I received a phone call today from a real estate broker that I have worked with over the last few years. I have some very loyal clients that I've done many loans for when they have purchased homes in Phoenix. 
These clients actually found her after I had pre-approved them. They have purchased a few homes with her, where I provided financing. Her and I get along really well and I enjoy working together. She called me today about a client she had previously referred. The conversation started like this:
Hi Dave! You remember those clients I referred to you that where moving from Texas to Arizona? You spoke with them and took their information over the phone. You also asked them to send you paystubs, so you could verify their income. I had one of my agents take them out to look at homes. They didn't want to send their paystubs, so she referred them to another lender that did not require them to issue an pre-approval.
I didn't have a chance to do the loan..... because I asked for paystubs to verify they were qualified??? Why would any agent not want to know that their clients were in fact qualified?
Well Dave.. they put an offer on a home and it was accepted. We ordered the termite report and it came back 4 weeks ago. Now we are ready to fund, but the lender is telling me she can not fund because they do not have a clear termite report. It has "water damage" listed as being on the property. Have you ever had this problem?
Yes! Yes, I have and I would have prevented this from being an issue about 3 weeks and 6 days ago by simply reviewing the report when it was originally completed. So, I tell her how we worked around this issue on a transaction we had the same problem on a year ago.
It's a double edge sword.......Ask for too much documentation and your buyers go to someone else. Don't ask for enough and your transaction falls apart at the 11th hour. I would prefer to lose the buyers and keep my integrity.
About the Author
My name is David Krushinsky and I am a Phoenix mortgage specialist that is truly passionate about my profession and the result is that nearly 100% of my business is by referral from satisfied clients, trusted financial advisors and the most experienced REALTOR®'s in the Phoenix area.
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David - I put it like this - Before you buyer spends $400 for an appraisal and another $500+ for home inspections etc. I suggest you allow me to collect their info. Not only will the buyer suffer a large financial loss, it will hurt everyone in the transaction.
A pre approval is a negotiating tool. If the buyer knows you just need a property to submit to a lender your offer will be stronger. I just wrote a post about this very thing 2 days ago. Feel free to stop by and take a look. Nice post David I agree with you 100% and I think your integrity and reputation is more valuable than 1 loan lost.
With all the challenges we presently hear about regarding mortgages and lending ... With all the press we are bombarded with regarding this issue ... If you've been in real estate sales more than a week ... If you don't want to waste the time of all those involved in the transaction ... If you care about your own reputation .... Why oh why would any agent choose this path??? It just doesn't make sense to me. I totally agree with you. Do the right thing. Ask for the info and documentation you need in order to do your job correctly, that protect the best interests of all involved, and lead your client to a successful closing. Maintain your good reputation. You chose the right thing to do.
Gene
Dave, I have a 10 point document that I prepared for prospective buyers. It does not not ask them any questions, just fills them in on what the buying process is all about and I sometimes get the feeling that they somehow think it is threatening. It is not a contract of any kind, just some bullet points. It is supposed to help and educate them but some don't like it.
Ask for too much documentation and your buyers go to someone else.
A. Let them
B. I hope the door doesn't hit them in the butt as they leave.
C. There's such a thing as "too much documentation" in our business?
David - it is really a balancing act. No, the buyers do not like any bullet points, nor do they fancy the idea fo being educated
Я подумал, что Вы, вполне возможно, говорите по-русски.
Dqvid: Yes and amen. Let someone else take the bullet. As long as you're being upfront you'll be ok. Things always happen for a reason. I try to remind myself of that daily. It helps me stomach a tough business! Thanks for the post!
David
I think all loan officers have experienced this some point in their career. What I see alot of recently is borrowers asking to get rate qoutes without providing any documentation or credit report being done. When you tell them it is impossible to quote a rate based on no information they become upset.
Dear David,
In the long run, your integrity will keep you in business.
I would prefer to lose the buyers and keep my integrity.
You did not give up anything. It just goes to show that you get what you pay for sometimes. Agents should work with MLOs that they have a proven closing record with to make sure that these things do NOT happen at the last minute. Unfortunate, but hopefully a learned lesson by the agent.
Hopefully Active Rain will provide a forum for ALL PROFESSIONALS in the transaction to avoid taking short cuts (while hurting professionals w/ integrity in the process). Stay the course David...odds are both of those "professionals" will be in a different industry this time next year.
Me too Dave, some of them just need to be let go to make room for the good guys...loyal and reasonable, who understand that documentation is required for a reason. OH my.
There is definiely a buyers' confusion; they think that a good credit score alone will get them the loan. No wonder, Credit scores have been played up so much by advertisers.
Hi David -- Another great example of why it's paramount for a consumer to only surround themselves with the best and most competent real estate professionals they can find.
Measure twice...cut once...
So true don't look back. I tell people if you want to work with someone who is inexperienced do it your way. If you want to work with someone who is experienced you are probably going to have to do it their way.
I work with a great lender that collects all the information before approving the buyer. All my buyers are ready to go with him. He has never missed a closing date in 13 hears. Work with the best to close deal$$$$$$
Good post! I jumped over from my post:) Integrity any day! Always. Good luck in the future.
Hello David:
I know you d**** if you do d**** if you don't. I as a listing agents always ask for a second opinion on offers that are submitted on homes that I represent, it not that I want to take the business from the other person I just do not want my seller to have bag's packed to find out there is a issue. I also put into my contracts a per Diem for the seller if the buyer or lender do not close on time. Local agents balk at this but I have seen it perform extremely well.
We verify pre-approvals and Proof of Funds for Buyers interested in our Listings. The more solid the Buyer, the more interested the Seller.
David, in this business you can't have enough documentation. Buyers who don't want to cooperate usually have something to hide.
I am with you on this. Some buyers are weird about this stuff though.
I had a potential client last year who refused to give me paystubs during the preapproval stage. As a matter of fact, he became very defensive when I explained why I needed paystubs prior to (along with other documentation) prior to issuing a PreApproval. Needless to say, he did not go with me. I was happy it blew up before he was in escrow. The last thing I need right now is a client who fights with me over basic documentation requests. Can you imagine what would have happened if, two weeks into escrow, we needed documentation on a deposit on the bank statement? Ouch
@John Le Francois - I agree with you. I have noticed this when buyers come referred to me from an agent that has less control of the transaction. We usually don't wind up working with those buyers.
@Hella - You're right. I've also noticed this. Additionally, many people think putting down more money will fix credit problems, which is currently not the case.
@Chris Olsen - I actually did measure twice about a week ago when I was building something with wood, and I thought of that saying. I learned this quote from being a carpenter after graduating from high school and it still holds true.
@Lorraine/Loretta Kratz - that's interesting. Speaking only from a loan officer perspective, I think many loan officers would also take offense to having their clients talk to other lenders because they are worried the client may select another lender. However, I think it's a good idea as a listing agent and see the benefit.
@Tim Storm - I know the feeling my brother. It's hard enough to get your loans closed, let alone worry about a client who is uncooperative.
I wish I can say I'm surprised by this but I'm not. I'm glad you work the way you work Dave. Good post
I just lost a potential buyer on a short sale because when he called last week to see my listing I asked him if he had been pre-approved. He said he just wanted me to "show" him the place that same day. I told him that my clients had instructed me to only show the home to pre-approved buyers since its a short sale and the offer would need a pre-approval letter to be submitted.
He huffed and puffed and said he would get another realtor to show him the place. he could not believe I was going to lose this opportunity over a pre-approval. I am sorry but why would I waste my time showing you a place you may not qualify for a mortgage on? Perhaps in the "old days" realtors could do that knowing that as long as the client was breathing they would qualify for a mortgage. Those days are gone and I for one am glad. So I don't get to double end my listing? Maybe?
But I doubt it...I was able to continue with my scheduled activities and if the client found another agent that had the time to show him the place without qualifying him in any way shape and form - go for it. But time is one thing that is in limited supply and I for one am not going to waste it with a buyer that is not pre-approved by a qualified mortgage professional. End of story!
It is best to let them go, buyers who are uncooperative at the beginning stages will not get more cooperative later.