Home Buying in Fontana>Question Details

Gen Urbano, Home Buyer in Los Angeles, CA

SELLER's agent insist I use their Mortgage provide. IS THAT LEGAL?

Asked by Gen Urbano, Los Angeles, CA Fri Dec 27, 2013

Supposedly, its the sellers request after a couple of failed transaction that pushed her to require a specific lending company. I am fully approved and funded and can definitely close in in a week. But they still wnt consider my offer. They want me to submit documents for consideration. I find it absurd considering my appproval situation. My lender even.called their "preffered" lender only to find.out that the sellers agent and their preffered lender are affiliated. Is this legal?

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Answers

31
It's not, imo, a matter of legal or not legal..........it's a matter of what the sellers want!

They can dictate their terms -
You can agree or walk away

They can, for example, say they will only sell their home for all cash......or give a specific date for closing.......or sell "as is" and refuse to do repairs.........if they have lost buyers because they failed to get a mortgage approval, I can understand why they are jittery.

The affiliation should have been disclosed to you - I know we have to disclose any affiliations upfront. But if you're implying they are in "cahoots" because of the affiliation, I wouldn't necessarily agree with that.
I know that some of my sellers prefer when the buyers at least have a conversation with our in house lender. It gives them a sense of confidence if a known lender says they are qualified.

So...........What was the end result of the conversation between the 2 lenders?

If you are fully approved and "funded" you can always think about waiving the contingency.
That should make the sellers happy.

But, I am confused - they won't even look at, or consider your offer, until you go to their lender?
2 votes Thank Flag Link Fri Dec 27, 2013
Please let us know what their lender says, and more importantly, what the sellers say at that point. I really think they just want the reassurance that you're qualified, and once their lender sees the paperwork, they will have that assurance, and will be fine with you moving forward. Good luck!
Flag Sat Dec 28, 2013
my lender emailed all necessary documents to preferred lender. Im just waiting on result
Flag Fri Dec 27, 2013
their term is.either i use their lender or walk away. That is why I am questioning their motive considering my approval status.
Flag Fri Dec 27, 2013
Gen,

I know you are frustrated, but you're actually in a great position. You might also think that as a lender I would encourage you to fight the "preferred" lender because you're already approved. However, because your file is so strong, simply have your lender of choice package your file and send it to the seller's lender. It will be easy for him/her to do, and it will completely reinforce the strength of your offer. This is a case where it's better to cooperate than to resist.

I have been on both sides of this scenario. It has been my experience that the cream always rises to the top. You have to appreciate the seller's position here too. Along with your "A+ offer" they will see a lot of other offers that are wolves in sheep's clothing. Those lenders will say their clients are stellar but they won't even have a full file. As a "preferred" lender for some agents (with no affiliation), I can assure you this happens.

But again, if you are rock solid, just demonstrate that and your offer will be in the running right away. That is the path of least resistance --- as unpalatable as it may sound.

Good luck,

Rob Spinosa
rspinosa@rpm-mtg.com
1 vote Thank Flag Link Tue Dec 31, 2013
This is rife with favoritism which unfortunately isn't totally illegal albeit somewhat unethical if not out right greedy. Sounds to me like the seller has their hand in the til somewhat. Either they're getting a kick back under the table or someone very near and dear is the lender who's getting the commish. I guess if you really want the house you might have to acquiesce. Good luck.
1 vote Thank Flag Link Mon Dec 30, 2013
There is no law that states a seller has to sell a property to a buyer for any reason. And if they have had deals fall through because of loans I don't blame them for wanting to make sure that the buyers can perform.

And developers on new projects routinely demand buyers not only use a specific lender but a specific lender rep.

I suggest you get pre-approved with their lender and then see if you can talk them into using yours or match their deal. If they won't do that and you don't like their lender, then look for another property.
1 vote Thank Flag Link Sat Dec 28, 2013
Gen,
There is more to the story than it appears. The seller should only care that the deal closes and they get paid. I can understand wanting you to get pre-approved with their lender to guarantee your capacity, but "tying" the lender to the deal is where I question the legality.
At this point you have many answers from the Trulia community, but nothing is settled. I suggest you buy 5 minutes of an attorney's time and see what they suggest.
1 vote Thank Flag Link Fri Dec 27, 2013
Exactly my thought. Thank you for taking time to respond.
Flag Sat Dec 28, 2013
it is illegal to force you to use their lender, you can tell them that you will file a comply with the department of real estate.
1 vote Thank Flag Link Fri Dec 27, 2013
Hi Gen,

It's not uncommon for the seller to require a pre-approval from their preferred lender. In most cases, however, you can change lenders once your offer has been accepted. This is definitely something you should discuss with your agent.

Best wishes,

Elva Wormley
Mortgage Consultant
C2 Financial Corporation
NMLS 331981
1 vote Thank Flag Link Fri Dec 27, 2013
*seller of the replacement property Im attempting to purchase specified that I must use their lender* - wanted to clarify that.
Flag Fri Dec 27, 2013
100% approved
Flag Fri Dec 27, 2013
Hi Elva,

I am 100%' actually I have been in escrow for 90+days. We have extended escrow twice already, however, seller of the property im.attempting to purchase hasnt found a replacement home for them. 2nd escrow extension will close in 2weeks. This prompted me to look for a replacement home (im cancelling come jan 2nd) but seller specified in the addendum that I must use their lender or walk away..key word "must" NO if's and but's

I also understand that seller can dictate their terms.however, I am unsure if the same rule applies for mortgage lender since one shoe doesnt fit all.
Flag Fri Dec 27, 2013
Often there can be a requirement to be pre-approved by a specific lender that the Seller - usually corporate - knows and relies on. The can not compel a buyer to obtain their loan from any specific company.

Lisa Wetzel and Jim Valentine

Certified Distressed Property Expert, CDPE
RE/MAX Realty Affiliates
1320 Hwy 395
Gardnerville, NV 89410
775-781-5472 Lisa
775-781-3704 Jim
775-781-3703 Jessie
http://www.carsonvalleyland.com
http://www.experienceispriceless.blogspot.com
carsonvalleyland@hotmail.com
0 votes Thank Flag Link Thu Jun 19, 2014
I have seen this before and it IS the seller's request, But you probably have a misunderstanding something since NOBODY can force you to do business with someone you don;t want to except the alleged president. What they are usually doing is asking that a particular lender vet you as a buyer. ON THE OTHER HAND, if they truly are forcing you to get a loan from a particular lender there is a good chance that they are going to try something fishy. In that case get a new agent and find a different house.
0 votes Thank Flag Link Thu Jun 19, 2014
I doubt it's the seller's request, most likely it's the listing agent's request. It's not legal for them to force you use any specific lender. Listing agent may request the buyer to cross-qualify, but that's pretty much it. To file a complaint to the California Bureau of Real Estate, please see link below:
http://www.dre.ca.gov/consumers/filecomplaint.html

Mike Hsieh
Realtor, RE/MAX Champions
Direct: (909) 770-5055
Fax: (909) 256-2111
121 S. Mountain Ave
Upland, CA 91786
BRE# 01812059
0 votes Thank Flag Link Thu Jun 19, 2014
Well here's my take on the issue:
i agree with the point made by many others that the seller can't force the buyer to use a specific lender, but the homeowner is under no obligation to accept an offer he/she doesn't like, in the case at hand, an offer which identifies a lender the homeowner doesn't like.

so the buyer is not being forced; he/she can comply or walk away. the buyer is free to choose.

I welcome the comments of a real estate attorney who may be able to better inform us.

fred
0 votes Thank Flag Link Thu May 1, 2014
Hello Gen,

You have the right to have your loan with the lender of your choice. The seller can ask you to be cross approved by their preferred lender.

If the listing agent has had other offers accepted that failed to close, they will be even more strict about having buyers cross approved by a lender they know and trust. This is a common practice.

The cross approval just shows you are a very strong buyer, if you really want the home get crossed approved, BUT if your offer is accepted you can close the deal with the lender of your choice, the selling side can not FORCE you to use their preferred lender.

I wish you the very best!
Kawain Payne, Realtor
0 votes Thank Flag Link Sat Jan 11, 2014
Hello Gen,

You have the right to have your loan with the lender of your choice. The seller can ask you to be cross approved by their preferred lender.

If the listing agent has had other offers accepted that failed to close, they will be even more strict about having buyers cross approved by a lender they know and trust. This is a common practice.

The cross approval just shows you are a very strong buyer, if you really want the home get crossed approved, BUT if your offer is accepted you can close the deal with the lender of your choice, the selling side can not FORCE you to use their preferred lender.

I wish you the very best!
Kawain Payne, Realtor
0 votes Thank Flag Link Sat Jan 11, 2014
A seller and/or his agent cannot require that you close with a specific lender. They can, however, require that you pre-qualify through a lender of their choice before accepting your offer.
0 votes Thank Flag Link Mon Jan 6, 2014
This sounds like to me it is not the seller themselves but rather the seller's agent. Yes this is legal basically they countered back to you. I have seen many times where the seller's agent would like for the buyer to be pre-qualified with their preferred Mortgage company. They do however have to disclose ANY affiliation. You also have the right to say no. Good luck hope all works out for you.
0 votes Thank Flag Link Mon Jan 6, 2014
you made an offer. the home owner in effect made a counter offer, accepting your $$$ if you agree to use the lender they specify. legal ??? yes, I think it is legal. The home owner can sell on terms he/she deems acceptable.

Is it really the home owner insisting on a specific lender or is it the listing agent or broker???
0 votes Thank Flag Link Thu Jan 2, 2014
I think it is unprofessional and could lead to the seller's agent getting in legal trouble. But if the seller is saying it is the SELLERS request (not the agent's) - and it really is - then there isn't much you can do about it. The seller can negotiate the sale of their house just about however they want to.
0 votes Thank Flag Link Thu Jan 2, 2014
If you want the property and require a loan to do so.....you will need to "do the dance."

There are normally two levels of financial approval: "pre-approval" and "final approval." Essentially a pre-approval is a letter stating you have applied for a loan but do not have approval, but are under consideration, while a final approval which comes several days prior to closing date that is a commitment that indicates you WILL be receiving funding.

Good luck,

Bill
0 votes Thank Flag Link Thu Jan 2, 2014
What most seller's agents are trying to do when they suggest their lender is making sure that you really qualify for a mortgage loan for the asking price.

Don't feel bad because your offer was accepted as a back up, you still have a chance to get the property.

Best of Luck,

Maria Cipollone

http://www.Flahomespecialist.com
0 votes Thank Flag Link Thu Jan 2, 2014
Hi John,
my thought, somebody is definitely getting kickbacks here.
0 votes Thank Flag Link Tue Dec 31, 2013
Not so, they may just trust the loan officer at that company to so they job.
Flag Wed Jan 1, 2014
Hi Rick,
My lender did just that on a friday. She td them that we can close in 10 days. Saturday is when we were Informed that they "chose" another offer because I wont go with their lender. I have that response in writing.
0 votes Thank Flag Link Tue Dec 31, 2013
Their response is unprofessional in my book. Not because they chose another offer, but because they disclosed why they didn't choose yours, whether or not it's a true statement. Again, you can't know all of the variables, so just keep at it and you will ultimately get the last laugh. Happy New Year.
Flag Thu Jan 2, 2014
You have the right to choose whatever lender you wish.
You can have the preferred lender process your file, but if they are not competative, you have the right to choose whomever you wish.
This is definitely a steering issue.
We see with real estate agencies that have their own lenders.
As far as 'legal', this is not yet illegai. We do anticipate having this type of affiliation monitored and most likely made unacceptable.
0 votes Thank Flag Link Mon Dec 30, 2013
So now the picture is clearer - there are 3 offers on the table.
Thanks for clarifying that.

Well, in the world of "multiple offers" anything can happen, and, as you're finding out, the buyer with the highest price doesn't always get the house.

Maybe you are up against an all cash deal......who knows, but the sellers have the last word, and are in the driver's seat - at least in this scenario.

Best wishes............
0 votes Thank Flag Link Sun Dec 29, 2013
Alex,
They accepted my offer. However, since I refused to use their lender, they dropped me. They will consider me as a back up only if I elect to use their lender.
0 votes Thank Flag Link Sun Dec 29, 2013
If there were only three and yours was the highest you have some leverage. This is just like negotiating on a buying price or anything else you want left in the home.

Alex Greer
Loan Officer
NMLS #1056079
http://www.TheMortgageOutlet.com

408-352-5147
AGreer@TheMortgageOutlet.com
0 votes Thank Flag Link Sun Dec 29, 2013
Gen - is there another offer on the table?

Below, you referenced that they would use you as a "back up offer", so I wondered and was curious if there were another contract competing with yours.
0 votes Thank Flag Link Sat Dec 28, 2013
Its really just a lender issue. Its brand new, its been open for a week so theyre trying to establish it.
Flag Sat Dec 28, 2013
And their agent said that they have to forego our offer bcOz we wnt use their lender.
Flag Sat Dec 28, 2013
From.what we were told, there's only 3 offers. Mine was the highes offer.
Flag Sat Dec 28, 2013
Please let me know the name of the attorney that let's you buy 5 minutes of his time. Frankly I'm not so sure you need legal counsel on this one. The answers you've received from the RE professionals on this thread are quite responsible and very astute.
0 votes Thank Flag Link Sat Dec 28, 2013
Their argument doesny make sure sense. They said they wanted to close in a timely manner. I am 100% approved and ready to close, even in a week. And then drop me? I.sense.greed here. Something is definitely in the works here.
Flag Sat Dec 28, 2013
my agent just I.formed me that the seller dropped my offer because I wouldnt go with their lender. They would consider me as a back only if I go with their lender.
Flag Sat Dec 28, 2013
John,
I actually have a couple of attorney's I refer people to that wouldn't charge me or my clients for 5 minutes of their time for a quick question like this. Some might and it could be worthwhile. If after exploring the issue a more substantial involvement would be worthwhile, the buyer and attorney could discuss this and proceed as they see best.
Flag Sat Dec 28, 2013
Gen, let us know what they do after their lender reviews and responds to the paperwork your lender sent over.

My feeling is, once the sellers have the reassurance they seem to need, from their lender, that you're qualified, they will move forward.

Good luck!
0 votes Thank Flag Link Sat Dec 28, 2013
What law is being broken by a seller requesting a preferred lender provide the loan approval?

Is a law being broken if the seller won't accept an FHA loan contingency?

Sellers can set their terms, whatever those terms may be as long as they don't encroach upon, or break any Fair Housing Laws.....no one is forcing a buyer to make an offer -

I would refer any legal questions to an attorney
0 votes Thank Flag Link Fri Dec 27, 2013
They can insist.
You can decline to comply.

Pretty simple. This is where an experienced negotiation can be helpful. Most Realtors are experienced negotiators.
0 votes Thank Flag Link Fri Dec 27, 2013
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
The property is Not bank owned.
0 votes Thank Flag Link Fri Dec 27, 2013
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