Here is yet another horrible mortgage story. This time the agent is more at fault than anyone else.
I have a listing in Bergenfield NJ. Bergenfield is a great town. It’s a town of affordable homes with a terrific school district and strong community spirit.There is also a good bus commute to NYC (extremely important around here) and a nice business district too. Because Bergenfield has so much to offer, it’s very popular with home buyers.
We listed the house with a clear notice that pre qualifications will not be honored. Because pre qualifications are non verified they’re worthless. As a result, this is unacceptable to me whether I’m a listing agent or representing a buyer. What’s the point? It doesn’t work. Let me tell you why.
Sellers take their home off the market only to learn that their buyer pulls out because they can’t get a mortgage or it takes delay after delay while a buyer tries to find a mortgage. Buyers go into contract on a house with no idea what the mortgage will really cost. Talk about a disaster waiting to happen!
Unfortunately this happens all the time. I call these horrible people Mr Happy Banker because he tells you happy fairy tales or shoots rockets into the sky on TV. It’s all a big lie. The truth is that you need to sit down with a banker, bring in all that pain in the neck documentation and get it done right. There is no substitute.
We received several offers and one used Mr Happy Banker. I could not believe what I was reading while reviewing it. The offer and pre approval were for a conventional mortgage with a 3% down payment.
Conventional loans accept 5% as a minimum down payment. The offer is not possible with only 3%. It got worse.
The so called pre approval was really a pre qualification because nothing was verified. I Google searched their bank. It’s not a bank because it’s an LLC. I dug deep into their website and saw they call themselves a mortgage company.
There are programs that allow less but for very specialized borrowers like VA loans. This buyer is not that. She is a typical home buyer. So I called her agent who told me she recommended the LLC and that her pre approval was good enough for now. I asked her to please get the buyer correctly pre approved and come back to me with your best and highest offer as I am asking this of all offers.
They raised their offer a little bit. Nothing else changed. The seller is very sophisticated and he understands finance. He told me he would not accept such an offer at any price because “that thing will blow up and never close”.
Buyers go to LLC’s rather than a legitimate bank because they don’t qualify with a Chase, Wells Fargo or Weichert Financial. They pay higher rates and fees when all they have to do is save up a little more or fix their credit etc. Buyers go to these places sometimes because they just don’t know better. I blame the agent who is not doing the best for her customer.
This buyer is going to have a very hard time. I wish I could help her but she’s someone else’s customer. She is also responsible for what happens to her. This is another horrible mortgage story.