The other day I posted a message about providing a buyer's credit score to a seller when making an offer (with the buyer's written permission, of course.) While most of the comments I received were positive, I received one comment that disagreed with the idea. The agent suggested that I stick with having the listing agent talk with the buyer's lender.
Interesting concept, I thought. Talk with the buyer's lender. Now why hadn't I thought of that? Oh, yeah, right. I already had thought of that. There's on little problem with that strategy: Buyers and their lenders have been known to ... what's that word ... oh yeah ... LIE. Or at least fudge the facts. Sometimes give a little more glowing report than the truth might support.
My suggestion that sellers demand more factual information about the buyer when considering an offer was based on numerous bad experiences "talking with the buyer's lender." The lenders have nothing to lose by misleading a seller into thinking the buyer is "rock-solid." They can blow all the smoke they want and have no repercussions. "Oops, my bad," is all they need to say when the deal falls through and everything's all good.
Frankly, I think we owe it to our sellers to exercise better due diligence.
If you feel uncomfortable asking for a credit score, how about a written, signed statement by the buyer to the seller that the buyer 1) has the cash to close in a demand deposit account right now, 2) has no liens, judgments, bankruptcies, or other legal action that would prevent the buyer from closing within the term of the contract, and 3) if the statement contained in this signed statement are false, the buyer will forfeit the earnest deposit to the seller. Way back in 1993, after having several transactions fall apart because of misinformation provided by buyers, their agents and lenders, I created a Buyer Financial Disclosure form with those questions (and a few more) and requested buyers complete and sign it before I presented their offer to a seller. Not every buyer agreed to fill it out but very often I had two or three offers on a listing and guess which buyers won out? The ones who had provided the seller with bona fide information about their ability to close the sale and were willing to put their money where their mouth is.
I happen to think the credit score approach is a little simpler and less intimidating but either one will mitigate the risk your seller faces when accepting an offer.
Another thing I did about a year ago is this: I created a "Best Lenders" list on my web site. Check it out at www.donphelan.com. Just scroll down to the "Best Lenders" icon. Whenever a buyer asks, "Do you know any good lenders?" I say, "Yes, I know several good lenders" and hand them the list or direct them to my web site. The only way lenders qualify for the list is by referral and/or an exceptional experience with them in a real estate transaction. Nobody has paid a cent to be on the list; a lender can't buy their way in.
There are enough lenders to choose from on the list that buyers can feel quite certain they have pleny of options to comparison shop for a competitive interest rate and will have numerous lending programs available.
'Course, you can keep having the buyer's lender and listing agent chat, but if you want to improve the chances your purchase agreements will see a closing, it might be time to try something new.
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