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Consumers Come First. The Real Estate Mashup of Misinformation Needs to End

I am getting ready to start the process of helping my sister find a qualified real estate agent to help her First things first, approval before house hunting navigate the waters of the real estate industry. She has looked at some listings through a real estate agent's website and had started to fall for a 3 flat in an up and coming neighborhood in Chicago. My sister has been diligent in getting her credit to a good standard, saving a 15%, and being realistic about what she can realistically afford for a housing budget.

The first thing I did was to tell my sisterto get a pre-approval. I told her in reading many blogs from real estate professionals it appears that the criteria has really tightened up and things have changed. I told her I would have told her to get a pre-approval (the one where they actually run your credit) 15 years ago, but it is important now more than ever. So my sister went to her credit union and she got a pre-approval.

BUT BEFORE my sister walked out the door, she told her credit union loan representative that she was looking at a foreclosure and he told her that the credit union couldn't give her a loan on a foreclosed property because they wouldn't be able to do an appraisal. He recommended that my sister look at some condos in the same price range, though she really wants a single family home.

Huh? I'm confused.

My sister emailed the real estate agent who was listing the property and told her what the loan officer said. The listing agent emailed my sister back,

"Your conventional loan will mostly likely work fine since this property is a short sale, or pre-foreclosure...I could provide your with representation in the purchase of your home, whether it be this or another. I have helped many first-time home buyers find the right thing for them whether it'd be a fixer-upper or a new construction condo."

I am still confused.

The email goes on to further state,

I am not playing this game with my sister's future "...but you should see houses only with your Realtor (whether that ends up being me or someone else) because that Realtor would look out for your best interest, not the seller's."

I will always agree that working with a real estate agent is your best bet. HOWEVER, this REALTOR is trying to sell my sister a house in which one floor is habitable out of three and in which she is the listing agent.

I should also share that my sister is buying her first house with her boyfriend. My sister is thirty years old with no children. She has saved diligently on a teacher's salary and if she bought the house from this real estate agent, wouldn't my sister be buying the house from a real estate agent who only had the seller in mind. I might add that she never directly ASKED my sister if she was working with an agent.

Back to my story. I will be contacting three real estateagents to work with my sister. I want an agent who doesn't mind showing my sister short sale or foreclosure single family homes because she is not going to buy a house for more than $100,000. She knows it will be far from the Taj Mahal and she is fine with a fixer upper, though I am trying to steer her away from a money pit.

I want my sister to get the right house because of her real estate agent, not in spite of the agent.

If you feel like you fit the bill please email me- rebecca@realestateskillz.com.

If you have any ideas on how I should advise my sister to handle the situation with her lender, please Home buyers shouldn't be wounded from the get go weigh in. My sister is getting a conventional loan but even if she wasn't, why wouldn't they be able to get an appraisal done on the property.

I am also a little sad today because my sister has an advocate, me, who will research the heck out of this and who has a strong community or two to help her out with the process. If she didn't I can tell you she would take the word of the Credit Union and she would remain impressed with the REALTOR she spoke with about the dilapidated house.

How many consumers out there know better and how many are in the process or will be in the process of getting screwed? I guess at least I should be thankful that my sister didn't try to get a value online.

Consumers Come First. The Real Estate Mashup of Misinformation Needs to End

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Posted by Rebecca Levinson, Real Estate Marketing Consultant on 03/05/2009 05:32 PM

Comments (12)

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12 Comments on Consumers Come First. The Real Estate Mashup of Misinformation Needs to End

MAR

Rebecca - Great post ! It shows the dilemna out there for many consumers as everywhere they go, they can get new and different information. I would feel confident that once your sister finds the agent she wants to work with (with your help of course) that things will start to be a lot more smooth for her in regards to both the properties as well as the financing. I do know that credit unions might be confined to certain programs which may not include foreclosures or banged up properties. Other lenders and mortgage pros will have more options for her I would bet. Either way, keep the community posted on her progress. I am sure it will turn out to be a successful story... and of course all successful stories have bumps in the road (for the most part) ~ Chris

That makes absolutely no sense to me, but some credit unions have strict rules. I would suggest that she contact a different mortgage broker to find out about other conventional loan programs.

What the real estate agent is trying to get at in her email is the issues of procuring cause and dual agency. The listing agent represents the sellers interests and if your sister were to view the property with her and share confidential information with her, she HAS to share that with the seller. Obviously I haven't read the entire email, but I think what she is trying to state is that your sister needs to find a buyer agent fairly quickly and use that person to help screen out properties, rather than go through listing agents. It is in her best interest that way.

Rebecca your sister should ask for a guarantee of undivided loyalty from her real estate licensee. If they cannot provide that in writing then go to another. Tell her to just say "no" - to dual agency.

Rebecca, tell you what check with Alan May. He is a fellow Rainer and is based in Chicago.

I don't like dual agency. Double ending deals can be very difficult. I try NOT to do it unless the buyer won't have it any other way. When the sitution arises, I turn the buyer over to another agent. Most understand after I explain it to them.

MAR

Make sure your sister doesn't shop around for lenders too much, especially if each of them are doing a credit check! It could hurt her credit score. This has been a problem over the past year. Greg Cavaiani

Thank you everyone for your support and your comments. Because of the online real estate community camarderie here at Active Rain I have been able to start the connection between my sister and a loan officer and a real estate agent who have been honest and sincere.

MAR

Rebecca, Credit unions are often not the best choice for mortgages because they tend to be very risk averse and slow. Finding the right agent to represent her is key. Also, there is no reason your sister can't meet with several loan officers or even mortgage brokers. It's good to have a backup source for a mortgage in these tough economic times. I'm glad you found a good loan officer and real estate agent through AR for her.