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Mr. Banker, please don't change our written contract!!

By Barbara S. Duncan

Real Estate Agent with RE/MAX Advantage

March 27, 2008 01:00 AM

This has happened more than once and it is always upsetting.

You have worked with buyers and the buyers usually buy with a simple bank loan. You know what that is. They go to their banker who makes car loans or smaller loans of any type. That banker does NOT make 30 year fixed rate mortgages. The buyers have plenty of clout with the bank and can call the shots as he pleases and he knows he can get the money and he intends to get the simple loan.

You write the contract and fill it in saying the financing will be simple bank financing and it can close in two weeks. The seller is pleased because it will be easy and fast. The buyer goes to the banker and the banker is now pushing the mortgage department, which may make the bank more money. He tells the buyer that he should get this special investor 30 year mortgage or some kind of long term mortgage and refers them on to the mortgage department.

The banker, by doing that, is completely changing the terms of the original contract! He has actually made the buyer violate the terms of the contract. The time element is longer, more expenses will be incurred, a full-fledged appraisal has to be done, the buyer's ratios and income have to be in order and it has to go to an underwriter for final approval. What started out being a good deal for the seller has turned into a not-so-good-deal after all. We have to get amendments to the original contract.

The banker has put the contract in jeopardy. He has forced us to ask for new terms from the seller. What would the buyer say if the seller then said, "Since you are changing the terms of this contract, I'd like more money for my house."

When asked about why he has done this the banker will usually just say he was looking out for the best interests of his customer!

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Alan Brown

Coldwell Banker Realty - Davenport, FL

34 Years of Real Estate Experience .

The banker or Mortgage person have a duty to their customer just like you do to yours, you may not agree with it but that's the way it is. My wife has been doing Mortgages for 20 years and I have been selling Real estate almost as long. Believe me I understand this as I have been round and round on more than one occassion with my wife on transactions she has been doing the loan on for our customers and she has pointed out the fact that she also has a duty to do what is best for the customer.

Mar 27, 2008 01:35 AM

JoEllen Stranger-Thorsen

Eustis, FL

Lake County, FL

I thought I was the only one who had run into a banker who suddenly became a Realtor in the process. I recently had one who wanted me to write an addendum two weeks after the contract had been finalized and she didn't want to disclose something to the sellers. She tried to sell me on it by telling me it would benefit the buyers and that I was costing them money. After my speech on ethics and disclosure she no longer wanted to talk to me.

Mar 27, 2008 01:41 AM

Barbara S. Duncan

RE/MAX Advantage - Searcy, AR

GRI, e-PRO, Executive Broker, Searcy AR

Alan, I agree with you up to a point. But changing a contract after it is written is not necessarily in the best interest of the customer. Switching from simple bank to long term mortgage is a very important change and could jeopardize the contract completely. I just had a customer that got run over to the mortgage department and couldn't get the loan through that method but could get it from the regular banker. He was confused and unhappy about the whole process. Your wife, as a mortgage broker (rather than a banker) would be the one who switches the customers from conventional to FHA and that's a whole other story. Thanks for your very interesting comment.

Mar 27, 2008 01:56 AM

JoEllen, that sounds like an interesting conversation. We get along well with our lenders in our town but we can't help but get very annoyed when they start changing things in the contracts and won't reveal why. Thanks for your comment.

Mar 27, 2008 01:57 AM

Gary Woltal

Keller Williams Realty - Flower Mound, TX

Assoc. Broker Realtor SFR Dallas Ft. Worth

Barbara, your story of the banker reminds me about attorneys and how they kill deals. Sounds like the bankers need to keep their hands off the financial deals after they set up the borrower in the first round.

Mar 27, 2008 02:13 PM

Bronson, the banker was looking out for the bank. But it is difficult to bad-mouth the buyer's banker. The buyer trusts that banker.

Gary, we don't have attorneys in many of our deals in Searcy. The escrow companies close the properties.

Mar 27, 2008 02:55 PM

Ron Tarvin

Residential, Investment properties, rehab projects, property management, luxury homes, new construction! - Katy, TX

Broker, Katy, Houston, Cypress 77450,77494,77095

The bank DOES NOT have fiduciary responsibility to the home buyer. As an agent with an agreement in place with a buyer, you have fiduciary responsibility to the buyer but the bank or the mortgage company has only it's own interests to look out for, at least in my neck of the woods. It's a very touchy distinction, especially when the bank/customer relationship may have existed long before the Agent/Buyer relationship!

Mar 28, 2008 12:10 AM

Ron, the term "touchy distinction" is so accurate. The banker and customer had the relationship before I ever came along. The buyer probably trusts that banker more than he does me, especially if he regularly borrows money to run his business there. Thanks for your comments.

Mar 28, 2008 12:19 AM

Terry, I love the way you put that. "A contract is a contract. Any changes made after it is signed essentially causes it to be a new contract." I'm going to tuck that away in my memory for further use when I need to explain why they shouldn't do it. Thanks.

Apr 02, 2008 06:38 AM

Mr. Banker, please don't change our written contract!!

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Barbara S. Duncan

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