As competition weakened amongst home loan lenders during 2009 there was a common and frustrating side effect: Buyers started asking for 21 day finance clauses on their contracts.
This wasn’t something buyers dreamt up, but rather a regular directive issued by the banks in what we can only guess was an attempt to ease their paperwork pressures. And it’s still happening now.
Buyers and their banks need to consider the ‘cost’ of expanding the normal finance timelines of 7 or 14 days. A seller has to effectively withdraw their property from the market while they wait to see if you’ll get your money. They might have started a new marketing campaign, ads booked, money spent. When sales were slow sellers might have agreed to it but now they’re likely to need a premium price to justify the delay.
Yes the agents can take back-up contracts (that take effect only if the first contract fails) but will that second buyer also be happy to join the game of ‘wait and see’ and miss other homes?
We hear Australian car buyers can now access pre-approved personal finance online. “Synergy” uses sophisticated identity checking, credit assessment and dynamic verification. It means they can get conditional pre-approval 24/7 in one internet session.
Three weeks for a home loan approval? Buyers should be asking for better service from their banks.