What party is responsible to the real estate seller to ensure buyer lending is approved?

Question

I was informed today after nearly 5 weeks that the lender has additional questions of the buyer (updated bank statements and such). The transaction was to close a week ago and has gone 7 days without resolution. I received this information this evening (30 minutes prior to the updated close today).

Is the buyer's agent, title company and lender liable when a pre-approval letter was received after the contract was signed? I feel as though these folks have potentially dropped the ball and not kept the seller informed.

Thanks in advance for any advice you have.

Answer 1

Ultimately it is your responsibility. If you have a listing agent representing you then he should have certainly kept abreast of the buyer's situation. I can tell you that it is not uncommon for a lender to drag their feet. I don't know what liabiliy you are addressing. If the buyer can't get qualified then the contract simply becomes null and void in most cases. That would depend on the terms and conditions in the purchase agreement.
You need to make sure that if the time frame for the buyer's obtaining financing is out of contract then you need to at least extend the contract in writing or renegotiate.

Again there wouldn't be any liability on the agent's part to you for the buyer's failure to qualify. It might be a disservice and something that you could report to the local realtor board. I would certainly hold your agent liable if he drops the ball on the contract and doesn't get it extended.

Answer 2

Been there, done that. But we were on the buying end, and the mortgage company simply didn't ask all the questions iniatially.

We met a few days before closing to go over the last few documents. That was when they asked the question regarding other property we owned. The whole deal fell through over that. Our realtor felt really dumb, apparently he was supposed to have covered all this with us according to that state's laws.

Basically, it comes down to closing. The transaction isn't complete until after closing papers are all signed.

Answer 3

That is what the Real Estate Agent is for.. It is THEIR responsibility to ensure that it is and to convey that it is.