Friday, March 25, 2011

Mortgage Pre-approval

This past week I went back to class for my continuing education credits. The title of the course dealt with Buyer Agency, and since I hadn't taken anything like this is in a while, I thought it would be interesting. It was, very!

We had a wonderful small group of agents and a very mesmerizing educator, John J. Waugh. So we talked - and talked and talked.

Something I had been rolling around in my head because of the past week came up - mortgage pre-approval.

Money is always a touchy subject, and I learned early on that when money enters a conversation as it must in real estate, the world changes a bit. I prefer to send my buyers to a mortgage person, someone I know and trust or someone they know and trust, rather than qualify them for a mortgage myself. This used to be done all the time by agents, I am told, but the consensus in the class was that most "used" mortgage people to do it.

But it must be done. I had a conversation earlier in the week with an agent who told me a story about a client who absolutely refused to speak with anyone and still wanted to see higher end homes. She accommodated him/her for a bit, but then she had to insist on some verification. The person left in a huff, presumably to work with someone else... who one would hope would ask for the same verification eventually.

For every offer, I have on file a pre-approval or proof of funds if it's a cash deal. Often though, while I may have the documentation, other agents do not ask for it. Generally for mortgages I include it in the offer to bolster it. This was necessary in the good old days because there were other offers out there. Now agents are thrilled to get any offer, real or not, it seems. Either that, or they have come to trust that I have made my buyers do their homework or I wouldn't bring the offer.

This goes for every buyer, even people I know well. Recently I worked with a couple whose credit scores had been checked, approvals given, and were stellar buyers on the very high end. They knew the requirements and called one of the mortgage people I recommend. We were all shocked when the pre-approval was denied due to a blip in their credit not in their control (long story, not to be gone into here). My stellar buyers would have to wait a bit until the issue was resolved. But we are all so glad that the problem was identified early - before an offer was extended and accepted, before their current home went on the market.

I remember sitting with a gentleman a while back who was offering cash for a good-sized home. I needed to know he could buy it, and we sat in the empty office for a couple hours while he fished around through his files and came up with enough verification for me to go ahead with the offer. He told me his wife didn't know as much as I did afterwards. But we got the house, and I was able to negotiate from a strong position.

As uncomfortable as the money discussion can be, it is necessary.