BUYERS, DON'T BOTHER PREQUALIFYING WITH "YOUR" LENDER ~ BECAUSE MANY LISTING AGENTS ARE DEMANDING YOU USE THEIR LENDER. OR "THEM"

By
Real Estate Agent with MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 BRE 01235311

Recently I posted a VENT (read it here) about listing agents DEMANDING a buyer pre-qual with a specific LENDER. I even called CALIFORNIA ASSOCATION OF REALTORS (  C.A.R) and the attorney did say it is LEGAL, IF the Realtor has a SIGNED AGREEMENT with the repo bank, though he (the attorney) could see problems arising from it and did bring up the word RESPA "Hummm. Good point, I told him."

So, yesterday, I get a call from a client wanting to see a particular property.  I pull up the listing off the MLS to get the "Showing Instructions." Right after those remarks, I read (and my blood pressure shot up), the following: Buyer must be prequalified with sellers lender.  

GUESS who is the seller's LENDER?   This REALTOR!!!!    (Yes, he is a Realtor/Lender...plus he loves the the word EXPERT, as it's all over his advertising).

I have to tell you, I am getting more and more upset uptight, disgusted, pissed off about this NEW practice.  And if something isn't done soon, we're (Realtors) going to lose the rest of what little respect we do have, from consumers. 

This NEW PRACTICE smells like a bowl of peeled, rotten eggs and makes me sick to my stomach. And IF my clients ask me how I feel about it when this issue pops up, be sure I will tell them exactly what I AM THINKING.

 ...AND I plan to keep spouting off about it as often as possible!!!

**** JUST ADDED: I think what Vicki (#21) asked about Cross-Qualifying may be a happy medium to this situtation, as it is NOT DEMANDING that the BUYER QUALIFY with XYZ, it just asks that THEY CROSS-QUALIFY.  I'll think about this a   while...

~ ~ ~

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Rainmaker
291,273
Darrell Walters
W. Darrell Walters - Newnan, GA

The Realtor must not do much business as a lender.

If he did, I couldn't see why he would upset his biggest referral source, real estate agents, by competing with them!

Jun 05, 2009 10:52 AM #5
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Lee & Pamela St. Peter
Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522 - Raleigh, NC
Making Connections to Success in Real Estate

Hi Kat, may I inject another side on this subject?  Your points are very very valid and I have to just hope that the type of pre-qualifing you described isn't the norm of what is going on. 

Here's another side to consider.  With all the online lenders available we have found that it's very easy for a buyer to produce a pre-qual/pre-approval letter.  AND we have been burned.  Usually it's by a company we don't know them, nor are they even in our local.  It's happened that take the property off the market as pending, taking at face value these buyers are good to go as their prequal letter advised.  But then the cards come tumbling down.  Weeks later, maybe even a month of being off the market we start to sense this buyer isn't going to get their approval. 

So we'll put that financial requirement on our lisitings and it'll read; Buyer MUST be pre-approved with  such and such bank - our inhouse lenders name  919 000-0000, but may close with any lender.

It's not our attempt to steer anyone - it's our only defense and protection for our seller.  Is there another way to avoid getting burned by not so valid approvals?

Jun 05, 2009 11:05 AM #6
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Scott, I am seeing it more and more and more... daily!

#5.  These Realtors doing this, seem to be trying to double end the deals, as they're not likely to even return calls... EXCEPT as I found out, to my BUYER.

Jun 05, 2009 11:05 AM #7
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Lee and Pamela:  Oh I see your point, totally. My buyers are always pre-qual'd with a "live" body and not online, so I KNOW whom they're working with and try to avoid those nasty hiccups later on down the loan line.

 But what I am seeing here is Realtors TRYING to get clients and WORKING too closely with"some" banks. And some of these Realtors are definitely trying to grab other Realtors' clients. I can say this because it is happening over and over.  IF I call certain Realtors for info on a listing, I will NOT get a call back. BUT if my client calls the listing Realtors, they will get a call back ASAP.  Smells fishy.

What you're inserting into your disclosure about  the buyer being free to use another lender is perfect, but it is NOT happening here and IT SHOULD BE.

All I know is my buyers are getting more and more ticked off.

Jun 05, 2009 11:16 AM #8
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Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Kat,

After the pre-qualification with "their" lender, are your buyers free to choose whoever they want?

Rich

Jun 05, 2009 11:20 AM #9
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Rich: Though that is what it should say, it DOESN'T. There are no disclosures to that affect.

Jun 05, 2009 11:29 AM #10
Rainmaker
598,880
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Kat - YOU GO GIRL!  Oh don't even get me started on this sleazy practice.  For those of us in the mortgage biz, we've been dealing with these snakes for quite some time.  While these sleazy banks will tell you that these practices are a means to insure the prospective buyer is truly qualified, we (other lenders) all know that these practices are simply marketing ploys to abscond with other lenders qualified buyers.

Recently, a client of mine (who was referred by a friend and I had spent approx. four months working with) was asked to pre-approve with this big, national bank.  Since my client is a very busy person, he asked me to take care of it for him.  When I contacted the "preferred" bank rep and explained who I was and what I was calling for, they immediately refused to speak with me and told me they only speak with buyers.  I relayed the message to my client.

My client was annoyed but called anyway because he wanted the property.  My client had to go thru the same process I put him through, he had to have his credit pulled again and the rep nagged him throughout the whole pre-approval process about going with her and the "preferred" bank.  On numerous occassions, my client told the rep he had no interest in changing lenders.

At this point, the bank rep insinuated that my client had a better chance of getting his offer accepted if he went with her instead of me, which infuriated my client to the point that he told her he would let his Realtor know that because he was sure that his Realtor, who also sits on the MLS board, would be very interested in hearing that.

Needless to say, my clients offer was accepted and throughout the entire escrow, this bank rep continued to call my client in an effort to get the loan, right up to the day we ordered docs.  CAN WE ALL SAY WTF?

Jun 05, 2009 03:08 PM #11
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Donne: THANK GOODNESS someone understands my frustrations!!! Thank you. It's these kinds of stories that are pissing me off.  SNAKES - there is no other way to say it and I don't mind saying it.

RE: Recently, a client of mine (who was referred by a friend and I had spent approx. four months working with) was asked to pre-approve with this big, national bank.  Since my client is a very busy person, he asked me to take care of it for him.  When I contacted the "preferred" bank rep and explained who I was and what I was calling for, they immediately refused to speak with me and told me they only speak with buyers.  I relayed the message to my client.

YEP... have had this happen.

But for some reason, people (REALTORS) accepting this kind of crap. 

NOT me, I'll go down kicking and screaming and CALLING C.A.R. and turning in violators.

THANK YOU FOR SHARING!

Jun 05, 2009 03:19 PM #12
Rainmaker
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Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Kat - In retrospect, I should have reported her then too but I didn't want to jeopardize my clients chance of not getting his offer accepted.  This guy had been looking for months and had already had several of his offers beaten out by other offers.

This particular time though he was best and highest and got the property regardless of what the "preferred" bank rep said.  Personally, I told him that she was just saying that in hopes to scare him into going with her.  PATHETIC!

Jun 05, 2009 03:25 PM #13
Rainmaker
1,163,705
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Kat - I often shake my head at some of the events and practices going on in our industry, that we wouldn't have dreamed of a few years back.  It's just as Donna says, "PATHETIC!"

Jun 05, 2009 03:59 PM #14
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Donne: EXACTLY, Pathetic!  And here's what I keep hearing from "some" Realtors, "Well, the sellers/Realtors/Banks just want to make sure you're bringing a QUALIFIED buyers."  HELLO, that is what I've always done. THAT is the correct practice, PRE-QUALIFY your buyer, RIGHT?.   Ah... I'm so sick of it.

Jun 05, 2009 05:10 PM #15
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Myrl: This seems to be a new FAD of sorts, but a VERY dangerous one.  Just mark my words, WITHIN THE NEXT YEAR or so, we're going to start seeing/reading/hearing about lawsuits and Realtors/Lenders losing their lic.  because of this crap.

Jun 05, 2009 05:12 PM #16
Rainmaker
644,390
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Kat,

I agree this practice is smelly! But you don't have to use their lender, just agree to be prequalified by them!!! Insist, on behalf of the consumer you represent, that the ultimate lender is one your consumer has chosen...!!! Thanks,   Fran

Jun 05, 2009 06:25 PM #17
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Fran: Oh, believe me, I do...I do.  THANKS, friend!

Jun 05, 2009 09:44 PM #18
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Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

That's a bunch of BS. I don't approve of any who wear many hats or the companies that have escrow, lender and real estate co all in one either. CONFLICT OF INTEREST. That's a big one for me and I have NO problem spewing about that either.

Jun 06, 2009 12:34 AM #19
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Woo-Hoo: AGREED 100%... BUT it is happening here MORE and MORE and I loathe it!!!

Thanks for commenting

Jun 06, 2009 09:27 AM #20
Rainmaker
158,573
Vicki Pedersen
Pedersen Real Estate - Riverside, CA
Providing Exceptional Real Estate Service

Kat, Being in that same market of Southern California, I agree that this practice is bad (for the most part).  But I know have a different take on it.  I have a new listing - people were in escrow with their previous listing agent. The buyers had a pre-approval from a fly-by-night lender -which ended up being meaningless.  Eventually the transaction was cancelled because these people could not get a loan.  Now I have the listing.  The sellers are so afraid of that happening again.  We are asking that any buyers with a pre-approval from a lender that is not recognized be cross qualified with the loan person I trust.  This is like insurance for my sellers.  A pre-approval from a major lender likes Wells Fargo, or BofA won't need that cross qualification.  And we aren't trying to steer business away from anyone's lender.  In this type of situation, what do you think of asking for a cross qualification?  I'd love to hear your opinion.

Jun 06, 2009 05:43 PM #21
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Vicki: I so agree that NO ONE should use though fly-by lenders. NEVER.   And, every case is different.  My take is, I ALWAYS have had my buyers PRE-QUAL'd or Approved with reputable lenders, as we were ALL taught to do when we started in R.E.  

I just really get a bad taste in my mouth when I have a GREAT buyer who has done ALL the right things and then is TOLD, "So who cares if you're pre-qual'd, YOU'RE still going to HAVE to BE PRE_QUAL'D with my lender. 

CrossQualfication can be okay..if it isn't nicking my buyers credit scores 

We all have to do what is best for our clients in the end.

Thanks Vicki, for your take on this. I appreciate it.

 

Jun 06, 2009 06:25 PM #22
Rainmaker
1,224,353
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

There is an upside to this, if you think about it. We see this all the time in Sacramento. Primarily, the listing agent (and sometimes the seller cares, too) wants to know that the buyer is truly qualified. There are those back-burner agents-slash-mortgage brokers who sometimes issue prequal letters for buyers that are bogus. Then the seller has sat in escrow for 3 to 4 weeks before anybody discovers that the buyer's lender can't perform because the buyer wasn't properly qualified. It happens more often than I'd like to think.

The lender does not demand that the buyer get the loan through that lender. The buyer is still free to choose his or her own lender. But the upside, I'm getting to this, is the fact that in Sacramento, almost every desirable listing is receiving multiple offers. On top of this, the poor mortgage rep who has to prequalify all these buyers realizes that only one buyer will win the offer, and that buyer may not use that mortgage rep for the loan, so all the work that rep has done is in vain.

OK, OK, so the upside, the upside is the mortgage rep KNOWS how much all those other buyers are offering for THAT HOME. This is where you can find out, if you do it properly, the amount a buyer is bidding against, if you get my drift.

sacramento short sale agent

Jun 07, 2009 11:02 AM #23
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Kat DeLong
MOUNTAIN COUNTRY REALTY, Lake Arrowhead. (909)-273-4542 - Lake Arrowhead, CA
Realtor BRE#01235311, Lake Arrowhead Real Estate (

Elizabht: LOL  I like the "Upside."   Thanks for sharing! 

  You know, I SHOULD clairfy that there are a LOT of wonderful lenders & Realtors out there.... that said, I'll stop.  :)

Jun 07, 2009 11:57 AM #24
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Kat DeLong

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