I am only one small fish in the sea, and only represent a tiny portion of the real estate transactions taking place in San Francisco on a daily basis (yes, properties are still trading, and trading briskly). To assume that my experiences are an 100% accurate depiction of the market would be plain foolish. I rely on my colleagues and Stammtisch when writing a lot of what I write, so I digress to them again. Colleagues!?

Hi Alexander,

I’m an avid reader of your newsletter and blog. I’m curious what changes in loan contingencies you’re seeing as of result of tighter lending. Have buyers become more conservative in their offers and are sellers more open to longer loan contingency removal periods?

Sonia

My reply (with updates):

Sonia,

From what I’ve experienced (this is why I should post it, you’ll get more feedback) the loan contingencies on offers are still very similar to the way they were previously. However! Pre-approval letters, down payments, financial statements, and all the other forms that were previously over-looked (over-looked was not the best word…”glanced at” is better) when offers were submitted are being much more scrutinized, and loan approval dates are much more important (read longer). I have a listing coming up this week, and if/when an offer comes, I plan on calling the lender/broker directly to make 100% certain the buyers are qualified and their loan will go through (before) their offer is accepted. (Per our latest email, no, there are no guarantees until the loan is actually funded.)

Many buyers have simply been pushed out of the game. So yes, buyers (in general) have become a bit more conservative and many are on the fence waiting to see what happens. That said, there are still hundreds of “hungry” buyers out there that see this as an opportunity for less competition on the homes they desire.

The truth of the matter is that there are still great loans to be found, you just have to have excellent credit, and a healthy down payment (and proof of financials ). That doesn’t mean you can’t put 10% (or less) down. You just need the right broker/lender.

(Sellers are more open to longer contingency removals. They have to be. But that doesn’t mean that offer will be accepted, because there is likely another offer alongside theirs.)

Again, thanks for reading and please spread the word.

Sincerely,

alex clark

Any colleagues care to elaborate? It would be much appreciated.