Post # 1
Hi ladies, hopefully I can make this short.
Last week my fiance and I came across a gorgeous house, totally within our price range and we absolutely adored it. We made an offer well above the bidding price to make sure we got it. The seller’s agent soon contacted our agent and asked that we “cross-qualify” with their lender before they made a decision. We agreed in good spirit even though we knew we wanted to go with our own. They contact us a few days later and say that they’re making their decision that day and they need to know whether we will use their lender instead of ours. I look over their paperwork and their lender has an extra whopping 4k of fees and etc. Of course some of that is variable based on 3rd party costs, and they are merely estimating, but really- wow. Our lender was also willing to give us 2k at the percent we were going to get anyway- while their lender needed an extra .25% to get the same lender credit. We agreed verbally, figuring we’d look over everything again after and just back if needed. Except then our agent sent us an adendum to our buyer’s representative agreement, stating that we would use their lender. Initially we were furious that we were so obviously being manipulated (and in such an illegal way) but after a few hours of discussion, we decided to take the higher interest rate and that we’d be fine since it would leave us an extra cushion after everything was said and done. We agreed, knowing that we were taking the brunt of extra fees, but also knowing that the home is perfect and that at least we’d have the extra money for anything that came up.
Until today, when my dear fiance discovered that due to FHA laws and the house (a flip) had been last sold less than 90 days ago didn’t comply with the rates they gave us. Given that they were the same lender for the buyer, and that our agent hopefully has more real estate knowledge than us- I am angry that we were the first to bring this up (though I’m sure not the first to think of it). Now the lender is saying they have to take down the lender credit by a full percent to comply with these regulations- bringing our lender credit down 1k but for still the higher interest rate. I am livid, as I’m sure you can imagine.
Furthermore, after reading through an exhaustive amount of paperwork the lender has been pushing us to sign all morning, I note that a specific clause makes us liable to pay the difference if the house is appraised for less than we offered to pay. I bring this up the lender, who says that this can always be ammended later once the appraisel comes in but if I really don’t want to, we don’t have to sign it. Thanks but no thanks buddy, I don’t trust you, I’ll leave it blank for now. But why am I able to not sign this particular document if you’ve been telling me I have to sign them asap?
After all this bees, my questions to you are:
1. Even if we stated that we would be using a particular lender in our Buyer’s Represenative Agreement, is there any way we can change lenders? Or are we held to it because we signed the form, even though it is illegal for a seller to force a specific lender on the buyer?
2. Do you have any general advice you can offer us first time homebuyers? We’re so frustrated, we just don’t know what to do.
Thank you so much bees.
Post # 3
WHO is your agent? Please tell me you have an agent? Even the most basic of searches (that even a buyer can do with just the internet) should have shown that this was a flip (which is usually a red flag in my book). I can’t imagine any agent with the buyer’s best interest at heart ever allowing their buyer to agree to this.
Did you put earnest money down? Have you cleared any contingencies that will make it harder to pull out? Honestly, i’d RUN. There are a ton of houses out there, wait for one that isn’t going to con you in the deal!
Post # 4
Yes we do have an agent, she seems fairly new. Up until now I was okay with that, figuring everyone has to start somewhere, but it’s just like more and more issues. As of right now she’s looking over the lender’s paperwork and trying to “determine” what to do. She asked if we’ve put the money in escrow yet, so that “they can’t cancel it” as easily if we decide to use another lender. But I’m concerned that this is just another mistake. Honestly, if we are able to change our lender now and still maintain the terms of our contract with the seller (not the lender) I would still love this house. But if not, it will take a lot of work to get us to stay- even though we’ll lose out of $350 for the home inspection.
Post # 5
This sounds like a mess and I would get out now.
Post # 6
- Wedding: October 2011 - Bed & Breakfast
Get out of this deal. You are allowing yourself to be railroaded, and I seriously question what sort of shady dealings are going on behind your back. And get a new agent before you dip your toes back in the market. If your agent is asking you whether you’ve put in an earnest money deposit, she’s an effing twit who isn;t worth her license.
Post # 7
This sounds super sketchy and a quick google search confirms my feelings. I think it’s very weird that the seller is demanding a specific lender, title company sure, but not lender. Honestly, I don’t care how great the house is, I would walk away. If you do stay, I would get an attorny to help you go over the paperwork.
Post # 8
I’m not licensed in CA but sounds strange to me. Is this a foreclosure? Some banks will actually offer financing for foreclosures in their portfolios I.e Fannie Mae and Freddie Mac. Your agent is not working on your behalf. Speak to the lender you initially worked with and explain the situation. This behavior by both seller’s agent and your agent would be bad news in Illinois. Op, this is one of the largest purchases you will probably make in your lives, if you feel uncomfortable with anything please contact the department of professional regulation in your state. They will advise you from there. I wouldn’t put a dime of earnest money down on any property unless you are pre-approved( not pre-qualified) for a loan with a reputable lender with whom you feel comfortable. Good luck!
Post # 9
You all are so awesome. A lot has happened since I first posted, but I want you all to know that if it hadn’t I would have definitely taken your suggestions (the manfriend and I were just a few hours away from legally cancelling everything.) But, the agent actually came through on this one (yes, i’m suprised) and actualy got the seller to agree to allow us to use the lender we initially wanted.
Ladies, when that twit of a lender (the one railroading me) called to ask if I was sure I wanted to cancel my transaction with them, the only thing I said was “The seller said it was alright? Ok. Then HELL YES” and hung up the damn phone. Now we’re working with the vendor we absolutely love and totally trust, and while my agent is not the brightest in my eyes- she did well enough to keep on. As for the seller, I’m suprised they gave in- and being that was the only issue in my book- I feel much better now.
Just so everyone knows, from what I’ve been told by many realtors and recent buyers- this is becoming a rather common situation in southern california in the past three months due to the lack of houses on the market. It’s totally not legal, but people are doing it anyway.
Post # 10
Birdi: It isn’t a forclosure, it’s a flip. So they want to get rid of it fairly fast. I also suspect they would have gotten something out of it had we used their lender (you scratch my back, etc.) So, yea- it’s pretty shit that they were trying to do that- but given they’ve conceded- I’m feeling better 🙂
Thanks again ladies!
Post # 11
I’m so happy to hear that you got to go back to the lender you like and trust!
I’m a lender myself, and hate when I work with a borrower for months, only to have them leave because the house they want comes with strings like you encountered. The most common thing up here is new construction where the seller will only pay the buyer’s closing costs if the buyer will use their “preferred” lender. I don’t begrudge my borrowers for having to make that choice, but I do think it’s unethical of the seller and agents involved.
Hope it goes smoothly for you from here!