Why do we require a pre-approval letter from a specific lender list ?

By
Real Estate Agent with EXP Realty 414-525-0563 57026-90 Broker

      We are primarily listing agents in southeastern Wisconsin and enjoy having the honor of showcasing houses throughout the area for lucky buyers  to call their next home.

puzzle pieces We are vigilant in helping Sellers prepare inside and out, for the best possible experience for potential buyers...from professional cleaning, staging, handyman repairs and painting...we encourage our Sellers to "put their best house forward" and offer the resources to help them do just that. Putting all the pieces together from curb appeal to "eye candy interior" and mechanical repair...our checklist covers many aspects of each home we list.

     When we receive an offer...the diligence continues. We require that the buyer submit an offer from a locally recognized lender.   Half a dozen times in the last several months, we have gotten letters...from Lenders that were not known....and as the result of years of practice, we know this can be a problem.  

    We know that all lenders are not Dangercreated equally....and for whatever reason, still issue pre-approval letters to Buyers that are not qualified for the amount...for the kind of loan...maybe not for any loan at all without some modification to their financial situation.  Here are some examples in recent months:

                           - Debt to income "imbalance"

list

  -  Limited time being self employed

  -  Low credit rating

  -  Bankruptcy too recent

  - Name on another mortgage...no a "quit claim" does not erase you from the loan obligation

   We keep our Sellers safe and require that the Buyer be pre-approved by any one of the lenders on a list we provide their agent.

   Do Buyers agents complain ?  Sometimes....and they are the same ones surprised that the Buyer they believed was pre-approved by a lender they trusted....needed a co-signer, had to reduce their debt, increase their credit rating etc.  

   The only thing worse than no offer at all...is one  acaccepted offercepted from a Buyer who is not qualified...taking the home off the market by flagging it "active with

offer" in MLS to find out the offer would never become a closed transaction.

  Keller Williams SOLD sign If you or anyone you know is looking for Realtors who are vigilant in every sense of the word and watch the "financial back" of both Sellers and Buyers...Call the Hansons...a foundation of education supported by successful experience.

     

Posted by

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Rainmaker
2,257,495
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Sally. You are right of course about not all loan officers are created equal, but be careful paint all that you don't know. I love being questioned by Realtors who receive a preapproval from me. Once we speak and I have them check me out, they know very quickly that I know what I'm talking about.

Nov 28, 2014 06:09 PM #1
Rainmaker
3,256,195
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Well Joe.Petrowsky....if we ever have a Wisconsin pre approval with your name on it...we won't worry...it will be a referred buyer we will take very good care of... ...there are enough IN Wisconsin to worry about !

Nov 28, 2014 06:14 PM #2
Rainmaker
1,847,340
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Boy, due diligence like that by the realtors is going to get you a rep among the other realtors!

Good for your clients though!

Nov 28, 2014 06:43 PM #3
Rainer
1,756,848
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Sally.  I have the same reputation.  No BS pre approvals for me.

Nov 28, 2014 07:23 PM #4
Rainmaker
2,919,376
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

To have a list of lenders the buyers are required to have a pre approval letter from around here would not work.  

Nov 28, 2014 07:47 PM #5
Ambassador
1,295,629
Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

Sally and David - nice way to take that extra special care of your clients.    

Nov 28, 2014 08:11 PM #6
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

That's a great way to insure that those pre-approval letters come from lenders that can actually close a loan.  

Nov 28, 2014 08:21 PM #7
Rainmaker
2,346,102
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

So much better for everyone involved in the transaction and no ones time is wasted.

Nov 28, 2014 08:24 PM #8
Rainmaker
3,177,477
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Home and Condo Specialists

You are right that not all lenders are the same, but we are not allowed to do this...

Nov 28, 2014 08:40 PM #9
Rainmaker
3,256,195
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

I bet....we are not saying required to use...we are saying required to be pre-approved by...that if you checked with your state associations legal department...which is what we did first...you may be surprised James Dray and  Lawence "Larry" & Sheila Agranoff....we had to find a way...it protects BOTH sides....the Buyer actually closes and the Seller has a Sale !

Nov 28, 2014 09:55 PM #10
Rainmaker
3,001,461
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

I like to say that most of the letters from these internet lenders are not worth the paper they are printed on. Anyone can get one for any amount and it gets them no closer to a mortgage.

Nov 28, 2014 10:33 PM #11
Rainmaker
3,135,535
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Better to be safe than sorry right?  And I know we have been burned by horrible lenders in the past..good for you!

Nov 28, 2014 11:03 PM #12
Rainmaker
5,389,051
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is good advice for prospective home buyers. However, Joe Petrowsky offers a perspective that we should always keep in mind.

 

Nov 29, 2014 12:11 AM #13
Rainmaker
1,287,271
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Sally K. & David L. Hanson ` protecting the sellers is job #1 and that means making sure the buyers are able to get a loan and close the deal

Nov 29, 2014 03:32 AM #14
Ambassador
3,804,179
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Sally I don't blame you for questioning Pre-Approval Letters from Lenders you do not know especially if they are from an internet lender.  With all the guideline changes in recent years, you really have to deal with someone your are confident knows what they are doing.

Nov 29, 2014 09:49 AM #15
Rainmaker
2,704,775
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello Sally and David,

I question pre-approval letters all of the time and am amazed when a lender is shocked when I call and discuss them.  All lenders are not created equal and it is up to us to weed them out for our clients!

Nov 29, 2014 11:24 AM #16
Ambassador
3,983,049
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

I do ask for a letter from the lender and permission to call them to verify the information. I get it in writing.

Nov 29, 2014 12:51 PM #17
Rainmaker
2,540,672
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

This is an excellent topic.  And, while it's usually new home builders who require lenders either be their own, or require significant verification of pre approval letters from others, I can see why the practice might be beneficial in the resale market as well.  All lenders are not created equal, as has been pointed out.

Nov 30, 2014 01:41 AM #18
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Rainmaker
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Sally K. & David L. Hanson

WI Realtors - Luxury - Divorce
For All Things Wisconsin Real Estate...Call the Hansons
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