Why wouldn't you share the aPre-Approval letter with your Agent; that would have precluded 2 problems. You don't admit that it was a mistake, but you know it was not the right thing to do.
You talk about LIST price as though it was a mistake, a detestable mistake: But the fact is; most houses sold recently have gone for MORE than List, because the LISTING PRICES have gotten more realistic. If your Agent recomended offering LIST price, she was absolutely correct, and you should give he credit instead of criticizing her.
She didn't need "your permission" to submit the letter; it was required, and she kept your butt out of the fire by doing so!
You are upset because the letter was for "significantly more" than the offer, but you are the one who negotiated the letter from your Lender.
In fact, its sounds like you are very "controlling" from the start and your Agent has to be agressive just to do her job.
It sounds like you should be grateful to have her as your Agent; you should hear some of the stories we hear here on Trulia.
And, NO! you can not, and may not "cut her out".
Then you go on to say " I don't have a signed contract yet"....do you mean you haven't countersigned the "changes" to the initial contract (price etc) ?
It's not an official contract till both buyers and seller not only sign the contract but initial any and all changes to that contract (price, mortgage commitment date, closing date for example)
If the house is one that is right for you and your family, and the comparative sales bear out the agreed upon sales price, then I would go ahead with the purchase, but mention your concerns to your agents broker. Your agent would still be entitled to the commission when you close, but perhaps the broker can assist throughout the rest transaction to ease your worries.
It sound like you and the realtor don't mesh well together. If you have your realtor looking for property for you and have not found one in a year, there may be some underlying factors.
1. Is the realtor actually working it.
2. Is the price point and the expectations of the type of home / area you are expecting not possible?
Depending on what your pre approval amount states it should never state more than what you are offering. You can always adjust that if need be, as long as your "actual" amount is higher. As far as you putting offers in, why are you doing that? If you have a realtor working for you they should be doing that. Let them do their job. You both seem like your off in different directions. How are you basing your offer? Your realtor does research in market trends, neighborhoods,schools and most importantly the comparable sales in the area. This is how an offer amount is presented as opposed to the List amount. Most sellers think thier house is worth a lot more than it is and most buyers think the home is worth a lot less than the actual value. (until they sell of course) You should probably start with a new realtor. It would probably be best for both of you to part. Good Luck!!
Mack makes a very good point that you should seriously consider if this is the right home for your family. I would have to agree that the pre-approval letter submitted with your offer weakened your ability to negotiate. There should have been a conversation about this wth your agent before the fact which could have helped you avoid this whole mess.
As described, it sounds like if you sign the contract you're commited to the agent. It sounds like you should be having a conversation with your lender about releasing your pre-approval to a third party without authorization.
Hope this is helpful.
If you sat down with your agent to physically write and sign an offer, I do hope your agent discussed the necessary paperwork she would be submitting the the sellers/ sellers agent, at least at the time of writing the offer, which ALWAYS includes a buyers pre-qualification.
I always have my clients pre-qualification in their file from the beginning, just in case we see a home and need to jump on the contract writing.
As far as losing your negotiating ability because your pre-qualification was more than your initial offer...., it really depends on the list price of the home, what the comparative sales say the home will sell for, if the list price was close to anticipated sales price, if there were multiple offers , if you were low-balling the initial offer price, etc.
If the home was priced properly, and the comps bear out a certain anticipated sales price, sellers and their agents have the same information available to them the determine approximate sales price and are going to negotiate accordingly. It also depends on what the home is worth to you. I have seen contracts fail because of $1000-$2000 difference in what the sellers will accept and what the buyers are willing to pay. A good rule of thumb is if the buyer thinks he/she paid a bit too much and the seller thinks he/she sold for a bit too little, it's a GREAT transaction!
Let's say you are looking at a home listed at $350K...but are only willing to pay $330K, so you offer $320,000. Getting a pre-qual for no more than $330K will also severey limit your negotiating ability. As a seller, if you think your home will sell for $340-345K, why would you negotiate with someone whose prequal is only for a max of $330K??? It works both ways.
The market in some towns are showing signs of sale price increases, there have been more multiple offer situations (I recently had 3 of them), and many homes ARE selling at or above list price, so it isn't a big surprise you may be buying close to list.
As far as cutting you agent out, I don't think you can because she was the one who showed you the home (procuring cause) and wrote your offer. I think you should have a little talk with your agent and perhaps eveh her broker, about your concern and see if you can resolve the situation this way.
I agree with the answers below. Your agent probably will have "procuring cause" (meaning she was the agent who in terms of who the commission is owed to, brought a performing buyer) on the home in question, should you go ahead with the purchase - with your current agent, or with a different one. So there may not be much you can do to "cut her out of the deal" since technically, she did earn the commission.
My concern is why she went directly to the bank instead of asking you for the pre-approval letter. The pre-approval is one of the first things I ask my clients for - serious buyers should A. have this, B. have no issue with, and expect to be, asked for it, and C. gladly provide it to their real estate agent. Another concern is the lack of communication from your agent to you. I walk my clients page by page, section by section, through every piece of paperwork associated with the real estate contracts I submit on their behalf - not just to avoid situations like yours, but because that's pretty much a minimum standard that should be performed by all agents. Had she done this, you would have inevitably discussed the pre-approval and been on the same page. Most agents would also notice the qualification amount and discuss the option of whiting it out, or getting a new letter without the amount disclosed. While you shouldn't "give away" any more info than you have to in terms of your pre-approval amount, "what you can afford" should never really matter in negotiations - what you are willing to pay, and what the market value of property is, does. Your agent should be using the comps to justify your price.......not just simply saying "this is my clients best/final offer, because she can't qualify for/afford a penny more".
Since you don't have a signed contract, and you aren't happy with the price - you can simply walk away, or you can try to submit a new contract with terms more favorable to you.
Hope that helps!
Reasonable Care & Diligence
When I make an offer on behalf of my client, I never disclose the full approval amount. However, I've received many offers for my listings that do just that. While her representation may be questionable, she represented you in this transaction. You may wish to consult an attorney but I do not believe that you can "cut her out" from her commission if you proceed to a signed contract.
As Tim mentioned, do the comps support your purchase price? If it's overpriced, the bank would never appraise it at your purchase price amount.. You don't have a signed agreement. if the deal is not satisfactory to you, either tell her what you want or walk away from this purchase, however, for this house, she may have rights as being the "procuring cause" of this sale should you go to another agent for the same house.
So walk away and see if you can rewrite a lower offer and get it accepted. You should have said NO, you had the ability to do that so don't blame your agent, you can share in the fact you said YES. Did the appraisal come back and show the price you paid was good? If so be happy, if not you get to start over and tell the lender to not put a qualified amount on the letter next time.