Make sure finance approvals aren’t subject to a valuation or income check before sending them through as formal finance approvals.
To proceed to settlement on a contract that is subject to finance, we need a copy of the formal finance approval, which we usually obtain through the real estate agent involved.
Often, finance approvals are subject to conditions such as acceptance of the lender’s terms and conditions or an original First Home Owner’s Grant application being held, and when this is the case, we can still proceed towards settlement.
However, if the finance approval is conditional on a property valuation or an income check, this does not make the contract unconditional and we cannot proceed towards settlement.
Despite this, we often see finance approvals come into our office that are still subject to a property valuation or an income check. While this does not put us out of our way much (we simply contact the agent and wait until an unconditional finance approval becomes available), agents that mistake these finance approvals for formal finance run the risk of incorrectly informing their vendors that the contract has become unconditional.
In some cases, agents have consequently found themselves with very disgruntled vendors, who made plans to move on a certain date only to find that the contract had not become unconditional yet and, as a result, settlement would not occur until weeks after the expected date.
To avoid such confusion, ensure that finance approvals are not conditional upon a property valuation or income check before sending them through as formal finance approvals.
Image by Ed Mitchell via Flickr.