Special offer

What Every Home Seller Should Know About The Buyers Approval Letter...

By
Real Estate Agent with RE/MAX Compass 0524642

When I place a home on the market I plan on selling it. I'm in the business of selling houses, not listing them. Deals sometimes fall apart because the buyer's financing falls through. The reasons are countless. A good agent will be careful about who they're showing houses to. A desperate and inexperienced agent will show just about anyone in hopes of striking a deal. These types have to be avoided when you're representing a seller.

How do you avoid weak buyers?

 

It's as simple as making a ham sandwich. When a Realtor submits me an offer I ask a lot of questions. Here are a few examples....


qualifying home buyers

1. Feel out the agent. I ask the Realtor how long they've been working with buyer. If they met them an hour before submitting the offer then I know with almost certainty that they know very little about the buyer, including their financing.

2. I call the loan officer on the approval letter and ask the following questions:

  • Have you checked the buyers debt to income ratio?
  • Is the buyer self-employed? If so, do you have all the tax returns to verify income?
  • Has the buyer actually filled out an entire application?
  • How is the buyers credit?
  • How long have you been working with the buyer?
  • Does the buyer have the funds necessary to close for both the down payment and closing costs?
  • Does the buyer have stable income?

 

Legally the lender doesn't have to answer some of these questions, but they always do. I've never been told "I can't be told." Sometimes buyers ask for closing costs. Sometimes their agents say things to me like... "My buyer doesn't have the money for closing costs and they really need your seller to give them 3% of the sales price!"

I smile, but keep silent. The strategy has been played out. Thanks to their loan officer I know that the buyer has the money. My seller will likely save.

If the lender is shaky or trying to throw me excuses for not having received the tax returns then I am fully under the impression that this "buyer" is not ready to buy a house, especially the one  I am trying to sell. You would be surprised how many times the loan officer has done nothing more than had a conversation with the buyer. 

For whatever reason Realtors never call my lender when I submit an offer. They just assume I'm showing an approved buyer. I'm not complaining.

A lot of agents complain about "deals falling apart because of financing." It happens. You can't foreshadow every disaster in this business, but you can eliminate a lot of potential pitfalls by actually doing your job. Every home seller should ask their listing agent about the approval letter before signing on the dotted line to sell their home.

 

 

 

Posted by
Greg Nino
Realtor
RE/MAX Compass 
Direct & Text 7 days a wk: 832-298-8555 
 
 
Realtor since 2004
Mediator & Arbitrator for the TX Assoc. of Realtors
Member of the Professional Standards Committee for the TX Assoc. of Realtors
Arbitrator for the Comptroller's office for the State of TX for Arbitration of Property Tax Values

 Member of the RE/MAX Hall of Fame & Platinum Club

 

The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments disclaim any implied warranty or representation about it's accuracy, completeness or appropriateness for any particular purpose. All information is copywritten and the property of Greg Nino.  

Comments (10)

Trisha Bush-LeFore
Preferred Properties Land & Homes - Walla Walla, WA
Providing Realtor Services in the Walla Walla Area

Greg,

Great tips on approval letters. Sounds like you've been around the block a few times. Experience counts.

Jan 24, 2014 01:50 AM
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Not all approval letters are the same and your list of questions to the lender is a sure fire way of separating the wheat from the chaff.

Jan 24, 2014 01:57 AM
Doug Rogers
RE/MAX Coastal Properties - Destin, FL
Your Real Estate Resource!

"Client" is an overused buzzword in our industry. Did you meet with the prospect at the office and do a buyer consult? Then yep, that's a client.

Referring to the personh that parked next door to your open house as a client? Nope.

 

Jan 24, 2014 02:12 AM
Kristal Wilson
KB Home - Fontana, CA
Cause We Like 'Em New ~ New Home Specialist!

Greg ~ love the insight into a solid pre-approval and the questions to ask!

Jan 24, 2014 03:35 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Agree not all Pre-Approval letters are even close to the same. On your note I would answer with yes or no and thats that. The fact I issued the pre-approval letter means the loan is closing. I have yet to have one fall apart, ever!!

Jan 24, 2014 09:00 AM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Right you are. It's our fiduciary responsibility to check this stuff out for our clients. Good job!

Jan 24, 2014 09:19 AM
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

As a listing agent, we need to know who we are dealing with.  An unknown lender that refuses to answer my questions or cannot answer them about the buyer is always a red flag to me.

Jan 24, 2014 12:10 PM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

As a buyers agent, some of these tactics really annoy me.  My clients can close escrow . . . that's all you need to know.  I don't have time to deal with buyers that are not ready, willing and able to buy. 

Jan 24, 2014 01:22 PM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

Hi Greg,  Excellent blog, one every agent needs to read! :)

Jan 24, 2014 10:16 PM
Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

"You can eliminate a lot of potential pitfalls by actually doing your job."  Imagine that! 

Jan 25, 2014 06:33 AM