Just want to be sure I am on the same page as you. When you say pull your contingency, you mean taking the loan contingency out of your offer, correct? Which means you are confident that your financing will go through.

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Profeshenal spellar

Yes..

No one seems to think I will have any issues getting a loan..
Though we may need to ask for extensions once the deal is in place.

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"When two people agree on everything, one of them is not necessary" - Arliss

If you feel confident in your finances and you really want the house, then you may want to go for it.

What about offering a higher earnest money payment and still keeping the financing contingency?

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Profeshenal spellar

The current owner is bleeding...
He wants the deal done..

He is losing lots of money... Doesn't want to hold it anymore..

His price has reduced almost 50% since it was put on the market.

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"When two people agree on everything, one of them is not necessary" - Arliss

I got ya.

You seem pretty sure your financing will go through and from what I know of you, you seem like one who does his homework on this sort of thing, so I say if you are sure that you really want the house, then go for it. It sounds like you will probably be OK. In a perfect world, I would suggest a contract with more proctection for yourself though.

I am not sure about the legal aspect of this. If for some reason it didn't work out, what is the worst that can happen? You will be out your earnest money? Is that all or are there more serious consequences? Are you willing to take that risk? I guess that is what it comes down to.

I think I saw x5GuyInLA online. He may be able to help you more. He is a realtor in your neck of the woods.

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Profeshenal spellar

Nope, I wouldn't do it in a million years. If you don't get the loan then you lose the down payment. Just because a banker says there is no problem that you'll qualify for the loan isn't good enough (btw you need to get that statement in writing). What a lot of people forget is that getting a mortgage is different from getting a loan. Not only does the buyer need to be approved, but the PROPERTY needs to be approved as well. For example, if the asking price of the property is $1,000,000 but the bank's appraisal of the property is $750,000 then either the bank will not approve the loan with standard financing or they will only do so with considerable change in terms (such as significantly higher downpayment, etc.) So even if YOU qualify for the $1,000,000 loan (or 900,000 if financing 90%) the PROPERTY might not. (Keep in mind that doesn't mean the property isn't worth $1,000,000, it means that the bank is not willing to take a risk on the property unless the deal is sweetened for them... think about the extreme case.... you want a $10 million loan (very low interest) for a $500,000 house ... obviously the $9.5 million is going to go somewhere else entirely and the bank realizes that fact and isn't stupid) If you've dropped your loan contingency, then your downpayment is going bye bye.

Sounds crazy right? I've seen it happen way back when. Granted, this was a much rarer scenario the past 10 years since banks would give out mortages to anyone with a social security number, but now the situation is totally different. People are finding it harder to get 90% financing anymore for large loans, banks are getting much more strict with their appraisals, etc.

Hope this helps.

I agree with you Meister, but B-LIne seems to know his stuff. He said the seller was "bleeding" and seeing as he dropped the price to 50% of the original list price, I would imagine that the market value of the home is most likely well over the current listing price and what B-Line would offer. It sounds like a distressed/motivated sale, which are typically below market value. I know that is not guaranteed though. I was assuming he knew the actual value of the home. It can be sketchy if you don't have all the facts though. This is probably a moot point by now.

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Profeshenal spellar

Two months ago, a house that is a stones throw sold for $850,000 more.
Same square footage under roof.

Exterior square footage, mine is 14,000 and the comp that sold is 18,000 sqft. So there not exact, but there pretty close.

So I don't think we'll have any problem with comp appraisals..

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"When two people agree on everything, one of them is not necessary" - Arliss

It's just a protection for yourself. Whether you want it is up to you. Note that comp appraisals are only one thing a bank uses in determining mortgage eligibility, not the only thing. It's not a trivial process like buying an ipod or even a car, that's why home purchase escrows are 30 days, 45 days, etc. Escrow may fall through because the bank finds out there are 5 liens on the property or there has been reported structural damage to the site or there is a lawsuit pending on it because a divorce went bad and the kids of one party have put forth a legal challenge to 10% ownership. IOW, due diligence takes time. You can buy a Ferrari in one afternoon.

BTW, getting someone to pull a loan contingency ASAP is one of the classic broker moves as is 'there's someone else interested...you have 2 hours to decide.' You have to understand, a mortgage contingency is NOT a valid reason why a seller should refuse, what it is, is a reason for a seller to FORCE you into making a quick decision on something. Case in point, I went with someone to look at a $1.5 mill property that was on and off the market for over 8 months and had it's price dropped a half dozen times. The broker just happened to also be the owner. He was losing money every day on his loan, taxes, maintenance, etc. as it was vacant. After seeing it and expressing interest, my friend got a call the NEXT day that if he wanted the property he would have to make a decision within 24 hours because there is 'suddenly' an interested buyer who offered full price with no loan contingency. Yeah right. It's still for sale.