As foreclosure properties begin to dominate the market more and more, we are seeing the banks are requiring buyers get pre-approved through their bank before making an offer. So what if you have your own lender, as you should before you even begin looking for a home? That means you still need to talk to the bank who is selling the home too.
If you were pre-approved through a lender first then you should not need to worry about get approved with the seller either. The requirements should not be that different. Their “reasoning” for wanting to get you pre-approved through them is they want to make sure you are good for the loan and they don’t want to take another lenders word for it. The whole story is they want to make you a customer. It is all about customer acquisition.
Large lenders often will originate loans with a loss and they know they can beat the small lenders by taking that loss up front. That is okay with them though as they know once you use them for your loan, they have a chance to convert you to a life-long customer and they get the lifetime value of the new account.
Do I like that a buyer who is pre-approved with a lender and qualifies for the loan needs to also get approved by the selling bank? No, it should not be that way. But now you know what it is required.
{ 2 comments… read them below or add one }
True enough…but…what to do about it? Do you want your client to buy the house or do you want to quibble about who is doing the loan? Explain the requirements to your client and let the client make the decision as to what to do. If the client does not want to submit to the seller’s lender’s scrutiny, the client must pass on the property. The client’s desire to buy the property often overcomes their (and our) reluctance to have the buyer qualify with the seller’s lender.
From the seller’s standpoint: requiring the buyer to qualify with the seller’s lender gives greater credibility to that buyer’s offer and protects the seller (and seller’s agent) from wasting time on unqualified wannabe buyers. Or have you never experienced a “preapproval” that was not worth the paper that it was written on?
John agree with the first part there is not that much the buyer can do, but the seller does not need to require it, they are not doing it because they are worried about buyers funding… that is what the submit LSR with offer is for… they just want to add more lifetime clients….