How to Verify A Buyer

Question

I am selling a couple properties that I own. I have a couple buyers interested in the properties. I am going to be contacting their lender they provided on the proof of funds. Can they provide me the seller an information about the buyer? Also, can they provide me information along the way to ensure the transaction is moving smoothly on their side? I want to be sure I select a buyer that can and will close on the property.

Llewelyn A. · Answer

@Grant Anderson

Hi Grant. I generally am a Real Estate Investor but I also am a NYC Broker, recently licensed.

When I submit my bid for a purchase in my competitive NYC Market, I usually let the Seller's Agent know that they can have access to my information that I'm submitting to the Bank.

I do that to let the Seller know that we are confident on our ability to close as purchasers.

That way, if there were other bids that are above what we offered, the Seller or Seller's Agent can make a decision that's not necessarily the highest bid, but an acceptable bid with a high probability of closing.

Now that I'm a Broker, if I am representing a Buyer, I will have him prepare a "Credibility" package that will include a pre-approval as well as some other pertinent information (Credit Report, for instance), that can help us win the Bid.

However, I am unsure how other Brokers who represent their Buyers will react to any further information than just a Pre-Approval.

If I were to represent you as Seller, I would ask Buyer Agents to disclose as much as they can.

But that's just me and NYC is a very competitive Market. A lot of well priced Properties will attract all cash Buyers, even above $2 Million Listing Prices.

Chris Mason · Answer

Don't expect much from a big bank or 1-800 number, but yes if we wish we can disclose very general updates. Things like "it's out of underwriting" and "the appraisal has been ordered," but NOT thing like "we're waiting on this specific condition" or "this is the buyer's FICO score" without permission. Certainly not anything that would give the seller any advantage during negotiations with the buyer-client.

James C. · Answer

Grant,

Generally the banks won't provide you with much information. You might get the pre-qualification letter, but anything useful will be limited.  Plus lots of that stuff us based on buyer self disclosure and it's way different from reality.

Your best bet is a really solid contract with specific dates for things like loan application,  preliminary approval,  inspections etc.

If it's not done,  then it's a breach of contract. Then your recourse is what's in the contract.

Hope that helps.

Good luck,

Jim