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• Services to Sellers

• Getting your house ready
  to sell
• Coordinating showings
  of your home
• Understanding Minnesota's
  disclosure requirements
• Understanding your buyer's
  financial position

Understanding the buyers financial position
So much is on the line when you are selling your home. The last thing you need is a buyer whose financing falls through at the last minute. Avoid expensive hassles and disappointments by asking your REALTOR® three important questions:

1. Is the buyer really pre-approved?
There is a big difference between being pre-approved and "pre-qualified." When buyers are pre-approved, the lender has obtained a credit report, verified employment information, and the application has gone through some kind of underwriting process for official pre-approval. On the other hand, being pre-qualified only means that a lender looked at their income and debts and has given a non-binding estimate on how much mortgage they can afford.

2. Is their pre-approval issued by a credible lender?
The lender should have a record of stability and reliability. If it is an Internet lending company, there should be access to local brick-and-mortar and in-person service. The lender should provide the borrower with a Good Faith Estimate and a truth-in-lending disclosure within 72 hours of application.

There are two important considerations to protect you as a seller from a buyer who may "walk" because financing falls through. The first is to understand that you may ask the buyer to commit to a certain date before the closing to remove their finance contingency. Buyers who agree to this arrangement will agree that their loan will go through final underwriting and their lender will provide you with a final commitment letter. Should the buyer's financial position change after that date, they will be in a position to forfeit their earnest money to you the seller. The advantage of this kind of contract is two-fold: obviously while you'd rather have a sale commence, at least you should be walking away with some earnest money. Second, it should shorten the time your home is "off the market" and allow you to put it back on sooner. The second important consideration is, of course, how much earnest money the buyer has put forth. It is becoming increasingly common for buyers to write very small earnest money checks. Much of this, I believe, stems from the simple fact that a lot of young buyers have very little in the bank these days. The unfortunate consequence appears to be that many listing agents are getting complacent about not informing their sellers of the implications of a 'wimpy' earnest money check. Ideally you will want to secure enough earnest money to take the sting out of any deal that may fall through.