Mr. and Mrs. Smith put their house on the market for sale with me as their Listing Agent. We looked at the comparable sales, determined a fair market value, and within a few weeks of listing the property, received an offer on the house. The other REALTOR® presented the offer, accompanied by a pre-approval. So what’s my next step as the Listing Agent?
Yes. I notified the Sellers that we had received an offer. I also read it. I also called the loan officer.
Why do I call the loan officer? In the ever-changing world of real estate, I’ve noticed that in recent years, we might have multiple underwriters who revi
ew the loan along the way. I’ve also witnessed a tightening of margins and allowances. The pre-approval that gave all concerned the comfort that the Buyer’s debt-to-income ratios were within a good range might not hold up to the benchmarks of an underwriter down the line IF the numbers are too close to the edge. When I ask the loan officer if the Buyer is approved for exactly the amount of the pre-approval OR if they could get approved for a higher amount, that’s what I’m after. I want the reassurance that they’re not buying at the exact precipice of their buying potential. I don’t want anyone harmed in the transaction... Not the Buyer, not the Seller. We’re going to be married to one another for at least a month, maybe more, and I want the transaction to be harmonious.
If I have never worked with you as a loan officer before, I also want the reassurance that you’re approachable, professional, and will get the job done. We all have horror stories of lenders and REALTORS® (and other people in the transaction) for whom we can’t say that.
When I represent Buyers and get a pre-approval, I do discuss the trend for some to get an approval that exactly matches the amount of the offer. Predictably, I’m not a fan of that. I’d much rather have an approval for, say, $500,000, even though we’re only offering $395,000. Yes, my client CAN pay much more. They’re just not going to. My Buyer thinks the house is worth x. Only x. They’re approved for more. GREAT! That should tell the Seller that we’re really the best qualified. If the amount of the pre-approval undermines the Buyer’s strength in getting a good price, then the REALTOR isn’t negotiating. That’s what REALTORS are good at, at least good REALTORS® are. Negotiating.
And I have respect for the loan officer. I don’t want to have to call him or her every time we go to make a new offer and get a different pre-approval letter. One will suffice. After all, we’ve secured a strong lender and a professional loan officer. That alone is a beautiful thing. Combine that with the negotiation strength of the REALTOR® and it’s a win-win for the Buyer.
So when I call you, the loan officer, and ask you about the Buyer’s ability to purchase, I’m actually doing us all a favor. I’m working as a team player. I’m helping the Buyer buy and the Seller sell.
Oh... And if I do my job well? We all get paid.
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