Dear Monty: My wife and I are currently looking for homes with an agent. We have received preapproval letters from three lenders and are still deciding which way we will go. Upon providing our agent with our preapproval letters (all for the same amount and similar interest rates), the agent called our potential lenders and asked how a high HOA fee or high-rise condo restriction would affect our buying power. We did not authorize this communication. We are looking at a mix of single-family homes, townhomes and condos in many different areas. We have yet to decide on a specific property. It seems like a premature conversation as a way to steer our search away from properties that he believes could be a waste of his time because they may result in unfavorable loan terms or lack of approval. Was our agent’s call to lenders and subsequent inquiry ethical?
Monty’s Answer: Your agent was out of bounds to make those calls without seeking your approval. You might have OK'd the request had he asked for permission if he explained that gathering additional information would be a good idea. The agent’s motivation could have been that they experienced a loan rejection on a pre-approval because of a high HOA fee. Mortgage lenders have a dual processing system. The sales team gathers information from potential borrowers and promotes the advantages of their products. They look for reasons to make the loan. They pass the applications on to underwriters looking for reasons to turn loans away. They reject applications for many reasons, and when high HOA fees put a borrower over their limit, it may be one. On a condominium, most lenders would turn away a non-warranted condo project.
On the other hand, your observation may be right on the money. Were you happy with the agent until they made the calls? Or were the phone calls a culmination of past comments and actions? Have you asked the agent? If things had been going well, ask why he felt he should check in with the lenders, or why they didn’t ask you first.
Here are the pros and cons of speaking with the agent.
The Pros
No. 1: The agent may explain their reasoning to your satisfaction.No. 2: It may restore your confidence in the agent.
No. 3: You may feel good having expressed your concerns.
No. 4: It may strengthen the bond between you and the agent.
The Cons
No. 1: You may continue to suspect the agent is looking out for themself.No. 2: The agent may take your question as a lack of trust.
No. 3: The agent may stop working with you.
No. 4: When you find another agent, they may also be out for themselves.
