In the real estate industry it is necessary for a Realtor to understand financing. While we may not know every guideline that must be met in order for a Buyer to obtain a loan, it is important to have an overall knowledge of the loan your client is trying to obtain. Not knowing can cost your client hundreds of dollars and could cost you future business. I will give two very basic examples demonstrating how a lack of financing knowledge can cost Buyers and Sellers money!
Example #1 - A Buyer's offer was accepted on a rural custom home in Buckeye, AZ. The home inspection for approximately $400 was completed and an appraisal at a cost of $490 was completed. After the appraisal was done it was discovered that the home was on a shared well with 5 homes connected to the well. The Buyer was pre-approved for a FHA loan. The loan was denied after the lender discovered how many units connected to the well. In this case my clients fired the agent that was representing them and hired me to find them the home they successfully closed escrow on. This Buyer lost out on $890, because they trusted that the Realtors knew what they were doing. The Listing Agent, nor the Buyer's Broker had any idea that the home would not be FHA approved. Had they taken classes about FHA financing they would have known.
Example #2 - A Seller lists a condo with another Realtor. The Realtor advertises in the MLS that "New Financing" for the condo can be FHA, VA, Conventional, or Cash. The Seller receives an offer from a Buyer obtaining FHA financing. The Seller accepts the offer and decides to go ahead and put money down on a rental that he will be moving to until he finds his next home. It is discovered after approximately a week that the condo is not within a FHA approved condominium project. The Buyer cancels, because she can't get financing. Seller loses $50 application fee for the rental and the Realtor loses a future client. I ended up representing this Seller when he went to buy his next home. He told me the story and stated how he would never use that Realtor again! There would have been no time wasted by anyone had the Listing Agent or the Buyer Broker checked this website out https://entp.hud.gov/idapp/html/condlook.cfm to see if the project was FHA approved. Had they taken classes about FHA financing they would have known.
In real estate learning the hard way can be costly! Take advantage of the financing classes your Brokerage, Loan Officers and local Real Estate schools offer.
Wishing you all success and happiness! :-)