Home Buying in Minneapolis>Question Details

Dean Foerster, Real Estate Pro in Minneapolis, MN

Can a seller exclude a particular lender?

Asked by Dean Foerster, Minneapolis, MN Wed Dec 11, 2013

I recently had a buyer pre-approved with Wells Fargo. The seller countered their offer with the contingency that the pre-approval letter come from another lender. Is it legal for a listing agent to recommend that a seller exclude a particular lender?

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BEST ANSWER
Wells Fargo! Most certainly.
They leave more buyers at the alter than any other lender.
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Chase! Most certainly!
Bank of America! You bet.
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You should know better. Your buyer is at a significant disadvantage using these lenders.
The seller will inherit the consequences of you allowing your buyer to use such lenders.
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EXCEPTION! Buyer AND lender agree to disregard the fiat appraisal meaning buyer is willing and able to pay the NEGOTIATED price.
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Sellers are finally pushng back. Good for them!
1 vote Thank Flag Link Wed Dec 11, 2013
Awesome.
Flag Thu Dec 12, 2013
A seller can request they be pre-qualified through a particular lender but cannot make them use a particular lender. The seller can counter they not use a lender but the buyer can counter back that they want to use their own lender. despite what you hear, if a buyer has everything in order, has A credit and no negatives on their credit, the big banks can get the loan done. If they have any challenges though, they may want to use a lender that is more hands on, has a local loan officer and will work wiih the buyer in a timely manner.,
1 vote Thank Flag Link Thu Dec 12, 2013
I think you get the point. Yes it is perfectly ok for a seller to do this, and yes no one likes wells fargo including myself. I have gotten burned too many times. I empathize with you when a buyer comes already pre-approved though that makes things tough.

What I would do in this situation is get the buyer pre-approved through the listing agent's preferred lender, and as long as they are OK allow your buyer to proceed with Wells Fargo.

Good Luck

~Chris
1 vote Thank Flag Link Wed Dec 11, 2013
Yes, lenders are not a protected class under the fair housing and discrimination regulations!!!! :D

I believe the buyer has a right to say no if they don't like those terms.

So, yes, that is one area where sellers are allowed to discriminate!!!
1 vote Thank Flag Link Wed Dec 11, 2013
Yes. Lenders are not included as a protected class.
0 votes Thank Flag Link Sun Oct 19, 2014
Yes. I had that happen to me. Lost the deal because of it.
0 votes Thank Flag Link Sun Dec 15, 2013
Thank you Dean for the "Best Answer."
Clearly the issue is important to everyone in the business.
Although a few have the good fortune of having a responsible WF organization to work with, the majority, as shared by others, find the relationship strained, depressing, exasperating and too often leaves the buyer and seller surrounded by the smoldering ruins of a poor execution.
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Then, lets not overlook the 'nature' of WF and the disguised 'payday' loans they now offer called deposit advances. WF has no problem collecting 150% ..... if it quacks like a duck....
0 votes Thank Flag Link Thu Dec 12, 2013
That is the seller's prerogative.

If they have had nightmare experiences with Wells Fargo in the past then I can absolutely understand them excluding that particular lender.

If there is a lot of interest in the property then your buyers will probably have to play ball and get a mortgage elsewhere.

But if the home has been sitting out there for awhile then you can of course negotiate on your buyer's behalf so they can use whomever they want.

You might have to sweeten the pot for the sellers - higher offer, late penalty for going beyond the closing date, etc. Find out what the seller's concerns are and try to build in some security.

Or you could just move on to another house. All depends how bad your buyers want this one

Good luck!
0 votes Thank Flag Link Wed Dec 11, 2013
I would say the seller can sell the property under any terms and conditions as long as he or she is not discriminating. Wells Fargo has been a pain and that is probably why the seller does not want you to use them. There are a lot of better ones. Call Amber at Trustone Financial at 763.478.1938. She had my last buyer fully approved two weeks before closing. I had a buyer use Wells Fargo last month and they were still jumping through hoops the day of closing.
0 votes Thank Flag Link Wed Dec 11, 2013
Especially true if the seller is paying any of the buyer’s closing cost.

Good luck,
Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Wed Dec 11, 2013
Absolutely! Sellers are able to pick both the price as well as the terms that they are willing to accept. Since lenders are not a "protected class", sellers have every right to discriminate.

It's also legal for a listing agent to suggest whatever seems to be in the seller's best interest...and that could include a scenario like the one you mentioned in your question.

The interesting question to this situation is this.... if your buyer made a full price offer, you have presented the seller with a ready, willing, and able buyer...therefore, you may have earned a commission, unless...the terms listed on MLS indicated the sellers' terms excluding a particular lender.

I just closed a transaction with Wells Fargo on a DVA mortgage. It went as quickly and smoothly as any other transaction I've ever had. Based on that, I don't think it's a great idea to advise a seller to ignore any offer. There are certainly better ways to protect the interests of a seller via a counteroffer, than to require the buyer to get pre-approved through another lender. A large non-refundable earnest money check is one way.
0 votes Thank Flag Link Wed Dec 11, 2013
I just have to pipe in here on this one. Although I'm not a lawyer, I believe the seller has every right to say that they will not execute a purchase agreement (in MN, anyway) if the buyer has been approved by Lender X or Lender Y. And I do share insights often with my sellers if we get an offer and I have a little red flag because of their lender.

But I also want to share a rebuttal to what Annette Lawrence shared below. With all due respect, Annette, I fully disagree with you. That is your opinion. But here is my experience.

The largest and best lender in the country is Wells Fargo (WF). And we have used them in a joint venture for 20-30 years, I believe. In all of my years of doing real estate, there is only one lender that consistently offers the best customer service, the shortest time frame to get loans, by far the best rates, and most importantly.....the loans closing on time. And that is WF. WE don't have BOA here, but some clients have gotten them. Chase also pulls through with about 4 stars. We have about 3000 agents, and I can truly state that I have never even heard of ONE WF loan that did not close on time.....with one exception....and that is if the buyer CAUSED the delay by not getting documentation in time. Those closing packages are out 2-3 days ahead of time, superb communication with the loan officer and processors, and they are super friendly to boot. I think it is horrible for you to make a reference to leaving a buyer at the alter. I have never seen that. In my neck of the woods, when a buyer comes in with an approval letter with a priority A status, that is liquid GOLD. There is not a possible way to come up with a better and more rock solid approval than that. As I tell the buyers and sellers, once that is obtained and the purchase agreement is signed, you could literally go into a coma and wake up the morning of the closing and it is going to close.....that day.....on time...and with no issues. I have never, EVER seen any variation from that. And I don't work for Wells nor do I bank there, nor do I use WF for loans for my buyers. I am simply stating the facts. And I am sad to see your remarks below when that is a clearly false statement. Heck, remember back a couple of years ago when things got bad? WF was the first bank to say they won't do anymore stated income loans. Everyone else laughed at them. But they were smart. 1, 2 and 3 years later guess what? WF was the ONLY bank....no one of a few....the ONLY bank still operating in the black. Every other bank in this country was either operating severely in the red or they were extinct. Not WF.
0 votes Thank Flag Link Wed Dec 11, 2013
I don't think Annette is too far off base, with all due respect. The numbers state that of the top 10 mortgage lenders Chase, B of A and Wells Fargo have the highest turn down rates for applicants. They have the most overlays restricting the borrowers ability to be approved. Good or bad for the lender itself, it is just the fact of the matter. http://www.marketwatch.com/story/the-bank-that-rejects-the-most-mortgages-2013-09-25

I hear many stories of Wells Fargo mortgage transactions and unfortunately the great majority of the time it is not because of the flawless transaction that just transpired. :(

A buyer starting the buying process with a fully underwritten pre-approval very well may have this great experience, but that should be for any borrower that is already fully approved regardless of the lender. Reality = most don't.

The bottom line profitability of the lender is a different debate altogether.

Just my 2 cents for what it is worth from the mortgage trenches..........
Flag Wed Dec 11, 2013
http://www.DependableRealEstate.com forgot that :)
Flag Wed Dec 11, 2013
A seller can require that a buyer be pre-qualified by a particular lender but not that they close with a particular lender.
0 votes Thank Flag Link Wed Dec 11, 2013
I'm not sure you read the question correctly. They are not requiring a particular lender or asking to get pre-qualifed with a particular lender. They are only excluding a particular lender from doing the loan. Anyone but Wells Fargo. FYI- I didn't recommend Wells Fargo they came to me already pre-qualified by their banker.
Flag Wed Dec 11, 2013
The bank/seller may not demand that the buyer uses a particular lender, however they may ask for the buyer to go through the banks pre-approval process. I have never heard of a bank/seller excluding a particular lender. I hope this helps.
0 votes Thank Flag Link Wed Dec 11, 2013
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