Using multiple mortgage brokers?
We are selling our co-op FSBO and have a prospective buyer who wants to use the credit union at her place of employment to finance the apartment. We recently had a sale fall through and feel pretty strongly about her working with both the broker at the credit union as well as a traditional mortgage…
We are selling our co-op FSBO and have a prospective buyer who wants to use the credit union at her place of employment to finance the apartment. We recently had a sale fall through and feel pretty strongly about her working with both the broker at the credit union as well as a traditional mortgage broker so that she’ll have options in the event that one lender starts making things difficult. Since we’re doing this FSBO, I don’t know the answer to this: Are there any rules concerning how many mortgage “brokers” a buyer can use? (Even though the credit union broker only represents one lender …) If the buyer goes with the credit union, will she owe any payment to the more traditional mortgage broker?
Thanks for any advice!
Since you are the seller you should view the mortgage contingency in the contract as a grant of a free option to the buyer until the commitment date. Since it’s a free option, you should insist that it be as short as possible. That doesn’t mean that you just terminate the contract if they don’t get the mortgage by the commitment date. We recently sold a house and agreed to let the seller have several (a total of 10 weeks) extensions to the commitment date. We did this knowing that we would have a difficult time finding another buyer. Our buyer was interested and making sincere efforts to obtain a mortgage, but would clearly have walked away if we had asked for them to waive the mortgage contingency. This ultimately led to a good result – we closed. The trick is to just make sure the buyer keeps you posted on what they are doing (and make sure you believe what they are telling you). You should not, however, tell the buyer how to go about getting a mortgage unless they are doing something obviously wrong (like failing to apply). Otherwise, if they think they are more likely to get a mortgage from a credit union, let them try.
More importantly, you should make sure that your broker continues to advertise and show the house to prospective buyers. If someone else is interested enough, you may be able to sign a backup deal to protect you if the deal falls through.
This is a different story. If the buyer wants advice and you want to give it, cool. Be upfront with the mortgage broker about the credit union deal.
BTW, I’ve bought several co-ops and have only used a broker once. Just because you don’t use a broker, doesn’t mean you can’t go to any number of banks.
You could also refuse to give buyer a mortgage contingency and make them forfeit deposit if they back out or can’t secure the mortgage, but if this is a personal relationship that’s tricky.
good luck!
I thought banks weren’t using mortgage brokers anymore? When you say broker friends are you talking about real estate brokers or mortgage brokers? If it is the latter I suggest that their advice is less than impartial, no? I used a mortgage broker once and never got a firm handle on for whom he was working. I was paying him a fee, but when I asked him about what rates the banks were offering he seemed to imply that that was confidential information. Also why would multiple brokers want to work with the same buyer. She can only use one mortgage, and so someone is going to get stiffed.
In any other economic time, I would agree with you, Ringo and Johnny. However, our last deal fell through because, though there was good faith effort (LOTS of good faith effort) on the buyer’s part, she only went with a single lender who scuttled the deal. In the absence of a broker — and because we have a good relationship with the current buyer — she’s asked our advice on the process. Finally, several broker friends have advised us to ask a buyer to NOT use a single lender, but go to a mortgage broker who has several lender options. I really like the idea of the credit union, but want to be extra certain that she’ll have options as a buyer.
In my opinion, you’re going over the line. You don’t really get a say in this. Does your buyer have a letter of intent/pre-approval from the credit union? Think that’s all you can ask for.
Also, I grew up in a major one-company town that had it’s own credit union. Everyone in town who didn’t have ties to the company longed for access to the credit union. A credit union is often everything a bank is not: on your side in terms of price, service, flexibility. I think you’re fortunate that your buyer has this option.
Assuming a good faith effort on the buyer’s part, I’d suggest staying out of their decision making process.