Home : Blogs : Jason Price : Lake County Mortgage and Local Happenings (Eustis, Mt. Dora, Tavares, Leesburg)

Excuse me, Mr/Ms Realtor, that is none of your business.

Is it just me or did this Realtor step over the line?

Let me give you the background. I have a client that is good friends with one of my friends. He and his fiancee are looking to purchase a new home. When my friend found out that he was trying to get a mortgage and that no one was returning his phones call over the holidays, he immediately put him in touch with me. Within a couple hours, I had him pre-approved.

The home they wanted to buy was bank owned, but 2 owners prior belonged to his grandmother. They wanted to get the property back into the family. Unfortunately, someone snapped it up while they were calling other mortgage companies before finding me.

Now, I will give my client credit in that he asks a lot of questions. It shows that he wants to make sure that he understands what is going on. Last night, I got another email from him asking more questions. It is not so much the questions that sent me over the edge, but who he was asking the questions for... his REALTOR!!!

Now correct me if I am wrong, but when it comes to financing of a home, the only questions that a Realtor should ask are: "Are you approved?", "How much are you approved for?", and "Do you have an approval letter?"

This Realtor ask the following questions: "Is your loan FHA or conventional (FNMA)?", "Are there any points on the mortgage that I am charging?", and "How much are you really approved for?" I am sorry, but that is none of your (please, I beg you to use a strong descriptive word here) business, Mr/Ms Realtor. What concern is it to you what program I have determined best suits my client based on the information they provided to me that you have not seen? What is it to you how much money I am making on this deal? I am not having my client questions your "points." And what do you mean by "really approved for?" They are approved for the purchase of the home that they are interested in purchasing from you. Could they be approved for more? Possibly, but they want the home you have already showed them which they are currently approved for.

Here is my concern that I addressed to my client. I advised him to be very careful if he chooses to move forward with this Realtor because (s)he may have ulterior motives in that (s)he also is mortgage person (note that I did not call this person a professional) or has an in-house mortgage company where (s)he will get a kickback for the deal. I believe in full disclosure, that is why I have already given my client a GFE, TIL, disclosures, and a full explanation of YSP and how they can choose to use the YSP (note that I did not say how I will opt to use the YSP for my betterment). I have nothing to hide from my client, so I did answer the questions that the Realtor was asking.

But this is just one story of what happened this weekend. Here is another brief story: My client is wanting to purchase her first home. I have been working with her to get her financed. The Realtor that she was using in her limited mortgage knowledge (here business card said Realtor on one side and loan officer on the other) kept telling her that there is no way she will ever get approved. The Realtor successfully convinced my client over the weekend that she should rent because there is no way that she will get approved. (Yes, she kept telling her everyday that she will not get approved.) The Realtor would rather make a little money off a rental, than wait for the approval to make a large commission. Well, late last night my lender sent me the pre-approval. Yes, last night on a Sunday. I immediately emailed my client the terms of the loan which were very favorable (5% rate fixed for 30 years and minimal down payment). This morning, I get an email back from her telling me that she rented a place on Saturday. I bet that Realtor is pissed knowing that her greed cost her several thousands of dollars and that her client is not fuming mad for convincing her to go with the rental when she could have her own home.

Moral of these stories: REALTORS stay out of our (mortgage professionals) business. The industry is hard enough with all the changes that are going on that we do not need you interfering with our clients to make things worse. We are the mortgage professionals, you are the Realtor. It is our job to get your buyer financed, not yours.

Posted by Jason Price on 01/19/2009 10:52 AM

Comments (12)

realtors, mortgage professional, ysp, approval

Post is included in group: Realtors®
Post is included in group: Mortgages
Post is included in group: All Things Florida

12 Comments on Excuse me, Mr/Ms Realtor, that is none of your business.

JAN

Just some thoughts. you know a client's financing will make or break a deal. Many brokers have seen a loan officer put someone in a program that makes the deal tough to close and/or too tough to close. Some brokers have also written loans, and may know more than you are aware - thus the questions.

Jason,

Thank you for your post. As a realtor, I do not like to get very involved in the financing part of buying a home. I just need a pre-qual letter letting me know the price range of homes to be looking at with my client. I do not see why someone would want to be a realtor and a lender. However, as realtors, we do need to know if this loan will be FHA or conventional because there is an FHA addendum that needs to be filled out if the client is buying with an FHA loan.

Other than that, I agree with you that realtors should not be in the mortgage business.

Have a great day,

Linda

I believe it's downright disrepectful to try to sway a customer away from a lender or other vendor of choice.

Jason, I am an expert at my profession, you are an expert at yours. When my clients ask me about loan questions I typically tell them I do not want to warrant a guess. Ask an expert, these programs are changing daily and it's hard enough for me to keep up with the housing market!

The standard purchase agreement in our state has BLANKS that must be filled in in order to be considered VALID they include: TYPE of LOAN,( convetional, insured conventional FHA, VA, USDA, or contract terms further drwan up by attorney, not to mention # POINTS ( if any) and paid by whom ( buyer or seller) , INTEREST RATE ( or top limit of acceptable rate by parties in order for contract to remain valid), days to obtain full committment and CONDITIONS related to closing ( name of title company to be used, type of title policy etc..).

We set our own business policies guided by Prospect Equal Service Report which include having a pre approval letter in place before even showing properties. Reputable lenders even spell out conditions that need to be met and loan specifics in writing on these letters. vague letters usually get a phone call.

It is good business for a REALTOR to ask clients questions or to call the lender directly and ask about specifics.

You as a lender have to right to answer what you wish.

We, as REALTORS, have to right to ask to seek clarification on facts that may impact any transaction.

To make HASTY or sweeping generalizations (most REALTORS are not also dual Mortgage Brokers - we seek to work collaboratively) that there is underlying motives - is by nature, ILLOGICAL.

I think you're a little paranoid. I need to know what type of loan my buyers are getting, because some homes can't be financed FHA. With today's homes available on the Internet, many of my FHA buyers have picked out homes to look at that FHA wouldn't allow. If they're buying a condo with an HOA, I also need to know what figure the lender used for the HOA in calculating the loan. If the buyers fall in love with a condo with a high HOA figure it may push them over the top.

Heath - I understand that there are still some misleading mortgage people out there that would pre-approve someone just do so even if the deal can't be done, but this not the case. I also understand that some real estate brokers have closed loans (but that is another story). Again I will ask, what business is it to the agent/broker to question about the financing when they have not seen the financial situation of the borrower? Especially, the question about points?

Linda - Thank you. I definitely understand the purchase contract addendum for FHA, but the Realtor should call the mortgage professional to ask that question and leave it at that. If I may make a suggestion though, ask for pre-approval letters versus pre-qual letters. Pre-qual letters are junk. They mean nothing. A pre-approval letter means that it has already been approved by a lender with conditional terms that are still to be met for closing. This is a lot more solid and gives you peace of mind that your buyer is bankable.

Vickie - Thank you... I also believe that it is wrong for a mortgage professional to try to sway a buyer from a Realtor that they are already dealing. That is why I did not tell my clients to get another Realtor, I only told them to be careful.

Frank & Jodi - Thank you. We are all experts in our respective fields. While some intermingle between the two, there is still the long lasting debate on whether this is an ethical practice to do both when representing the same client.

Jeff & Grace - You are correct in that a pre-approval should spell out the terms of the loan, as well as any conditions to close. Even though the FARBAR contract has a section regarding to the terms of a mortgage approval, most Realtors that I have met or dealt with fill this section in even without knowing the terms of the loan. This section is often used as a back door to help a buyer get out of the purchase should financing not work or something else not be acceptable to the buyer. I have seen things like 2% mortgage with no points and 100+% financing. Could this Realtor be asking those questions to get legit figures? Possibly, but they should be calling me directly to get those questions, as that is the professional thing to do. But then again, they could always ask my borrower for a copy of the pre-approval letter that outlines the terms of the loan.

Jerry - Paranoid, maybe? But your reason is not a good one. You see, it is my job to get my borrower approved for a loan. As such, I need to know what house they are buying and make sure that home is approved for the loan as well. If it is not, then my borrower is not approved. Point in case, why would I tell a client they are pre-approved for a home in this area that is in question for a USDA loan, when I know the area is not USDA eligible? Or if a home is in a HOA, I would want to make sure that it is FHA approved before getting the pre-approval for an FHA loan. If they have not found a home and are solely seeking a pre-approval, then that is another issue. When I do not know the property, I assume the worst case scenario and work from there. For instance, I will get them FNMA approved and if the home does in fact qualify for FHA, then I flip it over to FHA provided the terms are better. I will not run it FHA, should the property they find not be FHA eligible and they are no longer approved. If I do not do this part of my job, I am wasting my time, the borrower's time, the Realtor's time, and the seller's time. As for the HOA fee, it is common sense to ask the Realtor (or the HOA) what the exact fees are when we are doing the file when we are approving the property for a specific loan program. These are common knowledge things that mortgage professionals should be doing when pre-approving a buyer for a home loan. Plus, remember that I said, they have already picked out a home which the pre-approval is for. All they have to do now is make their offer.

Some contracts across the country specifically ask the terms of the mortgage as well as points paid and by who. If you charge more than what is quoted in the contract, you maybe giving someone an out in the contract - so depending on the circumstances, these questions very well could be our business.

Mike - Please read my response to Jeff & Grace. As for how much I am charging is none of the Realtor's concern. My fee is not considered a point on any real estate contract. The points that are referred to in a contract are the points that a lender is charging (typically an origination fee or discount fee) for the loan. My fee is a mortgage broker fee which can be charged as a percentage of the loan, a flat fee, or combination of both.

Jason I agree with most of what you said, but I do think that the Pre-Approval letter should state the type of loan that the Borrower is Pre-Qualified for. I DO strongly agree with you that there is no reason to let the Sellers Realtor know how much the Borrower can qualify for, downpayment, or points. All they need to know in my opinion is that they are Qualified to purchase that property and what loan program that they will be using. I feel that a Borrower is putting themselves at a disadvantage if they reveal the dollar amount that they are able to go up to and how much money they have in the bank.

Jerry Becker wrote:

I need to know what type of loan my buyers are getting, because some homes can't be financed FHA.

Jerry - how would you know this other than with a condo (condos have to be on an approved list with HUD/FHA). But with a standard home, unless you know it is a fall down dump of a home which would not pass building code - how would you determine if it could be approved for an FHA loan? This is something the appraiser or home inspector would determine wouldn't it?

I am curious if in your market, you have certain homes not approved for FHA loans? Maybe by dollar amount (loan limits) - which would fall back to the lender's approval - or perhaps for property conditions? But what else would preclude a home in your market from FHA possibilities?

JAN

Jason: You're a little stong here although I generally agree with you. My experience has been that most realtors trust us to do our job just as we trust them. Occasionally we get the over-zealous and controlling one which can cause us grief. My advice is always to make a point of that and not necessarily choose to work with them again. The realtor-mortgage lender relationship is important and we should both take the time to get to know and trust one another!

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