24 Jan What EVERY Home Seller Should Know About The Buyers Approval Letter!
When I place a home on the market I plan on selling it. I’m in the business of selling houses, not listing them. Deals sometimes fall apart because the buyer’s financing falls through. The reasons are countless. A good agent will be careful about who they’re showing houses to. A desperate and inexperienced agent will show just about anyone in hopes of striking a deal. These types have to be avoided when you’re representing a seller.
How do you avoid weak buyers?
It’s as simple as making a ham sandwich. When a Realtor submits me an offer I ask a lot of questions. Here are a few examples….
1. Feel out the agent. I ask the Realtor how long they’ve been working with buyer. If they met them an hour before submitting the offer then I know with almost certainty that they know very little about the buyer, including their financing.
2. I call the loan officer on the approval letter and ask the following questions:
- Have you checked the buyers debt to income ratio?
- Is the buyer self-employed? If so, do you have all the tax returns to verify income?
- Has the buyer actually filled out an entire application?
- How is the buyers credit?
- How long have you been working with the buyer?
- Does the buyer have the funds necessary to close for both the down payment and closing costs?
- Does the buyer have stable income?
Legally the lender doesn’t have to answer some of these questions, but they always do. I’ve never been told “I can’t be told.” Sometimes buyers ask for closing costs. Sometimes their agents say things to me like… “My buyer doesn’t have the money for closing costs and they really need your seller to give them 3% of the sales price!”
I smile, but keep silent. The strategy has been played out. Thanks to their loan officer I know that the buyer has the money. My seller will likely save.
If the lender is shaky or trying to throw me excuses for not having received the tax returns then I am fully under the impression that this “buyer” is not ready to buy a house, especially the one I am trying to sell. You would be surprised how many times the loan officer has done nothing more than had a conversation with the buyer.
For whatever reason Realtors never call my lender when I submit an offer. They just assume I’m showing an approved buyer. I’m not complaining.
A lot of agents complain about “deals falling apart because of financing.” It happens. You can’t foreshadow every disaster in this business, but you can eliminate a lot of potential pitfalls by actually doing your job. Every home seller should ask their listing agent about the approval letter before signing on the dotted line to sell their home.
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