Right now, the financing landscape is going through an upheaval. Interest rates are rising and, at the same time, lenders are tightening their underwriting requirements in an effort to minimize unsustainable loans and debt burden on the population. While all of this is being done to put the brakes on a nation-wide recession, it’s wreaked havoc on the stability of home sales going on right now.
Buyers who were pre-qualified, in escrow, and ready to close may suddenly see their lending fall through when it comes time for the final loan approval. As a real estate agent, you have a front-row seat in how devastating this can be for your buyer who had their heart set on a home and likely did everything right in terms of pre-approval. Fortunately, the game is not yet over. There are a few strategies available to you that can save the home sale and help your buyer close successfully at this critical moment.
We’re here to share these techniques, along with a few tips to help avoid this situation in the near future as the nation’s economy continues to flux.
How to Save Home Purchase if Lending Falls Through
What can you do if your buyer’s lending falls through at the last minute? Here are three strategies that just might save the day.
1) Negotiate for an Extension
First, approach the seller’s agent and negotiate for an extension. Make it clear that your buyer is still dedicated to buying the property, but will need a little more time to get their financing together due to changing circumstances. Unless the seller already has a competitive second bid in their back pocket, they will likely accept. You may want to offer a concession or two if you need considerable extra time.
2) Have a Network of Lenders Ready
Right now is a good time for real estate agents to have a network of lenders to recommend to their home-buying clients. Not only is this a useful resource for new clients who do not yet have a lender, it can also be a life-saver if your client’s current lender falls through. Each lender has different standards for underwriting a loan. If you don’t yet have a network, help your buyer research and source a new lender from local options.
3) Ask for Home Updates
If it was the house that caused the problem (appraised too low) you can negotiate the price down or ask the seller to make a few necessary repairs or upgrades so that lenders – any lender – will approve the purchase.
How to Prevent Lending Fiascos in the Future
The current state of interest rates and loan approval is an ongoing situation, which means your next few clients could face similar challenges. As a proactive agent, you can prepare for these lending risks with a few strategies ahead of time.
1) Prioritize the Inspection and Appraisal
Don’t risk a loan falling through due to the house’s condition. Right now is a bad time to waive inspection rights as a negotiation tactic. In fact, you want an inspection – and maybe an appraisal – as soon as possible to make sure everything will scan as A-OK for the lender when they send their own appraisal team.
2) Keep Tabs on the Lender to Ensure Approval Stability
Check-in with the lending status frequently to make sure your buyer’s approval is still underway. It’s better to become familiar with the lender and make them assure you that the loan will go through than to be caught blind-sided if it does not.
3) Help Buyers to Keep Finances Stable
The other factor you can influence is your buyer’s financial stability. Make sure your buyer knows to put the brakes on buying a new car or changing jobs in the middle of a home purchase because their pre-approval hinges on stable financial data given earlier in the process. Changing that data with big purchases or career shifts could put the loan in jeopardy.
Super Agent: Keeping a House Sale Together When the Lending Falls Through
Being denied at the last minute by a mortgage lender can be devastating for both the buyer and seller once escrow is in place. One of the best ways to prove yourself a Super Agent is to save the day in this uniquely challenging situation. By having other lenders on-call and taking steps to ensure financing will be ready, you can save your buyer’s home purchase even if their first lender falls through.
For more great real estate agent tips and techniques, check out Commission Express National today.