Why A Lender Pre-Approval Would Be Worthless

I received a phone call today from a real estate broker that I have worked with over the last few years.  I have some very loyal clients that I’ve done many loans for when they have purchased homes in Phoenix.  These clients actually found her after I had pre-approved them.  They have purchased a few homes with her, where I provided financing.  Her and I get along really well and I enjoy working together.  She called me today about a client she had previously referred.  The conversation started like this: 

Hi Dave!  You remember those clients I referred to you that where moving from Texas to Arizona?  You spoke with them and took their information over the phone.  You also asked them to send you paystubs, so you could verify their income.  I had one of my agents take them out to look at homes.  They didn’t want to send their paystubs, so she referred them to another lender that did not require them to issue an pre-approval. 

I didn’t have a chance to do the loan….. because I asked for paystubs to verify they were qualified???  Why would any agent not want to know that their clients were in fact qualified? 

Well Dave.. they put an offer on a home and it was accepted.  We ordered the termite report and it came back 4 weeks ago.  Now we are ready to fund, but the lender is telling me she can not fund because they do not have a clear termite report.  It has “water damage” listed as being on the property.  Have you ever had this problem? 

Yes!  Yes, I have and I would have prevented this from being an issue about 3 weeks and 6 days ago by simply reviewing the report when it was originally completed.  So, I tell her how we worked around this issue on a transaction we had the same problem on a year ago.  

It’s a double edge sword…….Ask for too much documentation and your buyers go to someone else.  Don’t ask for enough and your transaction falls apart at the 11^th hour.  I would prefer to lose the buyers and keep my integrity.