Here it is! Hands down the best question we got this week.
Award winning, mind blowingly good question:
Buying a home is expensive and I want to save money anywhere I can. Online I can find lenders that are quoting lower rates and fees than the ones that I have been referred to here locally. When I talked with Anne-Lise about this, she mentioned that a seller may not want to accept my offer if I work with someone that is online only or out of the area. My question is this: Why does a seller care who I use as a lender and why is it any of their business?
Equally awesome answer:
This is a great question!
The seller (or, more accurately, the seller’s broker) definitely cares where you are getting your loan from & there are a number of significant reasons why your decision of lenders could impact them directly. Here are 3 big ones:
Appraisal Drama - Imagine an office worker - let’s call him Johnny - in North Dakota, being asked to pick an appraiser for a property in Green Lake. Johnny’s list of appraisers shows that an appraiser in Silverdale is 30 miles away...a good fit, right? That, my friend, is what happens every day in large lending institutions & online brokerages all over the country. Johnny at GetYourLoanatNoCost.com (purely fictional address) has no idea that Silverdale and Green Lake are totally different markets & are actually hours away from each other unless you are a bird. He doesn’t realize that an appraiser in Silverdale is going to assume that it takes 30-45 days to sell a home and values are increasing at a slow & steady pace versus one from Edmonds that will be working with the knowledge that there is a housing shortage that means most homes sell in under 14 days with multiple offers and people willing to give their first born to make it happen.
A seller doesn’t want to deal with the drama, possible heartache of needing to start over and time wasted by having appraisal issues due to an appraiser that doesn’t know the area. Appraisers offer educated opinions of value based on historical fact...really understanding the market dynamic a property is located in is absolutely essential for have a smooth appraisal process.
Hitting Contract Dates - In 18 years, I have often experienced big banks taking a contract date more as a “suggestion” than a deadline. I’ve heard things like “I see the contract is written for a 30 calendar day closing, but we need 45 business days” HUH? Or, my personal favorite “we are going to close late, but it is ok - you can just get an extension”. Um, no. Dates are legal, binding aspects of our real estate contract and the consequences of missing a date can be severe. If you miss a closing date, you are at risk of the seller not granting an extension and therefore can lose the house. That is right - LOSE.THE.HOUSE. Plus all the money you’ve invested in inspections and anything else. The seller doesn’t have to give you an extension. They could (yay!) or they could at a cost of $___ per day (who is going to pay that?) or, they could say forget it...we are going to find another buyer.
A seller wants dates they can count on and no surprises. They want to know when they can close on their new home or when they can expect their proceeds for whatever they are doing next. The reputation of large lenders is well known, leaving sellers antsy about accepting offers where they can’t feel confident on when they will actually close.
The Human Element - Reputation matters! Imagine 2 offers: One offer has a local lender that has a solid rep for on time performance, professionalism and problem solving. They are known in there community, have been working as a lender for years and regularly run in to their clients while shopping at PCC. The other has a nameless, faceless loan officer out of state who has no personal ties to the transaction, the company is well known for not having a central knowledgeable person to talk to when there are questions and the last 4 times we’ve worked with that lending institution we’ve closed late with massive drama in the process. Guess is going to win? When you are buying a home, the fees you pay for a lender aren’t just for the loan - they are for excellent customer service and they are worth it! Again, the consequences of missing dates or a lender that doesn’t understand their products & your unique scenario can be massive and it just isn’t worth losing the house and the emotional roller coaster for a couple thousand dollars.
A listing broker wants to work with a lender that stands behind their promises & will provide the most stable/non-stressful path to closing. Having a solid lender makes the entire transaction a better experience for both buyer and seller - as well as their brokers. If a lender has a strong reputation for getting the job done & being accountable in the process, that holds a lot of weight.
At first glance it seems like a seller really wouldn’t care where you get your money from...money is money, right? But hopefully this gives you an idea of a few reasons why your choice of lenders as a buyer has an impact on everyone in the transaction.
Do you have a question you’ve been dying to ask? Send it to sarah@ReeceHomes.com and we’ll be sure to get an answer to you!