract. More info here top right page 4. https://ctitle.net/wp-content/uploads/counselors-guide.pdf

[Anonymous]

As an agent once told me:

“Its fine to waive most contingencies. However don’t waive the financing contingency, unless your dad owns bank or you can pay cash for the entire house.”

[Anonymous]

Anonymous wrote:As an agent once told me:

“Its fine to waive most contingencies. However don’t waive the financing contingency, unless your dad owns bank or you can pay cash for the entire house.”

This is my fear. It sounds like waiving finance contingency is basically gambling that the seller views moving on to try to sell the house to someone else as such a hassle that they would be lenient and give you extra time, etc., if needed (lender running a few days long, title search running long, something amiss with getting homeowner insurance, etc.). But if there is a bidding war...the seller could just as easily declare the contract in default, pocket your earnest money, and have their agent contact other folks who bid on the house. Right? Or am I missing something?

[Anonymous]

Anonymous wrote:

Anonymous wrote:For financing contingency, if you have 20 days, then you have 20 days to get the letter of commitment from the lender. If you do not, you can lose your earnest money.

Usually if you pass this and then they take longer to close, that is very normal. There is usually a settlement date in the contract that is part of the terms. At this point depending on the condition (for ex title search taking longer) the seller will agree to an extension because it would take much longer to find a new buyer and relist. If they pull out you can lose your EM.

This is not correct.

If you don’t produce the letter then the seller has the right to give you a 3 day notice that if you don’t produce the letter they will terminate the contract and refund the buyer their EMS.

To clarify, I meant the OP does not have financing as a contingency, they can lose their earnest money if they fail to fulfill. If it is not waived they should get a refund.

[Anonymous]

Anonymous wrote:

Anonymous wrote:As an agent once told me:

“Its fine to waive most contingencies. However don’t waive the financing contingency, unless your dad owns bank or you can pay cash for the entire house.”

This is my fear. It sounds like waiving finance contingency is basically gambling that the seller views moving on to try to sell the house to someone else as such a hassle that they would be lenient and give you extra time, etc., if needed (lender running a few days long, title search running long, something amiss with getting homeowner insurance, etc.). But if there is a bidding war...the seller could just as easily declare the contract in default, pocket your earnest money, and have their agent contact other folks who bid on the house. Right? Or am I missing something?

At this point we're almost a month out. If the seller had offers at the time of acceptance, it's more than likely those offers are now gone. Sure they can reach out and sometimes it works out. But they have to start the financing process and inspection all over again with a new person..minimum another month compared to giving you a few more days.

The seller is also likely selling because they are purchasing a house, which can be contingent on sale of their current house. They want to get this wrapped up as fast as possible so they can fulfill their own side of the buying contract, which also has timelines and an earnest money deposit. They may be in a new rental or be in the new house already, which means each month it drags out they need to pay 1 month mortgage.

[Anonymous]

Anonymous wrote:As an agent once told me:

“Its fine to waive most contingencies. However don’t waive the financing contingency, unless your dad owns bank or you can pay cash for the entire house.”

We waived everything EXCEPT the financing contingency for this reason; however the people who bought our house waived ALL contingencies, including financing. One of their moms was their agent and the other's dad worked for their lender. They knew they were getting the loan and we closed in les than two weeks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As an agent once told me:

“Its fine to waive most contingencies. However don’t waive the financing contingency, unless your dad owns bank or you can pay cash for the entire house.”

This is my fear. It sounds like waiving finance contingency is basically gambling that the seller views moving on to try to sell the house to someone else as such a hassle that they would be lenient and give you extra time, etc., if needed (lender running a few days long, title search running long, something amiss with getting homeowner insurance, etc.). But if there is a bidding war...the seller could just as easily declare the contract in default, pocket your earnest money, and have their agent contact other folks who bid on the house. Right? Or am I missing something?

At this point we're almost a month out. If the seller had offers at the time of acceptance, it's more than likely those offers are now gone. Sure they can reach out and sometimes it works out. But they have to start the financing process and inspection all over again with a new person..minimum another month compared to giving you a few more days.

The seller is also likely selling because they are purchasing a house, which can be contingent on sale of their current house. They want to get this wrapped up as fast as possible so they can fulfill their own side of the buying contract, which also has timelines and an earnest money deposit. They may be in a new rental or be in the new house already, which means each month it drags out they need to pay 1 month mortgage.

This is exceedingly rare, but it could be that they want to sell quickly because they have a 45 day close on their house and don't want to carry two mortgages

[Anonymous]

It’s very rare for the seller to ever get the EMD. They can’t re-list the house or accept other offers until it’s released on mutual consent. The buyer doesn’t have to agree to release. The sellers agent will do whatever they can to get the seller to release the EMD back to the buyer so they can quickly re list and get another buyer. If the buyer just needs more time, the agent will push for this. The sellers agent knows that a protected EMD fight will likely result in the seller getting a different listing agent when they finally can re-list. A real estate attorney would be absolutely fine going after the EMD understanding it would time and money and letting his client decide what they wanted to do. A real estate agent will act only in their best interest which is to make the seller think there is no way to get back the EMD and work with the existing buyer to get the deal done..ie get that agent their commission check!