OK - so I understand when you have a client that is purchasing a bank owned property, there are hoops you have to sometimes jump through. Often, one of these is the requirement that buyers get approved by a lender chosen by the seller. We've all seen it. Personally, I don't really like this requirement. By Illinois License Law, the buyers have no obligation to use that lender. That lender can do a pre-approval and issue one for the client, but other than this, what do the sellers feel they are getting out of this requirement? The lender shouldn't be sharing personal information from the client with the other agent or seller without the permission of the buyer - if they do, they put themselves in a pretty hefty legal situation. So other than a pre-approval from a lender the seller knows is good, what is the advantage? I know some REO agents require this so they can put a bunch of hurdles in place for buyers and can delay accepting offers from other agents so they have the opportunity to sell it in-house first. I've had a client who wanted to badly put an offer on a home that had this requirement and the lender refused to do a pre-approval because he, "heard there was someone else already interested in the property and didn't want to waste his time". Yea.
So anyways, I know this happens for REO properties, but lately I'm starting to see this on short sales. Now, I'll have to say this is somewhat confusing to me. First, I understand that the sellers want to make sure that the buyers can actually purchase the home. But I thought that's what a pre-approval is for. I mean, even if the buyers get a pre-approval from a preferred lender, that's still no guarantee they're going to go forward with the purchase. So now we're putting hurdles in place for buyers that want to buy your short sale? With the hundreds and hundreds of other short sales out there just like it that don't have hurdles?
It's not like most of these short sales are easy 5-day quick close situations like a REO - most of the time the seller needs the buyer's patience in order to get approval. Plus, getting a bona fide offer on the home is generally a good thing for the seller even if it does eventually fall apart. The seller gets to start working with the lender for approval, usually gets the judicial sale delayed and can generally get the ball rolling.
Is there some program or class or training manual out there that I missed that is telling agents it's a good thing to require this of buyers on a short sale? Or is this the whole "preferred lender" thing where the lender will "do things" for the agent in return for that agent requiring all offers get pre-approved through that lender rearing its ugly head?
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