We as Realtors have all felt the blow of the lending situation and have run into some pit falls due to unqualified "pre approved" buyers. Delayed closings, and closings that are not happening, all due to the buyer not being as qualified as the letter his agent slaps on top of the offer.
We as listing agents owe it to our buyers to research the buyers before signing the dotted line on a Purchase adn Sale contract. Just having that letter is not enough. When you get that offer, call the lender and ask questions. Here is what I am asking all potential buyers lenders:
- How far has the buyer gone in the pre approval process? Is there pay stubs and tax papers still needed to be reviewed? If so, the buyer is not truly approved!!
- Is the amount the buyer offering within their means? Most of the time when an offer is made the limit the buyer is approved for is not on the letter. Review the purchse and sale with the lender, make sure that what they are offering is something that is truly within their means.
You are not stepping on anyone's toes by doing a little research before your seller signs. You will be avoiding stress later on in the game, and we all know there is enough stress in closing a deal as there is. You are better representing your client by doing this and they will thank you for it.
As for buyers reps you should do the same before taking on a new client. Don't just ask for the letter, save yourelf time and money invested into a person by asking as many questions as you feel needed.
Did I always do this? No, I used to just take the pre approval letter and run with it..but with the changing trend in mortgaage lending, I have found more action is needed and has saved me lots of heartache.
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