New GAR Financing Contingency Exhibit

April 20, 2011 by · Leave a Comment 

The Georgia Association of Realtors (GAR) has unveiled a new Financing Contingency Exhibit that has significant changes of which all realtors in GA need to be aware.  Reference the new Conventional Financing Contingency Exhibit, which is effective as of Jan 1, 2011.  Note that similar variations exist for both FHA and VA loans as well.  The exhibit is divided up into seven sections.  Here is what you need to know about each section:

1.  In this section, the buyer is given a limited number of days make loan application.  Getting the application going is of utmost importance and I suggest stating no more than 3-5 days in this blank.  What is new in this section is that the buyer is now required to give the seller evidence, through either a letter or a Good Faith Estimate, that they have made application.  The creation and delivery of this letter adds a new step to the process for both the loan officer and realtor alike.

2.  This section presents the listing agent with an incredible opportunity to influence where the buyer obtains their mortgage.  Here is a great opportunity to require the buyer to make application with the lender and loan officer you most trust.  May I suggest including something like the following in the blank provided:

       James Williamson / Shelter Mortgage Atlanta / 404-329-5595 / Submit an online application at

By including the loan officer’s contact info on this exhibit, you are not requiring the buyer to obtain their loan through this lender.  You are requiring them though to submit an application through this lender.  And, keep in mind, that good lenders do a good job of winning loans and will be able to convert a fair number of these opportunities.  That will certainly minimize how much you need to worry about the financing on those listings!

3.  Nothing new in this section.  The buyer is given a certain number of days to obtain loan approval before the Financing Contingency Exhibit is no longer valid.  I suggest including at least 20 days in this blank.

4.  This section requires another new letter to be provider by the loan officer.  The buyer is now obligated to deliver to the seller a letter confirming their loan approval.  This is super important because if the buyer fails to provide the seller with this letter, the seller may now terminate the agreement within seven days.  Yikes!  You can see that this is an important letter and that both the loan officer and the realtor need to be on this!

5.  This section presents a major change as the buyer is now authorizing the loan officer to talk to the listing agent or seller and inform them of the status of the loan application as well as specifics about the buyer’s ability to obtain the loan, what they have and have not provided thus far, and what conditions remain.  This is a huge change and will no doubt put many loan officers in a precarious position!

6.  Not much to be concerned about in this section.

7.  The appraisal contingency is now conveniently included in the financing contingency consolidating the forms into one.  By signing this form, both parties agree that if the appraisal comes in lower than the sales price, then the buyer can request within a certain number of days from the binding agreement date that the seller reduce the price to the appraised value.  I suggest including the same time period in this blank as the financing contingency in Section 3 (at least 20 days).  The seller is also given the right to accept the lower price and continue with the contract.  Thus, if both parties agree to the lower appraised value as the new price of the home, then the contract survives.

GAR’s new Financing Contingency Exhibit can be a great new tool for you to use in your business. Study up on it and be sure you know exactly how to use it.  Please let me know if you have any questions about this exhibit.