Why is a San Jose home buyer required to be pre-approved with a designated lender?
This post is inspired by Cathy McAlister of Sacramento, California.
Referring to a trend on flip properties, and the requirement that "buyer must be pre-approved through Mr. Lender at AB C Mortgage", Cathy asks:
“But why on earth would an individual seller make this requirement.”
I believe this trend is the direct result of the fact that equity sellers want to know their buyers can, in fact, secure financing to close. In my San Jose Real Estate business, it is my experience that far too many agents are working with buyers who are actually not approved. They carry a piece of paper that says they are approved however, the approval may not be worth the paper it is written on. As a San Jose real estate agent, I do not assume the buyer’s agent has even spoke with their client’s lender.
While I do not require pre-approval with a designated lender on equity sales, my designated lender does contact the prospective buyer’s lender to verify that the buyer’s lender has pulled the credit report and collected all the supporting documents required for a loan.
Due diligence in this regard is essential as sellers rely upon their agent to ensure the buyers who submit offers have completed all the steps necessary to secure a loan.
If my designated lender does not get a return call from the buyer’s lender and/or cannot verify/validate the buyer’s financials, then why would a seller want to accept that buyer’s offer?Sellers have the right to impose certain terms.
If the buyer is truly approved, one conversation with Seller’s designated lender can make the difference between the offer being accepted, or not.
It's about working together to ensure a win for all parties.
Lending requirements are ever-changing. It's not personal, it's business.
image /photoxpress.com
As a San Jose short sale agent, the sellers do require buyers to be pre-approved with a designated lender. It is unlawful to require the buyer to use a designated lender. The requirement is designed to help the Sellers make informed decisions about the offer they accept. I do not assume the buyer’s agent truly knows if their client is qualified for the property their client wants to purchase.
The process my designated lender follows does not require another credit pull. In many cases, it’s a simple as a lender to lender conversation. If the credit has not yet been pulled, then one must ask: On what basis was the buyer pre-approved?
As a listing agent I feel it would be a tremendous dis-service to my clients if I do not do all that I can to ensure the buyer's lender has done their job. A simple phone call can save a lot of time and frustration for both San Jose home sellers and buyers.
Sometimes buyers and their agents don’t know the lender has actually not pre-approved them. That is why a San Jose home buyer may be required to be pre-approved with a designated lender?
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