Home buying and moving are stressful tasks that normally take a lot of time. But when time is of the essence, it’s possible to expedite even these complicated jobs.
Especially at this time of year, home buyers are ready to get things wrapped up as quickly and painlessly as possible. With the start of the school year, a delayed or prolonged move means that kids may have to start at a new school in mid-semester.
But rush moves are a permanent part of the home-buying scene now, notes Peggy Cortright, regional manager with Mortgage Market Information Services Inc., Paoli, Pa. “Companies now transfer people on the spot, all year long. You no longer see companies giving families the luxury of having a whole summer to prepare for a move.”
How fast can a buyer select a home, put in a contract, seek financing and then close and take possession? “The quickest I’ve ever seen has been just two days from contract to closing,” says Spring Grove real estate attorney Neil Anderson. But that was a rather extraordinary case, Anderson admits, because the buyer didn’t need a mortgage to make the purchase.
For most home buyers, say the experts, it’s possible to go from contract to possession in about 30 days. The usual length of time is 45 to 60 days, but the tempo can quicken with the right tactics and a little luck.
Jumpstart financing
“Usually the thing that holds everything up is the buyer’s ability to get a mortgage,” Anderson notes. Real estate agent Dorothy Marmor, of Martin & Marbry in Skokie, agrees: “If a buyer waits until he puts in a contract on a home to seek a mortgage, it usually takes anywhere from 30 to 45 days for a lender to make a decision.”
That’s why both real estate experts and lenders recommend that buyers see a lender for “pre-approval” before they start looking at homes. The tangle of paper and information that lenders must examine to determine the creditworthiness of a borrower is a time drag, but can be shortened by pre-approval.
Most lenders offer pre-approval and do not charge for it, or charge a fee of about $50 to cover a credit report. In essence, borrowers ask to be approved for the biggest mortgage loan they can afford, and provide the necessary information on their finances and employment. Armed with a pre-approved loan, buyers can put a contract on a home they know they can afford. (They don’t have to actually seek the maximum mortgage amount, they can come in under that figure.)
Pre-approval itself takes about four business days, notes Reed Brunzell, senior loan officer with Windsor Mortgage, Northbrook. Applicants must supply three months’ worth of bank statements, the two previous years’ W2 forms, or two years’ worth of tax returns if they are self-employed, Brunzell says.
“Then the only thing the pre-approved buyer needs to do is come back and put in an actual application and pay for an appraisal on the property they want to buy,” Brunzell explains. “The appraisal should only take a week or so.”
“It shouldn’t take longer than a week for the appraiser to come out and the lender to make the OK,” says Tom Sampson, vice president of United Financial Mortgage Corp. in Oak Brook.
However, Cortright cautions that borrowers should shop for a speedy lender. Ask how long it will take to get a mortgage commitment once a pre-approved borrower puts a contract on a home, he suggests. “Some lenders will bend over backwards to push things through quickly. And some, especially smaller banks, still operate the old-fashioned way and have a committee that meets once a month to approve all loans,” he says.
What’s more, home buyers who are making less than a 20 percent down payment are required by lenders to take out private mortgage insurance (PMI), which can slow the process. “Your mortgage application goes to a second underwriter, so there is a two-tier process of approving the loan,” Cortright notes. “It can add a week onto the time from application to approval.”
Sampson says that borrowers who need PMI should shop for a lender who has been given the authority from the insurer to approve a borrower. “Then the approval for PMI can be given during the pre-approval,” he notes. “You don’t have to wait until you actually apply.”
Cecilia and Don Friedman say that the pre-approval process was a big factor in enabling them to move to Grayslake from California earlier this year, just three weeks after a whirlwind weekend of Chicago-area house hunting. “By express mail and fax, we got pre-approved with an Illinois branch of a California bank while we were still in California,” says Cecilia. “When we came to Chicago, we looked at 30 homes, put in an offer on one, and were able to close three weeks later because the lender already had the paperwork.”
If a buyer is really in a rush-makes an instant decision to move and doesn’t even have the luxury of first getting pre-approval-he might still be able to expedite the mortgage process if he seeks a lender willing to take “alternative documentation,” says Sampson. “If you give the lender alternative documentation-three months’ worth of bank statements, two years of your W2 forms and a month’s worth of paycheck stubs-he won’t have to verify your employment with your company or check with the bank about finances.”
Domino theory
Of course, just because the buyer is ready to up and move, doesn’t mean a seller is anxious to make a fast getaway. “For everything to work, about three or four parties have to agree,” notes Marmor. “It’s a domino theory. The seller has to be able to move into the place he’s buying quickly, too.”
When time is of the essence, a buyer and seller are likely to agree on rushing things along if the buyer meets most of the seller’s terms, says Ellie Lavi, a broker with Kahn Realty Co. in Lincoln Park.
“The closing date can become part of the negotiating,” adds Maria Davies, a real estate agent with Coldwell Banker, Evanston. “If the seller has no strong motivation to move out faster than the usual 45 or 60 days, he may be willing to move things ups two weeks faster if he gets 1 percent more in price.”
Indeed Robert Shrago says that he was more than willing to accommodate a hurried buyer when he recently sold his Chicago home within 3 1/2 weeks after the offer came in. The Shragos moved in with relatives until the Highland Park home they were purchasing was available.
“We’ve heard of so many nightmares of deals falling through or of not being able to sell your house while you’re trying to purchase your dream home, that having to move in a hurry sounded like the lesser of other possible evils,” says Shrago. “We got a little bit more in price and we were willing to accommodate the buyer’s date. It was a nice tradeoff.”
Like other terms that the buyer and seller must agree on, the closing date is always stipulated in the written contract to purchase, notes Anderson. “In fact, a real estate contract isn’t valid unless it has a specific closing date.”
Narrow the field
Vacant homes from which the seller has already moved are usually available quickly. “It is good to find a vacant property,” notes real estate agent Lavi. “But you are really narrowing the scope of the search if you limit yourself to vacant stuff.”
“You show (buyers) everything that is available in their price range,” says Lynn Fairfield, a real estate agent with Baird & Warner, Libertyville, who showed homes to the Friedmans during their whirlwind weekend. “And then you find out through negotiating whether or not someone will move fast.”
Time-pressed buyers may find sellers more willing to move in areas popular with transferees. “We have so many people moving into this area who are being transferred by their company,” notes Fairfield. “Anytime I get a listing, I tell the sellers that they should be prepared that the first person who walks in might want the house in 30 days.”
Chicago area transferee hot spots include Naperville, Libertyville, Grayslake, Gurnee and anywhere where new housing construction is plentiful, notes Kathleen Thuerk, president of Relocation Experts Inc., Oakbrook Terrace.
Temporary arrangement
Rushed buyers who can’t secure a fast closing might want to consider negotiating a “prior possession agreement,” notes attorney Anderson. “If the buyer wants to get in the house in order to have his kids start school, it is fairly common to have this agreement whereby the buyer rents with the understanding that once he takes possession he takes the house as is. If the furnace breaks, it is the buyer’s problem.”
Sellers are sometimes resistant to this approach, though, says Anderson, because they risk the buyer not getting a mortgage or some other snag that will derail the actual sale and closing. Real estate experts also cite cases where the deal evaporated after the buyer moved in before closing and then discovered or even created problems with the house.
