It was a beautiful Wednesday. The snow was falling, and I was enjoying an afternoon of relaxing puzzle construction. Then it happened. I got a shocking email from the buyer's agent stating the deal is dead THE DAY BEFORE CLOSING. WTH?!
Okay, you might be thinking to yourself, "Lindsay, how could you let this happen??" Let me tell you how. We as agents cannot restrict who buyers use for their loans. However, whether I am a buyer's agent or a listing agent I ALWAYS call the lender to ask if there are any red flags. This deal was no different. I received the offer on my listing, and there was a pre-approval letter from a lender I had never heard of. Great. I ask my co-workers, and no one really had feedback. I call the lender who swears up and down the buyer is solid and we should be able to close the deal in record time.
So on we went. Appraisal went well. Inspection was fine. Now we just waited for the lender. Christmas, then New Years, and then we got the request that the lender needed to extend closing. I expected it and had already prepped my seller. Fine... closing delayed a week.
The financing deadline came and went. Buyer's agent assured me buyer was already packing and as soon as he got the Loan Commitment from the lender he would send our way. Title work was done, and my seller electronically signed all the documents she could.
Crickets. Then the email came through the day after my seller signed. While I won't get into the reasons the buyer was denied, my immediate blame went to the lender.
Gave him a call and tried to remain calm while I gave him a chance to explain. He claims the information from the buyer "was not the whole story" and it took underwriting longer than expected to find the error. I won't dig into the details, but... again... WTH.
Now you might be asking, "What is the point of a pre-approval if the loan can still get denied."
Well, here are my theories. The loan officer is from a national mortgage company and is not local. Many loan officers from high volume companies such as this have to crank out tons of loans to make the big bucks. So, it is very likely you are just a number to them, and they don't take the extra time to get to know you. Had this loan officer done a bit more chatting with the buyer, perhaps the issue would have been resolved much sooner. The other issue was the extra time required by underwriting. Again, high volumes of loans may mean delayed submission from the loan officer to underwriting, or extra time in underwriting.
So, what is the moral of the story?
- As a buyer, PLEASE don't only go with a company just because it's easy or convenient (you cannot get pre-approved in 10 seconds. It takes time and sending over lots of documents).
- Don't just look for whoever promises you the lowest rates. Ask about closing costs. Ask about points. Ask ask about timelines for financing and appraisal.
- Do some digging. Get to know your lender, and don't be afraid to talk to more than one. Yes, it is a hassle to give your personal information to more than one lending institution, but I doubt you want to be in this same buyer's scenario because you weren't asked the right questions or didn't understand what was going on.
Agents work with TONS of really great lenders and would be happy to give you recommendations. This is a big deal (literally) and deserves to be treated as such!
The good news is we went back on the market and got multiple offers the next day! If that isn't the sign of a seller's market, I don't know what is!
Until next time, stay sweet!
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