When is a Palo Alto Loan Approval Not Really an Approval

I have been selling real estate Palo Alto and the the Silicon Valley for almost 18 years. I have seen a lot, but this last week was a new experience. I have a client buying a home in Palo Alto. They had a pre-approval letter, and 2 weeks ago got an approval from the bank for their loan. They were specifically told to remove their loan contingency and were given written confirmation of the terms of their loan.

We were then told that loan docs would be ready last Fri. for a Tues close. Last Fri their were no loan docs, and we were told that the underwriter said no and the mortgage broker was trying to get an exception. So of course out question was, why did you send us an approval and tell us to remove loan contingencies if we were not approved?

By Monday still no docs or approval.

On Tues my client walked into the bank and reviewed his file. It turns out there were a lot of mistakes. His file said he makes $1000 a month less than he does, and his student loan payments were $1000 a month higher than they really are. The mistakes were fixed, loan approved on Wed, loan docs in tile on Thurs, signed, and we were able to fund and close today, Fri.

It was stressful, to say the least. So what happened? I cannot answer but I have a hunch.

The Palo Alto market is insane. It is very difficult for buyers with loans to compete with those with cash. Lenders are anxious to get these loans, often for over a million dollars as this one was, and they tend to over promise and rush. When you over promise bad things can happen. When you rush mistakes are made.

My take away from this, when I list a home and a buyer's agent tells me they can get loan approval in 7 days and close in 21 days don't expect it to happen. If I did it would only lead to disappointment. As a buyer's agent don't over promise or believe a lender's over promise. 7 days is not enough time for a true, full approval, period. And when a yes becomes a no, look at the file and don't just accept it.

If you have any questions about buying or selling a home in Palo Alto please feel free to contact me.

Marcy Moyer
Keller Williams Realty
www.marcymoyer.com
marcy@marcymoyer.com
650-619-9285
D.R.E. 01191194