There are many reasons for this to be the case, and it would seem that some lenders are their own worst enemy.
Here is the “reason” for this requirement, that most “savvy” of the real estate listing agents employ.
If a Top Professional Realtor, that lists many homes for sale, has been in the business for any amount of time, they have been “burned” by a lender that did not have “enough information” to prequalify the real estate buyer, that they said was “qualified or approved”.
So, their offer is chosen, maybe after a short bout of bantering back and forth via counter offers.
Part of the process of Selecting offers for real estate sellers, most of the time, hinges on the strength of the pre qualification letter from a Reputable Lender.
After that, escrow opens. The deposit check is “deposited” with the escrow company handling the escrow for the home, condo or town-home being sold.
From the time the offer is completely executed – time starts.
Within the “timeframes” employed within contact – it maybe that the real estate buyers have 17 days to complete all inspections, approvals and qualification before having to remove their contingencies. After a buyer removes contingencies, and want to cancel the deal, they can lose their deposit.
The “burned” part comes in when the Sellers Realtor is notified that the buyer is cancelling escrow because they could not get a loan.
OMG – So the phone calls start from the Listing Realtor to the Buyers Lender and Realtor representing the buyer. Some “professional courtesy’s” are exchanged in high volume over the phone and via email.
However, they can use colorful metaphors all they want, it may be that the buyer did not qualify in the first place and won’t now, not even with a loan shark.
So hence the reason for pre qualifying with another lender. Typically the agent’s lender. The agent who is representing the home seller.
This requirement is usually listed on a counter offer during the negotiation process between the buyer and seller of the real estate transaction in question.
Remember, if the buyer agrees to the counter dictating to qualify with a lender of the sellers choosing, they are stuck to this requirement or maybe in breach of contract.
Don’t take offence – Just as long as the “second lender” does not try to convert the buyer by saying clever things like:
“How much is your lender charging? I can beat that.”
“What is your interest rate? I am sure I can beat that.”
Typically, this is “bad form” for a “secondary real estate lender”. And even more typically, the promises are “pie in the sky tactics that end up being lies”.
Understanding everyone wants to make money, this is not the way in which to do it and shines a negative light on home buying experience for the real estate buyer.
Reach out to my Paris911 Team of REMAX of Valencia CA Realtors. We will assist you with the best questions to ask lenders when wanting to purchase real estate and more.
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