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  • Writer's pictureKimberly Dotseth

My Favorite Mistake

A favorite mistake…or is it my most memorable? For me, it was missing a tiny box in a contract: a box was checked that said the buyer's loan approval contingency was to remain in effect until closing. The box is THIS small * and I missed that it had been checked. I represented the seller in this case, and it was and still in my job to scour the contract and write a counteroffer. I missed that the buyer’s agent wanted until the last day of closing to cancel in case the loan went badly. Typically a buyer gets 17 days to get full loan approval, not a day longer. Then the rest of the escrow is paperwork and the buyer formally signing off on contingencies.

At the time this happened, I was selling many condos at once during the condo conversion rage and I was a busy listing agent. I worked for a very intense developer based in Manhattan Beach, CA. He’s a wonderful guy but a stickler. And a real estate broker! But he hired me to sell all his San Diego condo conversions. And be all the eyes on all the contracts. He trusted me to tell him where to sign. Plus I had all my other non-condo conversion business. I missed this box on my developer’s sale. Allowing a buyer to have until the close of escrow (technically "the funding date") to get their loan approved gave them nearly the entire length of escrow to cancel legitimately and get their full good faith deposit returned. Why? Because this check-box item is a contingency with its own long time frame. This would have been 30 days. We on the seller side were on the hook for 30 days to see if the buyer would actually close. And if the lender can't approve the sale, the buyer could walk away. And get their deposit back. This caused me a lot of sleepless nights because I wasn't 100% sure if this would actually be used against us in case the buyer wanted to bail! You know, what if the buyer whispered to his or her lender that they actually want to cancel anyway, and then buyer and agent tell us (on the listing side) that they “couldn't get loan approval.” A white lie, but I can’t prove it. The listing side wouldn't have been able to prove this was a white lie since most lenders won't even talk to the listing agent about their buyer client's file. I had 30 days to worry. This deal did close with no issues. Rarely does someone try to write in a loan approval contingency for the length of the contract, but I will catch it.

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