If you have been actively selling real estate over the last year, you will noticed that a large numbers of sales are falling apart due to financing.  Since the beginning of 2009, my group has only had one transaction close on time and that was a cash deal.  Ask the loan officers and they blame the underwriters.  Ask the underwriters and they'll blame the loan officers and the appraisers.  Regardless who is to blame, there are far too many contracts falling apart these days due to the sloppy habits many of these lenders were accustomed to a few years back.

Upon reflection, the only conclusion that I am able to reach is that far too many people are being "pre-approved" that should never have been approved whatsoever.  However, the pre-approval process itself is a joke.  Lenders boast about how painless and effortless the process is.  Some will say they can have an approval in less than 10 minutes. 

10 minutes?  What can be done in 10 minutes?  You're telling me that it takes longer to make frozen pizza than it does to get a mortgage approval?  I know that in 10 minutes, the lender took the buyer's income at their word and reviewed their credit to see if they meet the minimum credit scores.  However, I know lenders hungry for a deal will even stretch a buyer who is close by not really able to get approved.  The end result is that you have a buyer who thinks they can shop with confidence, an agent who is hauling and hoping for a contract, and a seller who is depending on the sale to close to accomplish their goals. 

So to protect our sellers, our buyer clients, and ourselves, our group will no longer accept any lender's pre-approval letter.  After all, they're worthless born out of laziness and greed....I think you're getting my point.  Instead, every agent should demand that their client meet with the lender pre-home search and allow the lender to review ALL their information before hand. 

Back when I sold real estate in Maryland in 2003-2006, as listing agents, we demanded the sellers provide a full-loan commitment needing only a contract, termite, and appraisal.  During those days, I only can recall one transaction falling apart due financing (and I wasn't selling to sub-prime borrowers).  Today, I would put the numbers as high as 50%.  Even a year ago, I had one transaction fall apart a quarter and found that to be rare but not alarming.  Today, that market being what it is, far too many agents are writing contracts for under qualified buyers and anxious sellers and their agents are all too eager to accept.  

I want to encourage you to adopt our loan committment standard to assist in ensuring that your contract closes...period.

Charlotte Real Estate