The bank knows I've got the money
September 13, 2013 9:02 PM Subscribe
We're trying to buy a house (first timers). The seller has asked for detailed proof of funds. More detail than I'd normally like to give a private party before they accept the offer. This isn't a cash deal. Does that seem odd?
Hopefully my string of real estate questions to AskMe will come to a close soon. But we're in Chicago and we submitted an offer on a house. I had gotten a preapproval from my hometown bank earlier this summer, but we let it expire as we just weren't finding anything we liked.
When something popped up last week, we rushed a mortgage app into a local bank, well known in the city, thinking it might help the process along. Sadly, they only issued a pre qualification.
Offer went in, and we heard nothing for 2 days. Late today, the seller asked for a pre approval letter, bank statements, pay stubs, and tax returns. I guess it would be one thing if they indicated they were going to accept our offer, but they've done no such thing. We offered about 90% of ask.
My agent says he's never seen this before. The offer was about 60% of the amount we were prequalified for, and even that amount was conservative, because this is an old school bank and not some fly by night broker.
I've had to deal with identity theft before, so maybe I'm just a little jumpy. But is this normal? Would you give this info up when they've made no indication that a deal is even close?
Hopefully my string of real estate questions to AskMe will come to a close soon. But we're in Chicago and we submitted an offer on a house. I had gotten a preapproval from my hometown bank earlier this summer, but we let it expire as we just weren't finding anything we liked.
When something popped up last week, we rushed a mortgage app into a local bank, well known in the city, thinking it might help the process along. Sadly, they only issued a pre qualification.
Offer went in, and we heard nothing for 2 days. Late today, the seller asked for a pre approval letter, bank statements, pay stubs, and tax returns. I guess it would be one thing if they indicated they were going to accept our offer, but they've done no such thing. We offered about 90% of ask.
My agent says he's never seen this before. The offer was about 60% of the amount we were prequalified for, and even that amount was conservative, because this is an old school bank and not some fly by night broker.
I've had to deal with identity theft before, so maybe I'm just a little jumpy. But is this normal? Would you give this info up when they've made no indication that a deal is even close?
I'd simply say no. If they say deal's off, walk. Is your agent dealing with their agent or are they sellng by themselves?
posted by fatbird at 9:13 PM on September 13, 2013 [1 favorite]
posted by fatbird at 9:13 PM on September 13, 2013 [1 favorite]
Agreed. Don't do it. If this isn't a cash deal, they're not even selling the house to you anyway -- they're selling it to a bank that's letting you live there for 30 years until you pay off the mortgage.
It's probably not identity theft, but it's abnormal enough that you shouldn't do it.
posted by Etrigan at 9:14 PM on September 13, 2013
It's probably not identity theft, but it's abnormal enough that you shouldn't do it.
posted by Etrigan at 9:14 PM on September 13, 2013
Most likely he's trying to judge how likely you are to close. Is this an FSBO ?
When my wife and I were in the market, we were pre-approved for far more than we could actually afford. So, a pre-approval on it's face is no guarantee that you will actually get the loan and that the deal would close.
I would tell him to piss up a rope. Your problem is to show up to closing with some banks money. His problem is to show up with keys. The rest of it is your banks problem.
If the homeowner doesn't like your offer, I'm sure in this market they have many more to consider.
posted by Pogo_Fuzzybutt at 9:17 PM on September 13, 2013 [1 favorite]
When my wife and I were in the market, we were pre-approved for far more than we could actually afford. So, a pre-approval on it's face is no guarantee that you will actually get the loan and that the deal would close.
I would tell him to piss up a rope. Your problem is to show up to closing with some banks money. His problem is to show up with keys. The rest of it is your banks problem.
If the homeowner doesn't like your offer, I'm sure in this market they have many more to consider.
posted by Pogo_Fuzzybutt at 9:17 PM on September 13, 2013 [1 favorite]
Response by poster: Not FSBO. Now I'm sorta thinking they want my income data as a negotiation tool. And this place has been on the market for a while, and other offers have fallen through.
posted by hwyengr at 9:34 PM on September 13, 2013
posted by hwyengr at 9:34 PM on September 13, 2013
Curious. I haven't heard of this, either, and I am in a "hot" real estate market. I wonder if the sellers or their agent know something about the bank that you don't. Perhaps something like the bank hands out pre-qual letters like candy but doesn't underwrite the loans. Perhaps their agent is buddies with a broker and wants to push the business.
If they have been burned by other's financing falling through, I can kinda see why they might be so cautious and intrusive.
posted by stowaway at 9:44 PM on September 13, 2013
If they have been burned by other's financing falling through, I can kinda see why they might be so cautious and intrusive.
posted by stowaway at 9:44 PM on September 13, 2013
I think the owner has some real estate or mortgage experience and wants to play underwriter himself to ensure you're actually going to be qualified. I can think of a personality type who would do this, and it doesn't really surprise me, although I'm sure it isn't TYPICAL or normal.
posted by celtalitha at 9:52 PM on September 13, 2013 [1 favorite]
posted by celtalitha at 9:52 PM on September 13, 2013 [1 favorite]
I don't think it's identity theft or worry about closing. It sounds to me he wants to figure out what you could afford so he knows how to negotiate. If you are offering 90% of asking price, but he finds out you were pre-qualified for more than that AND can afford more than that (based on pay stubs and tax returns), he will hold out for more. This is bullshit. There is no way he should have access to information about your financial circumstances if he hasn't accepted your offer.
posted by lollusc at 10:13 PM on September 13, 2013 [28 favorites]
posted by lollusc at 10:13 PM on September 13, 2013 [28 favorites]
I agree with MoonOrb. He is asking for detailed information, but if he is going to accept a 90% bid, he wants to be assured that the deal will go through. I would not give him tax returns or pay stubs. I would certainly give him the pre-approval letter and maybe a highly redacted copy of my bank statement to prove I had the down payment.
I would first have your agent ask his agent if this request for information means he has accepted your offer or if it just means he wants to qualify you to be able to negotiate. Second, I would have your agent ask his agent if there is a way other than giving your private tax returns and pay stubs that you can assure him you will be able to close.
How much do you love the house and are you willing to go higher? If it were me, I might, MIGHT, consider telling him you will give him the information, but if you do, it means that this is your final offer and he has 24 hours to accept it.
posted by JohnnyGunn at 10:18 PM on September 13, 2013
I would first have your agent ask his agent if this request for information means he has accepted your offer or if it just means he wants to qualify you to be able to negotiate. Second, I would have your agent ask his agent if there is a way other than giving your private tax returns and pay stubs that you can assure him you will be able to close.
How much do you love the house and are you willing to go higher? If it were me, I might, MIGHT, consider telling him you will give him the information, but if you do, it means that this is your final offer and he has 24 hours to accept it.
posted by JohnnyGunn at 10:18 PM on September 13, 2013
If you are offering 90% of asking price, but he finds out you were pre-qualified for more than that AND can afford more than that (based on pay stubs and tax returns), he will hold out for more. This is bullshit.
Total bullshit. The only thing the seller needs to know is the amount you are willing to pay for the house and that you're good for it. Send a letter back saying basically that and be prepared to walk away.
posted by fshgrl at 10:36 PM on September 13, 2013 [11 favorites]
Total bullshit. The only thing the seller needs to know is the amount you are willing to pay for the house and that you're good for it. Send a letter back saying basically that and be prepared to walk away.
posted by fshgrl at 10:36 PM on September 13, 2013 [11 favorites]
Ask him why he needs it. The bank is covering the cost of the loan, not him. The bank might need to see proof of income, etc, but the seller isn't the one giving you the mortgage. I'm 99% sure that the bank just gives him a huge chunk of money in one go, and the bank is going to be better for the money than you are.
Face to face, ask him why he needs it, to put him on the spot.
posted by Solomon at 10:53 PM on September 13, 2013
Face to face, ask him why he needs it, to put him on the spot.
posted by Solomon at 10:53 PM on September 13, 2013
I agree with a lot of what has been said above, and also want to add that it sounds like you're dealing with a "difficult" seller. This is the kind of person who turns a fairly ordinary transaction into a nightmare. They have suspicious minds, just enough knowledge to be dangerous, and they are prone to believe all kinds of half-cocked things they read online, so the whole thing becomes unnecessarily complicated. I would tell them you've already turned over your info to your lender, and that they can confirm your qualifications with the lender. Then be prepared to walk away.
I'm betting this is why previous offers have fallen through.
posted by MexicanYenta at 10:54 PM on September 13, 2013 [45 favorites]
I'm betting this is why previous offers have fallen through.
posted by MexicanYenta at 10:54 PM on September 13, 2013 [45 favorites]
This is insane, I've never heard of anyone asking for this, and they have absolutely no right for it. If they're concerned it's going to fall through, tough shit. That's what contracts and deposits are for - if a signed contract falls through, deposit goes with it.
No frigging way would I give an frigging real estate agent my payslips, or some random off the street. They can see my drivers' licence and piss up a rope re: the rest. The only people I let see that stuff you've mentioned are basically: my bank, the government, and my employer. No one else could possibly have a reason to see that stuff.
posted by smoke at 11:07 PM on September 13, 2013 [1 favorite]
No frigging way would I give an frigging real estate agent my payslips, or some random off the street. They can see my drivers' licence and piss up a rope re: the rest. The only people I let see that stuff you've mentioned are basically: my bank, the government, and my employer. No one else could possibly have a reason to see that stuff.
posted by smoke at 11:07 PM on September 13, 2013 [1 favorite]
the seller asked for
In writing? That's their counteroffer. Reply in writing if you are interested in moving forward.
Preapproval letter is reasonable, the rest is ridiculous. Write the seller a letter that you expect a preapproval letter in however many days (add a few days to what the bank said), and that if he wishes to accept your offer contingent on that preapproval letter that is the only acceptable compromise as to how much personal info you will give out. Request the seller reply within 24 hours as to whether your offer is acceptable.
Go over the wording with your agent, and have your agent give it to the sellers agent. Take the attitude through this process that you are willing to give the seller another 24 hours to make up their mind but that's it, and take that tone for discussions with your agent.
It's OK for the seller's attitude here to be a dealbreaker for you.
posted by yohko at 11:08 PM on September 13, 2013 [1 favorite]
In writing? That's their counteroffer. Reply in writing if you are interested in moving forward.
Preapproval letter is reasonable, the rest is ridiculous. Write the seller a letter that you expect a preapproval letter in however many days (add a few days to what the bank said), and that if he wishes to accept your offer contingent on that preapproval letter that is the only acceptable compromise as to how much personal info you will give out. Request the seller reply within 24 hours as to whether your offer is acceptable.
Go over the wording with your agent, and have your agent give it to the sellers agent. Take the attitude through this process that you are willing to give the seller another 24 hours to make up their mind but that's it, and take that tone for discussions with your agent.
It's OK for the seller's attitude here to be a dealbreaker for you.
posted by yohko at 11:08 PM on September 13, 2013 [1 favorite]
Just to be clear: the seller isn't asking you directly for this, right? At the least, these requests should be coming from their agent to your agent. And in that case, tell your agent everyone's about to lose their commissions unless the seller takes a step back.
posted by JoeZydeco at 11:08 PM on September 13, 2013 [2 favorites]
posted by JoeZydeco at 11:08 PM on September 13, 2013 [2 favorites]
I would never give this information to a private party. At least the real estate agents and bankers and governed by laws & regulations.
posted by anthroprose at 12:26 AM on September 14, 2013
posted by anthroprose at 12:26 AM on September 14, 2013
we just closed what was supposed to be a 30-day escrow after about 70 days because the buyer's lender had them jumping through absurd numbers of hoops. (if you see a company called gotmortgage.com involved, run. they are terrible.) if the seller had already had a couple of sales not close, they may be doing as others said, doing their own look to make sure you are likely to actually close.
we were shown the pre approval documentation and a bank statement for our buyer, but not any income information (that i recall). i believe the bank statement was to demonstrate that they actually had the down payment money available.
this was in southern california, and when we were choosing between multiple offers.
posted by jimw at 2:03 AM on September 14, 2013
we were shown the pre approval documentation and a bank statement for our buyer, but not any income information (that i recall). i believe the bank statement was to demonstrate that they actually had the down payment money available.
this was in southern california, and when we were choosing between multiple offers.
posted by jimw at 2:03 AM on September 14, 2013
Pay stubs?? Tax returns?? Info about your personal bank accounts?? Oh heck NO.
You would be paying the bank for your mortgage, NOT this individual: if you were to buy this house, the bank would pay the seller in full, and only the bank would need to worry if/when you were to pay on your loan. There is no legitimate reason whatsoever that this seller needs your personal information.
Your agent --- someone with extensive experience in your particular market --- has never heard of this before, which means it's definately not normal practice in your area.
No-one here, including myself, has ever encountered this; my own reaction is yes, possible identity theft alert. I barely knew just the *names* of the people who sold my place to me, or who bought the house from my parents' estate, and I didn't even need to know that!
Refuse this intrusion completely --- yes, get pre-approved, yes, give THE BANK the info they request. No, do NOT give this seller ANY of your personal information: they do not need it.
posted by easily confused at 2:51 AM on September 14, 2013
You would be paying the bank for your mortgage, NOT this individual: if you were to buy this house, the bank would pay the seller in full, and only the bank would need to worry if/when you were to pay on your loan. There is no legitimate reason whatsoever that this seller needs your personal information.
Your agent --- someone with extensive experience in your particular market --- has never heard of this before, which means it's definately not normal practice in your area.
No-one here, including myself, has ever encountered this; my own reaction is yes, possible identity theft alert. I barely knew just the *names* of the people who sold my place to me, or who bought the house from my parents' estate, and I didn't even need to know that!
Refuse this intrusion completely --- yes, get pre-approved, yes, give THE BANK the info they request. No, do NOT give this seller ANY of your personal information: they do not need it.
posted by easily confused at 2:51 AM on September 14, 2013
Um, yeah, no, this is completely inappropriate and none of their business. Don't turn any of this stuff over to them. They're entitled to ask for a pre-qualification, pre-approval, and perhaps proof of funds for an escrow offer. Nothing more.
I actually work with a startup whose explicit job is to allow the purchasing agent to generate pre-qualification forms up to the maximum amount set by the lender specifically to maintain fiduciary duty.
Negotiating to buy a $175,000 house for $160,000 is tricky when you send over a pre-qual showing you're able to borrow enough for a $200,000 house. So typically the process involves the purchasing agent bothering the loan officer on a weekend to re-generate the form (especially here in Arizona, where it's a very specific form that involves monthly maximum payment math). It's a pain in the ass, so our system lets them fill out the form, pre-signed by the loan officer, but keeping within the maximum bounds they set.
This is all by way of saying that you can and should completely refuse any additional information. Not identity theft, but they want to know more about you to see if you can bring more to the table.
If their lender is giving them trouble (which would only occur on a short sale, and even then...) that's their problem. If it's not a short sale, there's literally no reason at all for this, but even when I've purchased a house that was a short sale, I only gave my financial information to my lender. It's none of their business and advice to provide it is a violation of fiduciary duty on the part of your buying agent, who should be telling them to fuck off.
posted by disillusioned at 3:01 AM on September 14, 2013 [3 favorites]
I actually work with a startup whose explicit job is to allow the purchasing agent to generate pre-qualification forms up to the maximum amount set by the lender specifically to maintain fiduciary duty.
Negotiating to buy a $175,000 house for $160,000 is tricky when you send over a pre-qual showing you're able to borrow enough for a $200,000 house. So typically the process involves the purchasing agent bothering the loan officer on a weekend to re-generate the form (especially here in Arizona, where it's a very specific form that involves monthly maximum payment math). It's a pain in the ass, so our system lets them fill out the form, pre-signed by the loan officer, but keeping within the maximum bounds they set.
This is all by way of saying that you can and should completely refuse any additional information. Not identity theft, but they want to know more about you to see if you can bring more to the table.
If their lender is giving them trouble (which would only occur on a short sale, and even then...) that's their problem. If it's not a short sale, there's literally no reason at all for this, but even when I've purchased a house that was a short sale, I only gave my financial information to my lender. It's none of their business and advice to provide it is a violation of fiduciary duty on the part of your buying agent, who should be telling them to fuck off.
posted by disillusioned at 3:01 AM on September 14, 2013 [3 favorites]
I couldn't read through all the answers to make sure I'm not repeating anyone's advice. But like everyone else, no, that is way too much information. But don't aggressively tell him to go to hell if you want the place. Say to him something like "it sound to me like you want reassurance that we will show up with the money. So we went ahead and got this offer from the bank. So we are ready to buy- are you ready to sell?"
Now if that's what he wanted- reassurance- then that's what he got. If he wanted something trickier- a way to establish your yearly income, identity information- then he'll have a hard time explaining why he still needs the information.
posted by cacao at 3:58 AM on September 14, 2013 [4 favorites]
Now if that's what he wanted- reassurance- then that's what he got. If he wanted something trickier- a way to establish your yearly income, identity information- then he'll have a hard time explaining why he still needs the information.
posted by cacao at 3:58 AM on September 14, 2013 [4 favorites]
Do you have a lawyer representing you, or just a broker? if you don't have a lawyer, maybe get one. they can tell you what you should & shouldn't give to the other party, and argue with them so that you don't have to.
posted by firei at 5:44 AM on September 14, 2013 [1 favorite]
posted by firei at 5:44 AM on September 14, 2013 [1 favorite]
Consider that the house may have been on the market for a while with other offers having fallen through because of shenanigans by the seller that drive the buyers away.
I'd skip that house and look for another one where the seller is behaving reasonably which would give you more confidence that the deal will close.
posted by TheAdamist at 6:02 AM on September 14, 2013
I'd skip that house and look for another one where the seller is behaving reasonably which would give you more confidence that the deal will close.
posted by TheAdamist at 6:02 AM on September 14, 2013
We're about to close on the sale of a house (as the sellers) and all we really care about is that the buyers are qualified, have a lock on their rate, and so on. The rest of it is between them and their bank.
Now, a couple of months ago, we were approached by a buyer who had a credit score so lousy that they couldn't qualify for any financing at all. News came that we were about to get an offer, and then at the 11th hour, their financial situation came to light and the L/P was offered up. It sucked, because we had our hopes up that an offer was finally coming in.
They insisted that they were working repairing their credit and asked if we would consider a lease-purchase that would let them move in and repair their credit for 6-12 months before making a formal offer to buy. We ended up passing on the lease-purchase offer, since the feedback we got from their agent led us to believe that there was no way they could get out of their credit hole in only 12 months.
So, along the lines of what TheAdamist says above, it's possible the sellers got burnt once, but all they should really need to see is a letter from your mortgage lender.
posted by jquinby at 7:06 AM on September 14, 2013
Now, a couple of months ago, we were approached by a buyer who had a credit score so lousy that they couldn't qualify for any financing at all. News came that we were about to get an offer, and then at the 11th hour, their financial situation came to light and the L/P was offered up. It sucked, because we had our hopes up that an offer was finally coming in.
They insisted that they were working repairing their credit and asked if we would consider a lease-purchase that would let them move in and repair their credit for 6-12 months before making a formal offer to buy. We ended up passing on the lease-purchase offer, since the feedback we got from their agent led us to believe that there was no way they could get out of their credit hole in only 12 months.
So, along the lines of what TheAdamist says above, it's possible the sellers got burnt once, but all they should really need to see is a letter from your mortgage lender.
posted by jquinby at 7:06 AM on September 14, 2013
I hate nonsense like this - I would tell your agent that you find this offer offensive and that you are no longer willing to pay 90%. Leave an offer for 80% on the table and just walk away.
As was suggested above - you will be amazed how quickly the agents will scurry to smooth this over...
There are lots of great houses on the market - there is no need to deal with someone like this. This is the very first step of a potentially long process (inspections, closing, etc...) - you can bet it will just get worse...
posted by NoDef at 7:45 AM on September 14, 2013 [3 favorites]
As was suggested above - you will be amazed how quickly the agents will scurry to smooth this over...
There are lots of great houses on the market - there is no need to deal with someone like this. This is the very first step of a potentially long process (inspections, closing, etc...) - you can bet it will just get worse...
posted by NoDef at 7:45 AM on September 14, 2013 [3 favorites]
I agree with a lot of what has been said above, and also want to add that it sounds like you're dealing with a "difficult" seller. This is the kind of person who turns a fairly ordinary transaction into a nightmare. They have suspicious minds, just enough knowledge to be dangerous, and they are prone to believe all kinds of half-cocked things they read online, so the whole thing becomes unnecessarily complicated. I would tell them you've already turned over your info to your lender, and that they can confirm your qualifications with the lender. Then be prepared to walk away.
I'm betting this is why previous offers have fallen through.
I think this is only the tip of the difficult seller ice berg. There will be drama up to and after closing. Walk away.
posted by tafetta, darling! at 12:21 PM on September 14, 2013 [4 favorites]
I'm betting this is why previous offers have fallen through.
I think this is only the tip of the difficult seller ice berg. There will be drama up to and after closing. Walk away.
posted by tafetta, darling! at 12:21 PM on September 14, 2013 [4 favorites]
It happened to us because the seller had previously been to a closing only to have the bank call halfway through the paperwork and say they weren't qualified for an FHA loan after all. We politely told them it wasn't an FHA loan so their concern was unmerited and closed a week later.
posted by jwells at 1:08 PM on September 14, 2013
posted by jwells at 1:08 PM on September 14, 2013
This thread is closed to new comments.
posted by Behemoth at 9:13 PM on September 13, 2013 [12 favorites]