THE HERO WE DESERVE
Buyer finally finds dream property. Realtor negotiates offer. Seller accepts. Life is good.
Just kidding! We all know it rarely happens that way, although we do strive to make the process as smooth as possible for our clients.
Last week as our buyer was approaching the end zone and waiting on final confirmation to close on his condo purchase, we received the dreaded call that the underwriter would not approve the loan. Generally, this is one of the worst things that can happen to a buyer. Unless the buyer plans to use cash for the purchase, they will need to find a new lender or update the terms of the loan and extend the process by another 30-45 days. All while crossing their fingers that the seller agrees to it so they don't lose the property and start back on the bench.
As we prep our buyer for the worst, the lender puts on his cape and goes to work...
Here's the thing. In order for a condo to be marketable in a lender's eyes, the condo is required to either allocate funds equal to 10% of the annual dues income to a reserve account, provide a budget with at least 10% allocated to reserves, or have a professional reserve study completed which shows they do not need the 10%. Back in the day, this wasn't an issue, however today there is a growing trend of property management companies outright refusing to meet the requirements. This makes it increasingly difficult for some buyers to secure financing and limits a seller's pool of potential buyers to all-cash buyers who are typically few and far between, or buyers with a hefty downpayment.
Now, in the time it took us to tell our buyer his options, the lender was able to work his magic and get the loan approved with a slight increase in downpayment to satisfy the underwriter, and only a few days added to the closing. Our buyer is happy, the seller is happy, and we have a closing scheduled for later this week!
PSA: A good lender is invaluable. When selecting a lender, we suggest finding someone who knows the rules, has a sense of urgency, and is willing to go above and beyond to get your loan approved. Michael Flanagan is the hero of this story and a lender we are happy to recommend to our buyers!
Written by: Alexandra Nakollari, Buyers Agent with The Jarboe Group Real Estate Team