Seller request their lender for pre-approval?

My inlaws sat down and were pre-approved for a mortgage. They did all the paperwork necessary and supplied all the documents.

They put an offer on a house and the seller wants them to be pre-approved through their lender.

Is this normal? What is the purpose of getting pre-approved if it isn't good enough?

Re: Seller request their lender for pre-approval?

I'm not a RE professional, but I've bought and sold a few times already and have never been asked or asked someone to do that. It's my brokers job to determine whether or not the buyer has a strong pre-approval.

I will say I LOVE my bank - they were super helpful, efficient and fast. After my buyer being delayed for over a month because their bank is SLOW and inefficient - I wish I did ask them to use my bank!! Although I'm not sure how realistic that is

Re: Seller request their lender for pre-approval?

Ridiculous! It's not a car dealership.

As long as they have a prequalified/pre-approved letter, that's plenty enough.

I would not agree to that at all.

Re: Seller request their lender for pre-approval?

I know. It is making them want to back out. We all love the house...just not sure if this is a sign.

Re: Seller request their lender for pre-approval?

I have heard of sellers requiring that potential buyers get preapproved by a certain lender.

It is ok for them to do that.

But it's NOT ok for them to require the buyer to actually USE that lender. That's the buyer's choice.

In other words, a seller can ask you to get preapproved by a lparticular ender, so that they can rest assured that you are qualified to buy the home. But a preapproval is not any kind of commitment to use that lender; you are not locked in to use that lender because you got preapproved by them.

Your in-laws could get preapproved by the lender the seller wants them to use, and then once the offer is accepted and contracts are signed, they can use whoever gave them the original preapproval, or another lender entirely.

Why would the seller require that? Maybe they got burned before, going to contract and wasting time only to find out the buyers couldn't get financing. Sadly, there are lender out there with unscrupulous practicess that will give preapproval letters without adequately checking into the buyer's financials and then not be able to close the loan. Or, worse, they may KNOW they will likely be unable the loan, but still issue a preapproval. When I am the listing agent, I really take nothing for granted. If I don't know the lender who issued the preapproval, I will often call the loan officer who's name is on the preapproval letter to get more info. A preapproval is not always a guarantee, because different lenders have different procedures (and do different amounts of due diligence) when issuing them.

It's pretty rare that a seller would request a specific preapproval, but I have seen it on listings.

Re: Seller request their lender for pre-approval?

Wow thanks.

There was none of this on their listing, which is why we are very confused.

My MIL just really doesn't want to sit down with all the paperwork again. We were at the mortgage broker for over 2 hours on Saturday doing all the paperwork. Everyone leads busy lives, we it just seems annoying.

They really loved the house and "there was one other offer" so they offered the listing price and supplied the letter.

Re: Seller request their lender for pre-approval?

We had this situation a few weeks ago. We felt as if they were looking to see how much we could afford compared to what we offered. We decided to withdraw our offer. Just because I'm preapproved for a certain amount doesn't mean I want to spend that amount!