We are trying to sell our house and one of the realtors suggested it. My spouse has undiagnosed dementia and lots of physical problems. The suggestion was in case he becomes unable to sign or understand the sale process. I see that as unlikely at this time.
It was 3 months since Dad signed the Listing Agreement and the date of closing... Dad's memory was fading a bit more. No way would I wanted Dad to sit through a long drawn out Settlement Closing, so I used his POA to represent him. Plus I was afraid he might start a story telling line-line from when he and my late Mom had bought the house 30 years ago. Didn't need to re-hear the story of the day the sump pump stopped during a bad rain storm... [sigh]
When you get a financial Power of Attorney, made sure the address of the property is written within the POA. Otherwise, the Settlement Closing company would request you use their own POA, and what if hubby isn't able to sign it, you don't need more speed-bumps.
Durable Power of Attorney ("DPOA") allows your agent (known as an "attorney-in-fact") to make decisions and transactions involving your material possessions: your real estate, bank accounts and other assets. Without DPOA, your family members would need a Probate Court Conservatorship to manage you financial and business affairs if you become unable to make informed decisions.
Everyone over age 18 should have a DPOA, no matter how young or old. Without DPOA (and Health Care Proxy) a parent does not have legal authority to manage the affairs and decisions for a young adult child who becomes unable to communicate informed decisions.
So, we all need to have these important documents in place. The most important question in the circumstances you explained is: whether your spouse is able to execute a Power of Attorney. The answer depends on the level of competence he still has.
If he is still able to comprehend the act of designating an agent now, but suffers a loss of competence before your house closing, you will be stuck. The only way you'll be able to give a deed to your buyer will be under the authority of Probate Court, and that will be costly in time and trouble.
Your next step right now is to contact an elder law attorney in your state.
I'd explore if husband is competent to sign a POA at this point. If so, it might help. If not, I'd ask the attorney for options.
Of course, if husband is able to sign the real estate documents.......it sounds like the realtor has some concerns.