Profile picture for minne

Do we have to be prequalifed with the selling agents lender?

We submitted a pre qual letter with Wells Fargo and a large deposit.  This office received another offer at the same time.  This is not a foreclosure or short sale.  This requirement to qualify with their lender was not included in the mls or contract.  They accepted our offer contingent upon us passing muster with their lender.  It sounds fishy to us.  We asked our agent to pass along our mortgage persons info for direct contact.
  • November 01 2011 - US
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Answers (12)

In our area if the buyer is not using a local lender, you can see the seller go to extra lengths to be certain the buyer is able to perform. In some cases, sellers agent will require the buyer to use a local lender or they will pass on that buyer. Getting the funds to close in this tough marketplace makes sellers nervous. They are just being cautious in going to contract with the buyer. It's better to be safe than sorry since you just don't know today. The seller certainly doesn't want to move out only to have the buyers loan denied. That's a very bad situation for a seller to be in. It's what they are trying to avoid.
  • November 07 2011
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Profile picture for Ofe Polack
Minne, you have nothing to lose by allowing the other lender to pre-approve you, you may even like their terms better.  You can not be forced to use their lender though.  If they have countered your offer subject to being pre-approved by "such and such" lender and you already signed it, then it becomes a contingency to the contract.
  • November 02 2011
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There are some occasions where the Seller agent requests that the Buyer be pre-approved by their lender. However, in my experience in the greater Boston metro area, this is not the common practice and overall, it would be "illegal" to force a consumer to choose a specific lender to get their financing. I've seen Buyers be personally offended and perhaps disrespected when there is a request for a second pre-approval since the Buyer believes they have already, in good faith, been pre-approved by a lender or mortgage broker. What if you tell the Seller agent "no, we will not comply with this request, do you want the offer or not?" You could do that and stand firm.

Situations where I've seen a request for a "second opinion" for a pre-approval letter are typically with:
*short sales
*foreclosures
*new construction
*random Seller agent requests on behalf of their client

Hope that is a helpful addition to this thread and your question. Best luck!

  • November 02 2011
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This is not necessarily consistent normal practice.  But I have ran across it.  Sellers and their agents are being extra cautious and want to make sure that the the buyer really does qualify.  You spin it to a positive, you would now be pre-approved with an additional lender and could compare rates.
  • November 02 2011
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Profile picture for Karla Casey

In Hawaii, that is unusual for a normal sale.  I have seen that done with new projects that have a "project" lender or with REOs.  The seller must have had a bad experience and just wants a buyer to be prequalified with a lender they trust.  If you want the home, I would recommend you go ahead an get prequalified with their lender.  You don't have to use their lender - they just want a second opinion.

  • November 01 2011
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Relax Minnie, this is not a bad thing, and if you received an attractive over accompanied by a pre-quality, and not a pre-approval, your agent would be encouraging you to do the same thing. Discuss more with your agent, mortgage expert and attorney. Look forward positively rather than anticipating and looking for problems. Best of luck!
  • November 01 2011
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Profile picture for ExpectFirstClass
minne - This is not an uncommon practice.  The seller's lender wants to ensure that you, as a Buyer, can qualify for lending to purchase the home.  Lenders now are very risk averse and want to minimize risk wherever they can.  I've had it happen to a buyer of mine where one lender gave a pre-qualification letter and when we submitted our offer and were getting ready to go to contract, I asked the buyers to see if they were interested in shopping for a better rate.  When I put them in touch with a few other lenders, ends up that they couldn't actually qualify (they'd qualified with an FHA loan and already had an FHA loan for a property they weren't planning on selling...and you can't have two FHA loans without extenuating circumstances).  If you really want the property, just go with it.  It shouldn't hurt your credit score if you qualified within 90 days.

Best of luck,
/rc
  • November 01 2011
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The seller probably had past bad experience or simply wants to make sure you are really qualified.  This is not that unusual and it just takes some time and copies of docs.
.
  • November 01 2011
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You don't have to use the seller's lender.  The seller is just trying tomake sure that you are a financially sound buyer.  If you are interested in the house, it would make sense to comply with the seller's request.
  • November 01 2011
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Profile picture for nwhome.us
All lending officers are held to standards of privacy.  Ask for the privacy policies (a brochure) from the seller's lender.  There should be no obligation that you use the seller's lender.
As stated before, this is a common technique used to confirm (get a second opinion) that a buyer is indeed per-approvable. There are many times when a second opinion turns up inconsistencies or, if someone claims they were denied a loan, supports an opportunity to close on the property.
This is solid representation of the seller. (Who's agent is called the listing agent.  You are represented by the selling agent.  Doesn't make sense, but those are the correct terms)
  • November 01 2011
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There are times when a listing agent will want to verify for their sellers that the buyer submitting the offer is truly qualified and that the loan will close. It is a safety measure that some agents ask that the buyer get preapproved with a lender they are familiar with. Some banks have reputations of having loans fall through, delays upon delays. It is not an insult, it is simply the agent knowing that some lenders don't always get the deal done and they are protecting their sellers best interest.

  • November 01 2011
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Profile picture for wetdawgs
Most sellers are looking for preapproval letters rather than prequalification letters.   (Preapproval is one step up the run for rigor than pre-qualification). 

If you had preapproval from JimBob's Lending and Plumbing Repair, then I'd think review by their lender would be appropriate, but not when it is from a well know name.

  • November 01 2011
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