You’ve found the house. The offer has been accepted. Inspections are underway, and everyone is looking forward to closing.

Then the lender says the property doesn’t qualify for financing.

It’s the kind of news that can make both buyers and sellers think the transaction is over.

But sometimes, “no” really means “not yet.”

I recently dealt with a situation where the property itself became an issue for the buyer’s financing. The lender had specific concerns about the condition of the home and required certain items to be corrected before they would approve the property.

One of those items involved something as seemingly simple as the proper installation of a toilet.

It may sound minor, but when a buyer is using financing, lender property requirements matter. Depending on the type of loan and the lender involved, certain health, safety, structural or property-condition issues may need to be addressed before the loan can move forward.

The First Step: Find Out Exactly What the Lender Needs

When a financing problem comes up, one of the worst things you can do is panic or make assumptions.

Instead, we needed to determine:

What exactly was preventing the property from qualifying, and what would satisfy the lender?

Once we understood the lender’s requirements, we could start working toward a solution.

That meant coordinating repairs, communicating with everyone involved and making sure the required work was completed properly.

It also meant keeping an eye on something equally important — the closing date.

Sometimes the Real Negotiation Is About Time

Real estate negotiations aren't always about price.

In this transaction, we also had to negotiate additional time so the required repairs could be completed and the lender could approve the property.

The buyer still wanted the home.

The seller still wanted to sell.

So instead of allowing the financing issue to derail the entire transaction, we worked together to find a reasonable solution.

That required communication between the buyer, seller, agents, lender and the people completing the repairs. We also needed to extend the closing date to give everyone enough time to get the necessary work done.

And that is something buyers and sellers don't always anticipate when they enter into a contract.

A closing date may be written on paper, but sometimes unexpected circumstances require everyone to adjust.

Small Property Issues Can Become Big Financing Issues

One of the lessons from this transaction is that something a homeowner has lived with for years may become an issue when the property is sold.

A repair that seems insignificant to a seller may be important to an appraiser or lender.

That doesn't necessarily mean the house is a bad property.

And it doesn't necessarily mean the buyer can't purchase it.

It simply means there may be another problem to solve.

That's where experience and good communication become extremely important.

What Buyers Can Do

If you're purchasing a home with financing, understand that the lender is approving both you and the property.

Before making an offer, talk with your lender about the type of loan you're using and whether there are property-condition requirements you should know about.

If an issue does arise, don't immediately assume you've lost the house. Ask what needs to be corrected, what documentation the lender requires and whether the closing timeline can be adjusted.

Sometimes the solution is much simpler than it initially appears.

What Sellers Can Do

For sellers, preparing your home before it goes on the market can help prevent financing surprises later.

Items involving plumbing, electrical systems, heating, safety or unfinished repairs deserve attention.

And if a lender-required repair comes up after you're under contract, look at the bigger picture before automatically saying no.

You may be deciding between completing a relatively small repair or losing a qualified buyer and putting the property back on the market.

That's a conversation worth having.

Real Estate Transactions Don't Always Go According to Plan

After more than 30 years in real estate, I've learned that getting a property under contract is only part of the job.

Things happen between the accepted offer and the closing table.

Financing issues arise. Appraisals create questions. Repairs are requested. Deadlines need to be extended.

My job is to help my clients understand their options and keep looking for solutions when there's a reasonable path forward.

In this case, the financing hurdle wasn't the end of the transaction. By identifying exactly what the lender required, addressing the repairs and negotiating additional time, we were able to keep moving toward closing.

Sometimes the difference between a transaction that falls apart and one that closes is simply having people willing to solve the problem.

If you're buying or selling a home in Billings, the Billings Heights or the surrounding area and you're concerned about real estate financing challenges, lender property qualification, negotiating real estate repairs or extending a closing date, I'd be happy to talk through your situation.

Shawn Cox-Mistretta
Berkshire Hathaway HomeServices Floberg Real Estate
406-350-6114 or email me here

Giving you the knowledge and confidence to make your next move.