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Rick Pelleriti

Advice on Escrow Timing when Buying a House

Tuesday, December 21, 2010 - Article by: Rick Pelleriti - American Capital Corp. - Message

Close of Escrow Timing Guidance for California Buyer's Agents.

After having done many purchases from start to finish in 2010, I feel I need to provide this guidance to those Buyer's Agents who have yet to realize that the lending landscape has changed significantly in 2010 relative to 2009 - and more changes are in store for 2011.

There have been several very significant changes to the laws surrounding the loan process, and one result of this has been to lengthen the loan cycle. Please consider the following:

* There are delays to get the lender to approve the New GFE.

* There are delays before the lender will allow you to order the appraisal.

* There are often delays where the lender will review the appraisal before clearing that condition.

* Underwriters continue to apply intense scrutiny on every aspect of a borrowers documentation, often asking for what may be considered unreasonable conditions.

* And last but not least, you may be forced to wait up to one week if you decide to change any terms of the loan, like the interest rate or the loan amount.

Most all these issues did not apply last year - but they are part of the real world this year.

So, having said this, here is my guidance to California Buyer's Agents.

When you are negotiating with the Seller, please do not put down 30 days for the Close of Escrow.

30 Days may have been the norm in 2009 - but so much has changed - those days are LONG GONE.

If you use 30 days - do so at your own risk. There is a 90% chance you will need an extension.

This is no longer "new news," but based on what I am seeing on recent purchase contracts, it appears the word has not spread far enough yet.

I recommend at least 35 days, (40 is better) and that means starting from the NEXT DAY after I receive the fully executed purchase contract.

Finally, take out your calendar. Consider the days in the month. Consider the weekends, and consider the holidays.

What is the intent here? Easy. Let's work together to protect the Borrower. It is his/her deposit money at stake.

This may not be what you want to hear- but it is the real world, and we need to recognize it.

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