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Doesn’t a pre-approval letter validate income and down payment? It’s basically the bank saying “if you buy a house for up to $x price (assuming it appraises for such) you are approved for a mortgage at y rate”?
Yes it does. A lot of people confuse a pre-qualification with a pre-approval.
Many banks will issue a pre-qualification based on a credit report and a few questions. You can even get them on line.
A pre-approval however is only issued after the borrower goes through the entire underwriting process as if they already were in contract. It is subject only to an appraisal and no change in the borrower's financial situation.
Yes it does. A lot of people confuse a pre-qualification with a pre-approval.
Many banks will issue a pre-qualification based on a credit report and a few questions. You can even get them on line.
A pre-approval however is only issued after the borrower goes through the entire underwriting process as if they already were in contract. It is subject only to an appraisal and no change in the borrower's financial situation.
In that case it’s probably reasonable for an agent to ask for a pre-qual before starting to invest time with a potential buyer, and a pre-approval before making an offer. But I would be offended if I were asked for my credit score, etc.
It’s the same as when my doctor or dentist asks for my SS#. I refuse to provide it as they don’t need it.
I had a similar situation on a RE deal about 2 years back. It might be legal, it might be ethical, but it is not reasonable.
Was working with my kid on a home purchase. He had a _very_ clueless RE agent. We saw a home we wanted where the owner was supposedly ready to accept another offer. The owner and his agent were there at the showing and it was obvious they were open to hearing an offer for us. Because of the other potential deal on the table, things were very time sensitive.
As we left the home, I told the RE agent we were prepared to make a cash offer on the spot. I wanted him to go back in with us and present an offer. Our agent refused.
He had to fill out paperwork and receive financial documentation from us to back up the offer. Very much along the lines of what is happening to the OP. I refused to provide tax returns and other sensitive personal information. This agent (our buyer's agent) insisted that no offer could be presented without that.
The homeowner accepted the other deal the next evening and went into contract shortly thereafter. Our agent's refusal to submit the offer in a timely manner lost the deal. The other offer also wasn't as good as mine, so everyone lost out. We immediately dumped that agent since he would never submit an offer for us without seeing my tax returns.
The next agent we had never asked for anything like that. We made a cash offer on another home and that offer was accepted. As part of the contract terms, we agreed to provide a letter from a financial institution stating that we had access to funds in excess of the amount needed to close. It didn't state how much we had or where the funds were coming from - just that we had access. That satisfied all parties.
A year later we did another deal that worked the same way. In that case, the seller didn't care about a cash offer, so we had the standard mortgage contingency. We weren't even asked for a pre-approval letter until the contract signing.
I get it that a bank/lender needs financial details. They want to make sure you can pay back what you borrow. While a seller deserves some assurance you can back up an offer, they (or any RE agent) has no need for a copy of your tax return or detailed financial data. A pre-approval letter from the bank should be plenty for their purposes.
To the OP - I would find another agent (which is what I did when I was in the same position).
Joe461, you are right that they should not have asked for all of that information. You were making a cash offer. What would have been reasonable would have been to request "Proof of Funds" to show that you had the cash on hand to complete the transaction. Every situation is different.
Joe461, you are right that they should not have asked for all of that information. You were making a cash offer. What would have been reasonable would have been to request "Proof of Funds" to show that you had the cash on hand to complete the transaction. Every situation is different.
Actually, what would have been reasonable would have been for Joe or his son to turn to the agent and say two words, "You're fired," then to knock on the door with their offer. The seller then would have had the option to decide what supporting documentation they required to consummate a deal.
It was unreasonable for the buyer's agent to stand in the way of a sale.
Actually, what would have been reasonable would have been for Joe or his son to turn to the agent and say two words, "You're fired," then to knock on the door with their offer. The seller then would have had the option to decide what supporting documentation they required to consummate a deal.
It was unreasonable for the buyer's agent to stand in the way of a sale.
Spot on. I have no idea why I didn't think of that. It did all work out for the best, since we found an even better home in the same neighborhood. And the new real estate agent got the commission, whereas the old agent still would have been compensated for almost screwing up a deal.
...but you're right. I should have knocked on the door and went solo.
I had several agents who wouldnt even allow us to view homes without sending our checking account statement. One even went as far as to question our account because it was under our business name and i had to pull up the articles of incorporation. It was rediculous and i ended up not working with them.
I had several agents who wouldnt even allow us to view homes without sending our checking account statement. One even went as far as to question our account because it was under our business name and i had to pull up the articles of incorporation. It was rediculous and i ended up not working with them.
This kind of arrogance needs to stop. Glad business is so good for them...if things slow again I’m sure they will go hungry.
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