Mortgage contingency

Sellers market. Screw mortgage contingencies.

keep mortgage contingency, but make sure that the buyer can easily afford it. if it's a coop, the board approval is a bigger problem then then contingency anyway.

Keep it. ANy buyer who needs a mortgage needs this contingency. It is standard boilerplate language in a RE contact. You ask for all the financials at offer stage to make sure they will get a mortgage. Put otherwise, do you want to vastly decrease the number of potential buyers?

A financing contingency is standard. Completely, regardless of what kind of "market" "this" is. Any even remotely smart buyer, buyer's broker, or buyer's attorney, walks away from the deal, regardless of how desirable the property is, immediately. Yes, I've seen this happen.

I already said that I'm going to give the mortgage contingency. I'm just wondering how to make the language more seller-favorable but in a reasonable way.

Ottawanyc - what kind of financials can I ask for from the buyer at this stage? We are just starting contract negotiations. You hit the nail on the head, my ultimate concern is whether the buyer will be able to get a mortgage and his finances is precisely what I'm curious about.

FYI this is a condo.

Whatever you want? Or do you not know what you want...

intercontinental,
The language in the contract about the mortgage contingency is entirely your attorney's responsibility. If you would like it tailored in a certain way, he should do what he can. As for what sort of financial picture you can expect, take a look at the REBNY financial statement. It is pretty standard, and It requires a balance for all assets, liabilities, etc. It is a good place to start from.

Isn't there typically language in the mortgage contingency that the buyer has to apply for a mortgage by x time and be able to obtain a mortgage by y time?

Sonya_D - thanks for pointing me to the REBNY financial statement. Is it reasonable for a seller, though, to ask for this level of financial detail from the buyer, especially in a condo situation? I've only bought from a sponsor and they did not ask for any financial info. As to the mortgage contingency language, my attorney has said he'll make it more stringent if I want but that his language is standard. I asked my original question to see what others thought was standard for comparison purposes.

Wavedeva - my contract draft MC clause has the language you described.

In the contract I believe there is wording that gives the buyer a certain amount of time to get a loan commitment. However if the buyer doesn't get his loan commitment by that time he doesn't lose his deposit.

I would never buy an apartment without a mortgage contingency especially now, the economy is still not out of the woods, anything can happen, banks still have tight lending guidelines.

By the way, is your condo Fannie Mae approved?

Hk50, condo sellers are entitled to know your financials esp if you are going for a mortgage because if you fail to get it, they are out two months of time.

when I bought , it was a buyers market and I was able to get my contract with language in it that said if anything happens to me and I cant get a mortgage and close, I would get my deposit back. If ur a serious buyer, I dont see why the seller would have a problem with certain language.

HK50,
What others have said, along the same lines, is on target. To answer your question, yes, it is reasonable. Perhaps maybe in a condo slightly less necessary than in a co-op, but still, far from unusual. REBNY is used regardless of coop/condo, so most people (buyers and sellers, and brokers alike) are familiar with it, and there are really no surprises to anyone (except a seller or customer who is kinda unfamiliar with the process).

HK50, are you the same person as intercontinental? It seems by your last post that you might be...

There's boilerplate language you can buy from Blumberg legal forms, just buy a copy and read it, but this is a conversation you need to be having with your attorney, IMHO.

Because for reasons unknown you're not satisfied with the language the attorney put in there.

As a seller I assume you are getting a high price and/or have a place that is a tough sell and/or are sympathetic with this particular buyer for some reason, because otherwise ggman is right, many sellers are not agreeing to mortgage contingency clauses in this market.

The nice thing about that stance for the seller is that buyers self-select. Any buyer who isn't 100% sure of a mortgage won't sign, and you as a seller can ignore financial screening.

>>"Any buyer who isn't 100% sure of a mortgage won't sign, and you as a seller can ignore financial screening."

I wouldn't totally agree with this last statement. Anyone who's been through the ropes a few times knows that there are many things that can go wrong with a loan, the buyer just being 1 part of the puzzle. I've known plenty of people that are A+ candidates themselves, but for some other reason, most often having to do with the building or bank itself, something happens. For example, a friend of mine right now is having problems with his loan because the bank he is working with is having issues with Fannie Mae backing. So, the buyer could be 100% themselves, but knowing if all the other pieces will fall into place is difficult, sometimes impossible.

I can take your buyer's loan application before signing the contract., and pre qualify him.

Ellen Silverman
E.S. Funding Co.
Licensed Mortgage Broker (since 1990)
Licensed Real Estate Broker (since 1987)
www.esfunding.instantlender.com
NMLS#60631

Excellent point Sonya_D. I wonder if the seller would readily receive liquidated damages (the 10% of purchase price at contract, usually) if the building itself is the only impediment to the mortgage.

Sunday NY Times article, "When a High Bid Isn't Enough".

http://www.nytimes.com/2013/05/12/realestate/sellers-seek-offers-without-mortgage-contingencies.html?ref=realestate

No one believed me so I had to write an article.