Thursday, October 25, 2012

Revise a Purchase Price? 4 Steps to Avoiding a Delayed Closing and Client Disappointment

Inventories are upwards of 25% lower in the Columbus, Ohio region and in many neighborhoods this is creating a "seller's market".  There are fewer clean, move-in ready homes on the market that are price appropriately, sparking great demand and leading to many multiple offer situations.

Properties not appraising for the contract price is an increased marketplace issue; many times due to a lack of solid comparable sales data, though also as a result of demand driving competitive contract prices up to a level that is unsustainable.  Result: POSSIBLE CONTRACT RE-NEGOTIATION.

Make sure your closing does not get delayed if you re-negotiate your contract sales price.  Use this checklist and don't assume anyone else has already thought of these actions that if left undone, will delay the closing and everyone's moving date:

1. Submit to the lender the addendum with the updated contract purchase price (or new build change order) PRONTO - copy both the processor & loan officer.  CONFIRM RECEIPT!  SOUND THE ALARMS!  EVERYONE HAS TO TURN OFF CRUISE CONTROL AND GET SOME WORK DONE TO ENSURE AN ON-TIME CLOSING!

2. Copy the processor and loan officer on communication, if going FHA, prompting them to generate a new FHA amendatory clause document that will need to be re-signed by all parties reflecting the amended purchase price.

3.  Copy the processor, loan officer and appraiser on communication preparing the appraiser they will be getting an order from the 3rd party appraisal management company for a revision reflecting the updated purchase price on the appraisal.  This can be a 2-3 day process from the time the order is submitted to the time the appraiser makes and submits the revision back to underwriting.

4. And really this should be the first step -- educate and remind your buyer and seller customers that the real estate marketplace is fluid and challenging right now for a whole host of reasons.  Closing dates are no longer a "sure thing", so scheduling the moving trucks for an hour after a "projected" closing date is a recipe for disappointment.  Counsel them on building in a buffer just in case and set the right expectations according to the climate in your local market.  Knowing is still half the battle.