MANAGING THE BUYER'S FINANCING IS AN IMPORTANT BUYER'S AGENT'S DUTY, Chapter 5 of 8

* * * *  HARD CORE REAL ESTATE TALK * * * *

LENN IS PAID FOR WHAT SHE KNOWS, NOT FOR WHAT SHE DOES!

Reference is made to the recent posts of Gary Bolen and comments thereto by Bob Stewart about agents getting the message out describing [justifying] the services provided to home buyers.   

Specifically, Bob Stewart suggested that we write about the duties outlined in my post of November 11, 2006:

1.  Make the appointment
2.  Show the home
3.  Provide the required disclosures
4.  Write the contract and escrow
5.  Manage financing for the buyer
6.  Manage inspections
7.  Manage the title work
8.  Schedule the settlement and manage settlement services

Today's chapter describes the Buyer's Agent's duties when selling FSBO listings in managing the buyers financial responsibilities.

BUYER'S AGENTS MUST UNDERSTAND THEIR BUYER'S FINANCIAL PROFILE AND ABILITIES.  Since, when representing a buyer in the purchase of a For Sale By Owner property, there is no agent on the Seller's side, extreme care must be taken to present a true picture of the Buyer's financial ability to buy and to follow the financing all the way to settlement. 

Documents to present to the Seller to evidence the Buyer's ability to buy include the Lender's Pre-Approval or Pre-Qualifying letter showing the buyer has been either completely Pre-Approved with the exception of the appraisal and Contract of Sale.  Or, the Lender has "credit approved" the Buyer by reviewing the Buyer's credit report, income to qualify and money to close.  The lender's letter will go a long way toward giving the Seller confidence that you are managing the Contract of Sale for their benefit as well as representing your Buyer/Client. 
 
BUYER'S LOAN APPLICATION.  If the buyer has not already done so, the formal signed loan application with the preferred lender must be made within the time agreed to in the Contract of Sale.  If there were a listing agent representing the Seller, they would often be verifying that the Buyer is taking the necessary steps to secure loan approval.  Just because the seller has no representation, the Buyer's Agent has taken the full responsibility for Contract Management and must make sure that the parties follow the contract. 

The Buyer's Agent must explain to their Buyer/Client that, even though the Seller is not represented, the Contract of Sale has full force and effect.  Some of the important dates would be:

• Deadline for making formal loan application.
• Deadline for written loan commitment.
• Loan is floating or locked depending on the current mortgage market.

COMMUNICATING WITH THE FSBO SELLER ABOUT THE BUYER'S LOAN PROCESS.  It's important to communicate the ongoing status of the Buyer's loan processing.  FSBO Sellers cannot be ignored and just be expected to appear at settlement.  They must be able to contact the Buyer's Agent and get status just as as a Listing Agent would.  The FSBO is less likely to understand the processes involved with the loan processing than an experienced Sellers Listing Agent or Broker. 

APPRAISAL.  It is not in the Buyer's interest for their agent to meet the appraiser.  The pricing of the house was and is the FSBO Seller's responsibility and although a Listing Agent would want to meet the appraiser to defend their pricing, a Buyer's Agent has no such responsibility.  The Buyer is best served to have the appraiser meet with the FSBO Seller.  If the appraisal issued is lower than the Contract price, the Buyer's Agent will explain to the FSBO Seller the alternatives; lowering the price to the appraisal amount, Buyer agrees to pay $xxxx over the appraised value or the Buyer and Seller will agree to a release of the Contract of Sale and the Buyer's Earnest Money Deposit is returned. 

If the appraisal issued is higher than the price in the Contract of Sale, it has no affect on the transaction. 

Settlement.  Once the appraisal is completed and the Buyer's written loan commitment is received and provided to the FSBO Seller, the parties are ready to meet and close the purchase.  It's important to make sure that the closing is coordinated with the FSBO Seller when arranging the schedule for the pre-settlement walk-through and closing appointment.  Any delay beyond the date for settlement in the Contract of Sale requires an addendum and signature of the parties.  Our experience is that the fewer documents, delays, or changes required, the better and smoother the transaction will be for all parties. 

We will deal with the seller honestly and truthfully.

We will advocate for our buyer/client.