Monday, August 03, 2009

Go pound sand

My buddies at UrbanTurf brought this news article from last weekend's WaPo to my attention. All I can say is, it irritated me to no end.

Home buyers in much of the Washington area had better be prepared to tell the sellers what their salaries are and how much cash they have in the bank. And they will be expected to lay bare such financial details before they even learn whether the seller is seriously considering the offer, and long before a final price has been negotiated...

"That long has been the custom, and I think an appropriate custom," said Dale Mattison, a broker with Long & Foster in Bethesda. "If you are a buyer, you are asking a seller to take the property off the market and to do so with a significant degree of good faith."

Some people still think this is 2005, although today the justification's different: then it was "a seller's market," now it's "custom." Shall we discuss other things that were "custom" until outlawed by the feds? It's neither the broker's nor the seller's right to see the buyer's finances. That's between the buyer and the mortgage company. All anyone has a right to see is documented evidence, e.g., a pre-approval letter, that the buyer is capable of buying the house for the agreed to price. Regardless of whether you believe the pre-approval letter, the standard contract has a financing clause that handles the situation.

"I want to see what their income is. I want to see the cash," said Jane Fairweather, a Coldwell Banker agent in Bethesda. "I want to know where are the dollars they are going to use, not only for the down payment, but for the closing costs. If they're putting 20 percent down, I want to see 25 percent in cash."

Guess what? If I'm the buyer, you're not going to see it. You're not a licensed mortgage broker, you're not a certified financial planner, so how the hell do I know whether you understand what you're reading? Apologies to my real estate agent friends out there, but some real estate agents I used to work with could barely do 7th grade algebra.

I understand agents are protecting their clients' best interests, but if they feel the information presented during execution of the standard transaction process is insufficient or that there are flaws in the process, then there's an easy solution: modify the standard real estate sales contract. Quit imposing extra-contractual information requirements on the process.

In this market, might I suggest a new "custom": tell the seller to pound sand and move on.

5 comments:

Brandon Green said...

Wow--that really is poor form.

Salmaan said...

I agree completely...I filed for a loan with my wife so we filed "married"...since we have different last names they requested a copy of the marriage certificate...

yeah, yeah I understand that we should be married but the bank easily could have called the state we were married and asked if we actually are married...really a bit intrusive.

dc_publius said...

The fact of the matter is that there's way too many people out there with high expectations. They think that they can buy a lot more than than they actually can, and contracts end up falling through when financing doesn't go through. For a buyer, this isn't that big of a deal... they didn't get the house... so what. But it is a big deal for the seller, who had to turn down other offers and made plans for new living arrangements.


Sellers are trying to avoid these bad situations.

And good buyers are more than willing to provide more financial disclosure.

Keith said...

dc_publius:

I was a good buyer and I would have refused this "request". My financial situation is none of their damned business as long as I have proof from another party that I can indeed swing a mortgage in a certain price range.

Sellers are trying to avoid bad situations? Fine. Let's make it a two way street. I'll give you my financial information if you'll toss in a home warranty at no charge to me OR you'll pay for the home inspection that's going to cost me $600.

Because believe it or not, buyers are taking a risk too - that the $1M palace the seller is so proud of isn't really just a rundown shack that's about to come apart at the seams.

I repeat what I said on the post: if this is such a serious issue, then MRIS should modify the standard contract to accommodate such a demand during the negotiation process.

ibc said...

This is just public chest-beating by sellers' agents. They're trying to drum up business.