As a broker I tend to try to look at all sides of every situation and try to solve issues. The issue I am discussing is the issue in My head in spinning! Can someone please explain? Sandra Nixon (Better Homes Realty).
The issue is why is listing agents requiring buyers to get pre-approved by a certain lender. Is it steering? Is it wrong/ethical? How can offers be worked out if your buyer does not want to talk to the other lender?
First why are REO companies and now other listing agents doing this?
As an broker that handles REO properties I can tell you that they are doing this - #1 because they have gotten so many bad "re-approval" letters over the past few years and #2 because a mortgage company has come along that hs convinced them that they can make sure that doesn't happen.
It's not the mortgage company that owns the property, it's a mortgage company that has done one heck of a sales job.
We went through a time when I wished I could get all buyer's approved through my favorite mortgage person. I didn't think it was in my seller's best interest to accept offers by people approved by "We Don't Know Squat Mortgage Company." Thankfully most of those mortgage companies are now out of business, but there are still some of them around and I believe that is what listing agents are trying to protect the sellers from.
Is it steering/wrong/unethical?
As long as you are not making someone get their mortgage from a certain mortgage company and the instructions are coming from you seller I really don't think so. I think sometimes it really is in the seller's best interest.
How can offers be worked out if your buyer does not want to talk to the other lender?
First let me say, I'm the listing agent and I find it annoying, but I also understand it and follow instructions because I owe the seller the duty of obiedence. I also have to present all offers, and I do whether the buyer is willing to get pre-qualified with the state company or not.
Many times a pre-approval letter from another company is sufficient when it is a reputable company. The REO company and any other seller still wants the highest and best. Sometimes you can just try the offer with the buyer's mortgage company and it will work. If the buyer is in multiples and the seller is asking for the buyer to get approved through another mortgage company the buyer needs to know they might be at a disadvantage to not comply.
When the seller is insisting on a pre-qual from a "named" mortgage company, when it is just to verify there is a good mortgage you can always get the buyer to give their mortgage company permission to give information to the "named" mortgage company. That way the buyer never actually has to deal with the "named" mortgage company and everyone is happy. Well the "named" mortgage company may not be, but as long as the buyer and seller is that is all that really matters anyway.
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