Friday, May 1, 2015

Pre-Qualifications From Lenders ~ Means Something, Right?

Well, it should. IF, I repeat, IF, your lender has done their due diligence!

Meaning of Due Diligence?  Wikipedia defines it as: A comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish it's assets and liabilities and evaluate it's commercial potential.

In my little world today, I'm talking about a lender not doing their due diligence for their borrower. AKA a buyer writing an offer on one of my listings that really couldn't afford to buy it.

Story: Buyer writes an offer, submits prequal info. A bit sketchy. A difficult loan, low FICO's, low down payment, gift money. Tough, but a can happen loan.

To protect my seller, I ask for one of my preferred lenders to take a look and see what they think about this buyers qualifications.

Basically, ask my lender to work for free, to assist my sellers, to do Due Diligence on the loan probability of this buyer.

Something that the buyers lender supposedly did, right? Hah! Buyers agent and I both felt a bit sketchy about the out-of-area-lender, so there was no animosity about my request.

Lo & Behold, not only had the lender not dug deep into buyers credit, income tax returns, assets, they hadn't even quoted the buyer what their monthly payment would be!!! Buyer about passed out when she heard it.

The type of buyers were absolutely perfect for the property in question. My sellers were more than happy to work with them on their loan program. However, when we determined, by MY lenders Due Diligence, that they could only comfortably afford 75k less.....we weren't so happy. 

Glad that we found out now vs. when we were two weeks into escrow. But damn, why the heck do lenders do this crap to their clients? Why, tell me freaking why???

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