Should I use home owners preferred lender

Question

Hello guys,

So this I just looked at this property and I am really interested and willing to buy it.  Now, my the owner wants me to only go through her lender. I really do not know the reason but that's what my real estate agent told me. Have you guys ever encountered the same scenario?  I was thinking to go to a broker, run my application and get the best loan in the market? I would appreciate any advice.

Thanks,

Rohit

Chris Mason · Answer

@MJ Barnett said:

> Many times larger Agents require you to be qualified by their lender before accepting your offer. This is to make sure that your lender is not actually lying which believe it or not happens many many times as least in the LA area. (...) When I am uncomfortable with a lender I discuss with my seller about countering and requiring the Buyer to be pre-approved by my lender.

This is fair. @Rohit Kochar does your lender sound like an idiot or a liar when on the phone? Be honest, haha.

MJ Barnett · Answer

Rohit,

Many times larger Agents require you to be qualified by their lender before accepting your offer. This is to make sure that your lender is not actually lying which believe it or not happens many many times as least in the LA area. Some lenders will even write up a full pre-approval and have only pulled a credit report because they don't want to do any work until the Buyer has opened escrow. They work off the philosophy of quantity verse quality. When I am uncomfortable with a lender I discuss with my seller about countering and requiring the Buyer to be pre-approved by my lender. Though there is no "legal" way to force you to use the Seller or Seller's Agent's lender. Though they can just not accept your offer. I would have your Agent counter back that you will do a cross-qual with their lender and check their rates they are offering which gives you the option to use your own lender and have the "Seller's" lender as back up.

MJ

(Only my opinion based on the info you provided. To protect my license I am only giving my opinion and do not know the full situation :) )

Charlie Fitzgerald · Answer

Use the lender or broker you want to use.  Any closing costs the other lender is going to pay, they are going to get into the transaction somewhere..

Chris Mason · Answer

I'm going to guess that it isn't actually the seller's preferred lender, but the listing agent's preferred lender.

Kickbacks are very illegal, but an agent wanting a deal to go smoothly is not illegal.

In this case, however, the listing agent is shooting herself in the foot: the mortgage gal or guy that already knows your situation and has done a mortgage or two for you before, and that you know for a fact knows how to set up financing for folks that own several pieces of real estate (not everyone does), will make things go 20 times smoother than the listing agent's "go to" lender for her first-time home buyer clients with simple situations and no Schedule E.

Tell your agent to tell the other agent to pound sand, you've already got a rockstar local non-big-bank lender that knows your finances, has done mortgages for you before, can steer your deal right back to the same underwriter that underwrote your last deal, and is strong in the ways of both the force AND investor borrowers.

Russell Brazil · Answer

Often a seller will ask for a preapproval from a particular lender. Usually this will be a lender who sends their preapprovals through an actual underwriting process. So a preapproval from one of those lenders essentially means you have a very very high likelihood of closing the deal. This helps to weed out a lot of the people using lenders who will write a preapproval for a corpse. However they can not require that you use a particular lender. This is however where we get into a a grey area....as they can not require to use a particular lender, title company etc.....however you can not force them to sell to you either.

Rohit Kochar · Answer

What if that lender agrees to pay the closing cost for this purchase ?

Christopher Brainard · Answer

@Rohit Kochar

I can think of a few reasons (ethical and not) that the seller would want you to use her lender, but most likely that is not in your best interest. I would shop the market and pick the lender that best fits your needs.

-Christopher