I sat down with an old friend today for lunch, speaking with him about the state of the market. We ended up discussing a dilemma he had last week. He submitted an offer on 2 bank owned homes from 2 separate clients with a pre qual letter. He included 1st page of Ficos, Income Proof (both loans were full documentation), and copy of deposit check. Both offers were kicked back, with the Banks Agent saying they only accepted pre approvals from direct lenders. Well both loans had low ficos, and he had to use non traditional banks to complete the loan, so he couldn't get a countrywide or direct lender approval being they didn't offer the same programs. The bank said the only way they would proceed is if he removed the loan contingency completely, which is absurd. No Realtor is going to put their clients deposit at risk! He ended up losing one of the clients, and the other is currently looking for other homes.
The point of this blog is to address banks and owners ridiculous standards. Just because a buyer can not get approved with Countrywide or Wells Fargo, doesn't mean they're not qualified! I understand sellers in this market being worried about buyers qualifications, but there should be exceptions! Full Documentation, 20%+ down, etc. I think these sellers are part of the reason homes sit on the market as long as they do, they have ridiculous expectations of buyers, and lower their potential buyer pool tremendously. Forcing buyers to pre approve with "Danny" at Wells Fargo will turn brokers and buyers off to your property. Its a hassle, it sometimes takes days to get the approvals, and It's not fair to base your decision on whether to entertain a buyers offer solely upon whether "Danny" can get them approved.
So to sum up this blog, Sellers need to lower their standards unless they want their listing to sit on the market for 6+ Months. There are plenty of buyers out there, but if they have to jump through hoops they'll just move on to the next home with the easy going seller. I understand some brokers used to just slap together pre quals for anyone with a pulse and a fico score, but there still are honest hard working brokers out there who just cant take their clients to the traditional banks, and they shouldn't be punished for this!!! Loosen up sellers or plan on your home sitting on the market for a long time!