I recently made an offer on a home with a pre-approval from a lender.

Asked by slishmov, Chicago, IL Sat Dec 22, 2012

I recently made an offer on a home with a pre-approval from a lender. The sellers agent actually called my lender before countering the offer and asked the lender to pre-approve me a different terms. Is that legal?

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Bill J Deligiannis’ answer
Bill J Delig…, Agent, Naperville, IL
Mon Dec 24, 2012
To call the lender and confirm your financing is normal. The listing agent can ask for whatever they want but your Realtor and Loan Officer represent you and in theory you should be made aware of any discussions that pertain to the deal.
0 votes
Riccardo War…, Agent, Bolingbrook, IL
Tue Jan 8, 2013
Not illegal. Agents call us all the time to talk about financing.
0 votes
Seth Captain, Agent, Chicago, IL
Fri Jan 4, 2013
If you were pre-approved for a 5 year ARM at 2.5%, the seller's agent may have wanted to make sure that you would qualify for a 30 year loan at 3.75%, or any other scenario where your pre-approval letter showed terms that seemed extremely favorable compared to normal conditions.

In full disclosure, as a buyer's agent, I am surprised by how few seller's agents actually call my buyer's lender to verify their financing. It's the keystone of any real estate deal, and this seller's agent is probably somebody who can be counted on.

It is feasible that he attempted to get your mortgage broker to give you unfavorable terms but that is as likely as you submitting a fake offer just because.
0 votes
Manuel Brown, Agent, Chicago, IL
Sun Dec 23, 2012
Dear Home buyer,

It is not an illegal activity, however, it over steps the boundaries of standard practices. The listing broker was not checking to see if the approval was legit; the listing broker was negotiating the terms of your mortgage without your knowledge.

The listing (selling) broker should have contacted your Broker, who would have than presented you the scenario would have been the correct course of action in my experience. Also if your Broker had no knowledge of the listing broker actions your broker should have cause for pause and have a stern conversation about not overstepping boundaries.

When scenarios in a purchase change it is our ethical responsibility to go to all parties before taking any action. I can totally understand why you are upset. Does anyone know those are the lending terms you want to live with?

Best of Luck and Happy Holidays,

Manuel Brown, Broker
iMove Chicago
0 votes
Suzanne MacD…, Agent, Morristown, NJ
Sat Dec 22, 2012
I agree with my fellow agents, however, I don't think it was right for them to ask the lender to pre-approve based on different terms without talking to you. If they wanted other terms they should have countered your offer. I am not sure whether there is anything you can do about it but still...
0 votes
slishmov, Home Buyer, Chicago, IL
Sat Dec 22, 2012
Just to clarify -

This pertains to a Sellers Agent requesting the lender pre-approve the buyer at a different set of terms not agreed to by the buyer or buyers broker.
0 votes
Matt Laricy, Agent, Chicago, IL
Sat Dec 22, 2012
It's ok for them to call your lender. They need to make sure it's legit. There is a lot of fake approvals out there. Asking if your approved for certain terms is also fine. They may be curious to see if the deal will work out.
0 votes
What if they ask the lender to approve you on a different set of terms that the buyer did not agree on?
Flag Sat Dec 22, 2012
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