It Wasn't Me - Who Brought About This Mess?

I was at a class last week on Short Sales.  The instructor asked the question "Who is responsible for the current situation where so many homeowners find themselves in danger of foreclosure?"  The ideas started to fly around the room.  It was the stock market, the government encouraging home ownership for all, the banks, the mortgage brokers, unemployment, etc. etc.  Well, I raised my hand to add that although it might not be popular in a room full of Realtors, we as a group had to accept some of the blame.  In the frenzy of easily obtained mortgage money and the brisk paced market we were taking out people prequalified for mortgage amounts that really were not feasible.  I said that as a buyer's representative I would often find that clients had no idea of the monthly payments they were "prequalified" to make.  Many times I would say well based on your income you could qualify but do you want to eat??

Many agents in the room agreed but there were still a few that said some disturbing things.  Well I assume that the financial details were reviewed by the mortgage lender.... It isn't my job to tell someone that they can't afford what they want.... and most upsetting, well I tried to tell someone they could not afford a $450,000 house once and lost them as clients so I stopped questioning them.  I was floored that this was admitted in the class.

Bottom line we are acting in a fiduciary relationship with our clients.  We are required to look out for thier best interests.  If you work for the seller you need to explain the bottom line of an offer, they need to know how much they will clear at closing and all the things that can affect whether the offer is something that they can accept.  If you work for the buyer you absolutely need to make sure they understand what they are getting into.  

I hope that I can make a living doing this work for a long time to come but I won't let fear of losing a buyer or seller because I point out important financial information to them.  I trust that most of us feel the same.  I may lose a client but I can sleep at night.