Do I Really Have to Use the Seller’s Lender?

I completely agree.  If Ed is correct that this is not legal, what is our recourse?  I'm sure its a state by state basis.

Renee:  I work mostly short sale listings, so before pulling a property off the market for what could possibly be a six month negotiation, I have to be ABSOLUTELY CERTAIN that the buyer really is qualified to buy.

I require ALL prospective buyers to get pre-approved by my "designated pre-qualification lender," not because they have to actually use him to get their loan, nor do I even care who they use to get their loan, but the only way I can know for sure if a buyer is truly qualified is if I hear it from a lender with whom I have gained trust through experience.

I explain this to buyers' agents up front and by and large they agree and understand.  Sometimes the buyers get the loan through "my guy" and sometimes they don't -- that really isn't my concern.

Incidentally, the lender is more than happy to have a shot at getting the loan and they know exactly what the situation is going in -- they know I tell prospective buyers up front that they can use whomever they like and should only go with someone they are comfortable with -- my pre-qualification mandate is just that, and nothing more.

Bottom line, while it's ILLEGAL to mandate that the buyer only get their loan from a particular lender, it is PERFECTLY LEGAL for a listing agent to insist that a pre-qualification be done by someone they know and trust trust (which by extension really means, "By someone the seller knows and trusts").

As a listing agent, my sellers expect me to "watch their back," and especially in a short sale situation, we cannot afford to be anything less than certain with respect to buyer qualification.

Make sense? -- JM

I agree with JM, I do have the right to act for my clients best interest and ask that the buyer pre-qualify with a Lender I am familiar with, as long as they understand that they are not being forced to use them.  If their are agents or Lender/Owners requiring that they use a specific Lender I would tell my buyer to walk away.

Thanks for the re-post!

JM, I see both sides of this and agree with you in the fact I do a lot of short sales as well and do the same thing you do. I have been told, albeit not researched to confirm, this has been challenged in some courts and determined to be illegal and unethical. I'm sure we will see some legislation coming down the pipe on this, but in the interim, if a buyer agent or client objects to this, I will step out of the way if it's a reputable lender, so not to cause my client a sell!