01-12-2013 02:33 PM - edited 01-12-2013 02:35 PM
Why do they take longer to close?
Because the market price is less than the outstanding mortgage(s), the lender has to approve the sale in order for it to close. After all, the seller is asking the bank to remove the mortgage lien from the property for less money than what is actually owed. The lender has a department to handle this process, but in general the department is staffed by people that have zero real estate experience.
Not all sales are approved by the mortgage co. A large majority are approved, but some are turned down for reasons having nothing to do with the actual price and or terms of the contract.
In order to get approval, a complete package must be sent to the lender showing that the seller can no longer afford the property and that the contract is market value. Also, the buyer and the seller have to sign an affidavit that the transaction is Arm's Length.
Be prepared to wait for the bank to respond. Some of the banks have a fairly rapid process, others move very slowly. This is a function of the lender, their process and the specific negotiator that has the file.
01-12-2013 08:41 PM
01-13-2013 07:55 AM