But that puts the earnest money deposit at risk if the contract doesn't close

Interesting change, but be careful of the logic in your conclusion (seller has to take the word of buyer).  It can be very useful to remind the buyers that seller has options and takes a dim view of offers without adequate backing. If best offer on the table doesn't have the proof of funds, seller can say a buyer was selected and has 48 (or 24) hours to provide proof of funds, otherwise second choice will be contacted.

That is very sloppy and opens a can of worms to heresay allegations should there become a dispute.

that's an interesting and scary change....

I'm finding it difficult to understand the logic in this language in a contract. Not thought through!

If it's an addendum to the contract and seller signs without actually having financing approval they could be in breach of contract.

Whoa! I do not understand why anyone supported making that change. Bad choice IMO.

The earnest money is at risk to be forfeited, but so is the probablity of closing!

The updated change does allow the buyer an option but does not obligate the seller to accept the 'word' of the buyer.

One of my first objectives to protect the seller is to remove the bank from the negotiation process by compelling the buyer to waive or quantify this contingency and provide proof of resources to fulfill their obligation.

Do not allow the seller to be damaged by the lender choice the buyer makes.

There are still two sides to this process. What the buyer wants (no commitment)  and the seller is willing to accept are part of the dance.

IMO makes no sense - but it figures - I'll keep my refusal statements in my contracts thank you

I have not had a chance to review all the changes, this being one of them but I don't really understand the need to make these changes. 

That makes no sense at all.

Good to know it applies to  VA only....

That seems so wrong to me!

No

That is dumb

Like in Virginia the buyer has to trust the seller not to deliberately hide a material fact?

Actually, I don't have a problem with the new financing clause, at lest not as long as there is a significant earnest money deposit at risk if the buyer does not perform because financing is denied.

Wow, really

Hi Jeff - I'm not sure what problem that's going to solve, but the ones it could create are pretty obvious.

Interesting.  Our business can vary so much by jurisdiction.   Local matters. So does staying on top of changes in each of practices.

I've never seen anyone ask for proof of having the loan with contingency removals.  As a matter of fact a buyers agent on a recent listing of mine removed the loan contingency prior to having a loan commitment!

If they remove the contingency and they don't get the loan, my seller gets their deposit.  Out here, it's always been "take them at their word."

If there is no way to show how the home is going to be paid for there is no contract.

Interesting. I can only wonder what the "thought leaders" were thinking when making this change.

  That doesn't make any sense.

Man cannot live a life governed by laws alone...It has to be interpreted

I always ask for proof of funds when representing a seller.

I hope that the option to redact and initial remains. I know it would be happening on contracts I prepared or countered.

Jeff Pearl Does this mean by removing the financing contingency, they still have to go through with closing? Or is it a way to back out of the contract?

I agree with Lise.

It seems to be so difficult these days for some lenders to provide what we could consider a commitment letter, anyway, I don't have a problem with it. To be clear, we are talking about the commitment letter, not the preapproval letter...how often do Sellers even ask the buyer to remove the financing contingency?  I have not had a listing agent ask for the financing contingency to be removed in, well, so long, I don't even remember the last time I even did it. 

I have always thought the financing contingency was heavily weighted toward the Buyer, anyway, leaving the Seller in the cold (especially when it comes to the 3 day notice asking for the removal of the financing contingency), that I was just glad to see some of the power returned to the Seller. 

The financing contingency is not a complete get out of jail free card for the Buyer, anyway, so even if they do not remove it, it does not offer a lot in the way of protection.  

Bottom line is, I think the new changes regarding the financing contingency actually should help to make Buyers think twice about their choice of mortgage lenders, stay on top of their lenders and make sure they get their docs in as requested.  

I always thought the Financing Contingency should expire automatically unless both parties agreed to extend - Buyers need to pick good lenders and put their money where their mouths are. 

On the surface , this doesn't sound good

That's a perfect example of why we created an Addendum that "prevails" over any conflicting language elsewhere in the contract!

This is an interesting change and a good blog topic for you.

Very interesting to see how our neighbours to the south draw up their contracts.

Jeff, indeed it doesn't make any sense .

That is surprising and I do not agree with. What were they thinking?