C H A P T E R 4
Dates, Deadlines, and Details
Logistics is the planning and implementation of the details of
an operation. In the real estate world, this means who does
what when. From response times at the beginning of the
offer process to loan application, inspection, appraisal, and
loan denial deadlines during the transaction, you have a lot
to keep track of when a contract gets written, considered,
and accepted. When it comes down to the wire, you’ve got
settlement, funding, recording, and, most important, possession
to worry about. The smoothest transaction in the world
can end in anger and confusion when logistics are not considered.
Sometimes a transaction never gets off the ground
because of poor logistical planning.
The three primary reasons you, as the buyer’s agent, may
be the target of this anger and confusion are:
1. The buyer’s offer has been rejected.
2. The buyer loses his or her earnest money.
3. The buyer is not able to move in when expected.
While contracts vary and special provisions can be written
in for ‘‘nonrefundable’’ earnest money, some of the deadlines
we’ll be discussing provide an ‘‘out’’ for buyers. This
out allows them to cancel the contract and leave the transaction
with their earnest money in hand. Violate a deadline,
however, and the seller may get to keep your earnest money.
Every state’s purchase contract is different, so I won’t
even attempt to dissect a certain state’s form. I will instead
go through some common deadlines and take a look at how
you can avoid problems as you go. When questions or discrepancies
arise, always consult with your broker and/or
Also, keep in mind that this book is written from the perspective
of a loan officer, so my major concerns are to provide
you with a look from my side of the fence. This is based
on my own experiences and those of people I’ve interviewed,
usually with mortgage, title, and client service lessons in
mind. While I think you’ll find this information very helpful,
there most likely will be a whole other set of details you have
to consider on every contract that have to do with the internal
processes of your own office: updating MLS listings, getting
contracts to transaction coordinators, sending escrow
instructions, etc. Make sure you understand this internal system
as well to keep all parties in the loop and on course.
I had an agent tell a client once that the response times on
the contract were really more of a guideline, not a true hardand-
fast rule. Those of you out there who’ve experienced a
hot, fast-moving market are shaking your heads right now.
You can tell stories of listings you’ve had with multiple offers
where it was all about response deadlines. Many of you have
probably had a least one listing where the buyer to whom
you made a counteroffer missed out because of an agent who
didn’t move quickly enough.
The other side of the coin is a sharp buyer’s agent who is
fully aware of the impending deadline, but has a buyer who
either can’t be reached or just doesn’t get the urgency of the
situation. Sometimes buyers can be reached by phone and
want to accept the counter, but aren’t available for signature
within the deadline. That’s where your reputation with your
colleagues and knowledge of the standard practices in your
area will determine the outcome. Verbal acceptances with
promises of ‘‘signatures coming’’ can be tricky business.
LOAN APPLICATION DEADLINE
Hopefully, you are representing a buyer who is fully preapproved
and this is not a worry. The offer you are writing
will always be stronger with a pre-approval letter attached.
If pre-approval hasn’t happened yet, be sure to discuss the
importance of moving quickly. I’ve had many agents request
the name of the client’s preferred lender while they were
writing the contract so that they could call and make the
application appointment right then. If the preferred loan officer
is out of town and won’t be available for ten days, it’s
nice to know. A decision needs to be made on whether to try
pushing out the deadline (not a great idea) or looking for an
Coordinating home, termite, and septic inspections can be
quite the juggling act. Throw in a water test, if necessary, and
things become even more complicated. The property, local
requirements, buyer’s preferences, and lender requirements
will dictate what the word ‘‘inspection’’ means. This is just
another example of how knowing your area and coordinating
with a lender early can be central to a smooth transaction.
You’ve got to figure out what inspections your client
wants or needs and how long they will take to complete.
While a professional home inspection is always advisable, a
client may choose not to have one, or may want to do their
own inspection. If they want a professional report, hopefully
you are familiar with the availability of inspectors in your
area and a general turnaround time.
Do we need/want one or not? In some areas termite inspections
are an unwritten rule on any property because termites
are a common problem. If a professional home inspection is
done, the termite inspection is usually already part of the
service. Many times your loan type dictates what is required.
Utah is a great example of the term ‘‘it depends’’ when it
comes to termite inspections in conjunction with loan requirements.
While we have termites in Utah, they are not a
common problem and termite inspections are not automatically
requested by a buyer. Typically, if a buyer is doing a
conventional loan on a property, a termite inspection is not
needed. The exception may come when an appraiser notes in
the appraisal that there were signs of infestation. (This
would be a rare fluke because appraisers are not going into
a home looking for termites; it’s not their job. But if they
see something obvious, they are supposed to note it in the
appraisal. Then the reviewing underwriter will want the
home inspected and treated if necessary.)
One other exception would be when an underwriter reviews
an appraisal and notices in the pictures of the home
that there is direct wood-to-ground contact. Many seasoned
underwriters will ask for a termite inspection in this instance.
Veterans Affairs (VA) loans and Federal Housing Administration
(FHA) loans have completely opposite requirements.
This is a new twist for lenders in Utah because VA
and FHA have always been very similar in their property
standards. FHA recently dropped its termite inspection requirement
for Utah. Last year we had to have them; this year
we don’t. Again, unless an appraiser notes a problem or an
underwriter requires one, termite inspections are no longer
part of the FHA loan process. VA loans, on the other hand,
still require a termite inspection.
So, my advice on termite inspections is to know your area
and/or call your buyer’s lender to be sure.
For some of you who always deal with properties on public
sewer systems, this will be a great bit of info for the property
that’s somewhere in your professional future and has a septic
Some counties require septic inspections anytime a home
is sold. These are usually conducted by a local municipal authority.
They will be looking at: (1) flow (are the toilets
flushing and the drains draining); (2) any signs of improper
leach field function (standing water/sewage in the yard); and
(3) whether the tank has been pumped in the last five years.
If not, that will have to be done.
FHA loans require a septic inspection only if there are
signs of system failure or if an underwriter or local authority
requires it. VA wants a septic inspection if there are known
soil percolation problems, or the local authority or underwriter
requires it. Conventional loans are dependent upon
the individual underwriter, but they are usually required.
If the septic tank needs to be pumped, a whole different
set of considerations enters the picture. This is great dinner
conversation and warrants taking some extra time for a few
fun-filled facts. First of all, it is rare that a homeowner remembers
or even knows that it is advisable to have a septic
tank pumped every five years, especially if the septic system
is older. Newer tanks are much more efficient but won’t be
exempt from pumping if it is a loan or municipality require-
ment. The party really starts when the homeowner realizes
that in order to get the tank pumped, they have to locate the
tank, and, more specifically, the opening to the tank. Nine
out of ten owners don’t even know where their tank is on
their property. Sometimes you can go to the county and the
system will be on record with a plot plan of the tank so you
can locate it. Many times I’ve had sellers out digging up half
their backyard trying to find the septic tank. This gets especially
interesting in some regions in January when the ground
Now for the really good news: Technology has left no
corner of the professional world untouched. It has even
found its way into the septic system business. I discovered
this last year when I had a buyer for whom I was doing a
loan, and who was also selling a property without the assistance
of a Realtor. My client was notified by his buyer that
their loan required a septic inspection and since they had
lived there ten years and never pumped the tank, a tank
pump as well. My client called me to (a) confirm that this
was a normal lending requirement, and (b) lament loudly
about the fact that they had no idea who to call for service,
what it was going to cost them, or where the tank was located.
It just so happened that I was familiar with a septic service
company in his area but couldn’t remember what they
charged. For whatever reason, my client felt too overwhelmed
to make a phone call and asked me to please call
them and find out the cost and call him back. Hey, customer
service, right? So I make the call and during the conversation
was informed that they offered a tank locating service as
well. For a mere $60 they would drop a ball in the toilet that
gives off a radio signal. They would then flush the toilet and
follow the signal out to the backyard until it stopped. Tank
located. But here’s the best part. They offer a $20 rebate if
you’ll retrieve the ball and return it to them. Is that a deal or
A water test could be required on a private water system (a
well) for many reasons. Some jurisdictions require it. Your
buyer may want it or it may be customary to the area.
An FHA loan requires it only under certain conditions,
i.e., mining or heavy agriculture within a quarter of a mile,
underwriter discretion, etc. VA will want it no matter what.
Conventional loans may want it at the underwriter’s discretion
and most underwriters will want one. Lack of potable
water means major problems with marketability and value.
Okay, so now you have all your inspections figured out and
have come up with a reasonable deadline date. Now it’s time
to worry about the appraisal deadline. Time frames can
really vary from area to area. Many areas are saturated with
appraisers and turnaround times are within a week. Other
areas, either because of lack of appraisers or an especially
busy market, are dealing with a three-week minimum wait
for an appraisal. In rural areas, long waits are especially
Wait times can also be lender specific. You would think
that since the lender orders the appraisal, they would just use
whatever appraiser is fastest. Most lenders will only work
with certain appraisers that are on their approved list or ones
with whom they have ongoing relationships. If those appraisers
are swamped, everybody waits. Knowing general
timetables for your area will help, but it’s always better to
check with the lender if you can. One other note is that with
VA loans, the lender doesn’t get to choose the appraiser. The
VA automated appraisal system assigns the appraiser to the
property. While VA has recommended turnaround times for
their VA-approved appraisers, there are no guarantees.
LOAN DENIAL DEADLINE
To be practical, this date should be far enough after the appraisal
deadline to allow for what we call final underwriting.
A loan can’t have a final approval without the appraisal, so
the lender can’t go forward with this step until the appraisal
is available. How long for final underwriting? That, too, can
depend from lender to lender. For some it’s three days; for
others it will be two weeks. If you haven’t researched this
with the buyer’s specific lender, you may be creating a deadline
that can’t be met. This would, therefore, put your buyer
at a higher risk for losing their earnest money if something
I can argue for two different approaches to loan denial
deadlines. From the seller’s perspective, dragging out a loan
denial date means that a buyer can tie up the property for a
longer period of time, have their financing denied, and still
get their earnest money back. While a seller’s property isn’t
taken off of the market, the status of ‘‘under contract’’ tends
to scare off any other interested parties. Not getting to keep
the earnest money is sort of like adding insult to injury if everything
falls apart at the end. While no amount of earnest
money is going to make up for a lost sale, at least it’s something.
As a seller’s agent you may want to lobby for as short a
deadline as possible when reviewing an offer with your client.
Buyers, on the other hand, always have the possibility of
last-minute loan denial due to completely unforeseen circumstances.
I’ve had buyers scheduled for settlement on a Monday
who got laid off from their jobs on the previous Friday
afternoon. It doesn’t seem fair to take their earnest money
when they’ve just suffered such a financial blow. To protect
them from losing their earnest money, a loan denial date as
close to the settlement date as possible is the way to go. Then
the question becomes, will the seller accept it?
This is the day when buyer and seller sign documents. Most
of us call this ‘‘closing,’’ but we are usually wrong. Closing
isn’t until the loan has actually been funded by the lender
(and the title/escrow company has the funds) and then recorded
at the county recorder’s office. At that point, the
transaction is actually closed.
Figuring out the best settlement date for your buyer
means you have to work backward. You first have to ask the
question, ‘‘Exactly when do you want to take possession?’’
You have to start with the day (and time of day) your client
wants to take possession and work backward from there.
This is absolutely critical for the buyer who is selling a home
simultaneously and trying to orchestrate a smooth move
from one house to the other. Get this one wrong and you can
have a buyer sitting curbside in front of their new home in a
U-haul they can’t unload and is supposed to be returned to
the rental place in four hours. Not to mention the fact they
have nowhere to sleep that night.
First you consider any number of days or hours that the
seller has requested to retain possession after closing. Example:
In a counteroffer, the seller wants to relinquish possession
48 hours after recording. Now calculate the time it takes
to record. Some escrow companies have the ability to record
electronically, so recording can happen within minutes of receiving
funds. Most escrow companies still have to physically
take the documents to the recorder’s office. Depending
on how they schedule their personnel, this can mean the difference
between a 4:58 p.m. recording on Thursday afternoon
and a 10:00 a.m. recording on Friday morning. That
means instead of moving into the home on Saturday evening
at 5:00 p.m., they have to wait until 10:00 a.m. on Sunday
morning, if the seller is not flexible.
Funding can really foul up a closing—thanks, again, to
your local flaky lender. Every lender handles their funding
differently. You have to hope that whoever is in charge of
doing this funding has shown up to work today, and if she
hasn’t, you have to hope that someone is supposed to be a
backup. I had a funding once that took three days to materialize.
I was a loan officer in a brokerage so I was dependent
upon the funding department of the lender to whom the loan
was brokered. (This was many years ago, and I have since
moved on to be with a mortgage banker that controls our
fundings in-house.) The point here is you need to talk to the
lender, get a time frame, and then pray that it happens.
Funding, recording, and possession practices vary from
state to state. Some states expect ‘‘table fundings.’’ In other
words, the loan money beats the client to the settlement
table. When loans are table funded, buyers can get the keys
to their home that same day. In Utah, loans are typically
funded and recorded the next business day after settlement.
Buyers get their keys then or at the agreed-upon possession
date after recording.
Take special care with out-of-state buyers. If they’ve
bought and sold a home before they often assume that everything
works the same in every state. This is how you and
your clients can arrive at the ‘‘anger and confusion’’ point I
mentioned at the beginning of this chapter. Again, when
writing an offer, don’t ask, ‘‘What day do you want to settle/
close?’’ Instead ask, ‘‘What day do you want to take possession?’’
and work from there.
Once a contract is accepted, be sure that you or your staff
log all of your contract deadlines and follow up on each one.
A good loan officer will be doing the same. By calendaring
these items at the beginning, you can relax and work through
the transaction, confident that you are representing your