“I learned something,” said the Realtor.
I’ve known this Realtor—and received referrals from him for about five years. He doesn’t know of the “old” old ways, wherein a Realtor has a buyer prequalified before even pointing and clicking on the MLS site to search for a home.
He’s used to the ridiculous mortgage qualifying methodology of the past six or so years. That’s the method where the mortgage “professional” places two fingers on the prospective Homebuyer’s wrist, checks for a pulse and proclaims the subject alive, well and qualified for mortgage financing.
Think: Sub-Prime mortgage debacle.
Too often the Realtors—running with the (wolf) pack or following the (sheep) herd (you choose the appropriate metaphor depending on your viewpoint) —responded to any and every prospective Buyer. The call came in and the Realtor setup an appointment to show the house. No worries about the prospective Buyer’s qualifications for a mortgage, oh no, none at all. (Think: Bobby McFerrin, “Don’t worry, Be Happy”)
Run out there and sell that buyer a house. Who cares of the Buyer’s Income, Assets, or Credit? They’ll get a mortgage! And who cares the affordability of the monthly payment? They’ll manage it, somehow!
Well, I always cared. I always stopped prospective clients and Realtors dead in their tracks by asking the fundamental qualifying questions about Income, Assets, and Credit: IAC.
I got a lot of people looking at me as if I were deranged. I got a lot of Realtors admonishing me, “Look, can you do the deal or not?” I lost a lot of prospective Buyers/Borrowers by asking too many questions and worrying if they could afford the mortgage.
After all, why should these Realtors and Buyers waste their time with me discussing the finer points of those late payments with Macys and Nissan, or responding to my queries about how long they’ve received their overtime and is it guaranteed by a contract? Why waste the time when there were plenty of other mortgage “pros” out there ready, willing and able to provide mortgage financing in a flash.
Oh, and flash it was.
And now that flash has passed, nay, exploded! And those flash in the pan mortgage losers are working for a fast food establishment asking you if you’d like ketchup with your drive-through order.
Yes, and those flashed-upon Homebuyers are in dire straits, indeed. Many of them in danger of soon losing their home.
What of the Realtors? Well, those like my Realtor-referral-guy are now learning the hard way how they should prequalify before opening the door to any house.
In the case of my Realtor, he not only showed the house, but the Buyers LOVED it and made an offer on the spot.
Why wouldn’t they love it? It was priced more than $100,000 below what the Seller owed the bank as well as comparable houses in the surrounding area!
As quickly as we qualified the Buyers, wrote the loan application and got it approved—Saturday application, loan approved by 10:40 a.m. Monday morning—the deal died a horrible death. It died because I discovered shortly after the loan was approved the truth: the Homeowner took out a mortgage in July 2007 in an amount fully $110,000 more than the offered price.
Apparently the Listing Realtor in this case has some learning to do, as well. Somehow she never disclosed this fact to my Realtor-guy, the Selling Realtor. Only the list price of $325,000 was disclosed.
The Listing agent had some crazy notion she would negotiate a “short sale” for the homeowner and make this deal happen.
Arrrrgggghhhhhh!!!!! What a waste of EVERYONE’S time. The Selling Realtor, me, my processing staff, and the Homebuyer’s. Worse, the Buyers are fixated on that price and mortgage payment.
Worse, still, there are NO houses available in the Buyers’ qualified and desired range. Homes the Buyers like are $70,000 to $100,000 more than the amount of the first house.
In other words, the Buyers are NOT qualified for the kind of house they want in the area they want. No matter we can potentially add a cosignor or find a home in a different area. Fixated on price and location, these Buyers won’t budge.
And it’s all the Realtor’s fault.
He realizes now how he wasted his time. Now he will listen to me when I say, “Let’s prequalify EVERY prospect before you invest your time.”
He learned something, alright.