Central Ohio Real Estate Market News

In this month’s REALTOR® Magazine, there was an article alerting us to a new direction some of the large brokerages are taking regarding the buyer’s financial approvals. Buyers, you need to be aware of this new direction prior to submitting a purchase offer on a home.

Our central Ohio Purchase Offer Contracts contain a paragraph regarding the date the buyer will provide the seller with a preapproval letter. The language in the paragraph is very specific as to what is to be included in the lender’s preapproval letter. Often times the preapproval letter that the lender provides is merely a form letter and upon close examination, doesn’t provide the exact info required in the contract.

Many times that preapproval letter isn’t sent along with the Purchase Offer. So the seller is being asked to enter into a contract with no knowledge of the lender or the type of loan the buyer will be using.

Sellers have the right to know who the buyer’s lender will be, what type of loan (Conv, FHA, VA), and whether the buyer is preapproved for the amount of the price of the home. In today’s financial market, this is extremely important as too often issues later arise with the buyer’s financing that cause the Contract to be terminated. That impacts the seller as they have taken their home off the market thinking they are in a bona fide Contract.

“We’re seeing a much higher incidence of buyers thinking they have financing and finding out either at the closing table or days before that the lender doesn’t have the money or has gone out of business,” says Jacelyn Botti, head of residential sales at Weichert Realtors® in Morris Plains, NJ.

Per the REALTOR® Magazine more and more brokers are working to “bulletproof” financing for buyers. One such brokerage’s program offers their sellers a “buyer’s verification”, which lets the seller request that buyers get a mortgage approval (at no cost) from the broker’s funding affiliate BEFORE making an offer on the seller’s property. If the buyers are approved, they are not required to use the broker’s funding affiliate, but it gives the sellers the added assurance that the buyer qualifies for a mortgage prior to entering into a Contract with the buyer.

From the seller’s perspective, this extra approval process gives the seller some assurances that a questionable lender won’t be doing some hocus-pocus financing. For buyers, while they may not care to go through the extra paperwork, it will offer a better chance that they will actually be able to go to closing OR it will alert them that they were originally planning to use a disreputable lender. This would be a good thing for both parties if the ultimate result is a completed transaction.

Buyers, if you want a better chance that the sellers will consider your offer, then …

• Select a reputable, well-know lender. A local one is better (no online aggregators).
• Don’t just get pre-qualified, get PREAPPROVED.
• Send the preapproval letter with your offer.
• Be prepared for the seller to ask for an alternative approval.

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