Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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Succeeding as a Contingent Buyer

The housing market can be a tough place for the contingent buyer.  Since the success of a contingent transaction relies heavily on timing, it’s often left up to the “Universe” to decide what’s meant to be and what’s not.  At times feeling as if their offers are discriminated against, contingent buyers are sometimes forced to sell their departing residence first before trying to purchase a new home.  Unfortunately, this can leave the contingent buyer feeling as if they’ve “missed opportunities” having to forgo pursing homes they really want.

So, if and when contingent buyers submit offers that are finally accepted, it’s likely that their stress-response system will kick into overdrive.  Multi-leg transactions are not easy to manage.  If one lender falls behind, serious delays may follow.  When this happens, delays can expose transactions to greater risk.  That’s why PrimeLending can provide post-funding exceptions to ensure delivery of funds for contingent buyers!

What Is A Multi-Leg Transaction

A multi-leg transaction is a chain of transactions that rely on one another to close.  In plain English, this means that a person may sell their current home in order to afford a new one.  They will use the proceeds from the sale of their old home to invest in a new one.  This is very common among people who are “moving up” to a larger home.  For instance, first-time homebuyers will sometimes purchase a smaller, more affordable home in hopes that it will increase in value.  When this happens and they are ready to “move up” to a larger home, they will sell their first home and use the proceeds to put toward a new home.  Of course, for this to happen, they need to close the sale of their old home to obtain the funds needed to close on their new home.  This is known as a multi-leg transaction.

What Issues Can Arise with Multi-Leg Transactions?

Sometimes a minor repair will be noted on an appraisal or an unsigned document will delay a closing and delivery of funds.  When this happens, the forward transaction (or, new home), is at risk.  Sellers of the new home may not agree to an extension of contract which would allow the lender more time to deliver the buyer’s funds to purchase the home.  If they sellers do agree to an extension, they may also require the contingent buyer to pay expensive per diems for each day that their new loan does not close.  Keep in mind that a delayed closing for a seller can be just as costly and per diems are often used to offset some of the added costs of a delayed transaction.

Contingent buyers may need to use a post-funding exception to avoid losing their new home!

Contingent buyers may need to use a post-funding exception to avoid losing their new home!

How to Succeed as a Contingent Buyer

Luckily, PrimeLending can provide their contingent buyers with a post-funding exception to ensure an on-time close!  “PrimeLending really showed up for me when I needed it most.  I had been relocated for work and needed to move quickly.  PrimeLending had my loan approved and final loan documents out to me in 9 business days.  I didn’t need the funds from my departing residence to purchase my new home but, I did need to show that I was no longer responsible for the old mortgage payment.  PrimeLending, understanding my situation, provided a post-funding condition so that I could move into my new home right away!”

If you’re a contingent buyer currently in contract and struggling with financing delays, contact me.  I may be able to help guide you through the remainder of the process with your current lender.  If you’re just starting the process, let’s be sure that you are fully-qualified and that you’re fully prepared for the road ahead.  A second look at your situation may help identify any potential pitfalls that might delay your transaction.  Plus, PrimeLending may be able to help with a FULL underwritten approval to submit with your contingent buyer offer!

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