As a listing agent, can you ask the buyer’s lender if they’re approved, and how much they’re approved for? Great question. That is really relevant information that a listing agent would want to know.
Are They Approved?
If I’m listing a home, say it’s for $500,000 and I get one offer for $490,000, which is low. I get an offer for $500,000, which is what we asked for. And then I get another offer for $510,000, which is above asking price. Wouldn’t it be important for me to know if these buyers can actually afford these offers that they’re submitting? It’s tempting as a seller agent to want to call that lender directly and ask them, “Hey, you’ve got a buyer they’ve gotten pre-approved with, can you tell me that they are pre-approved? For 490,000, for 500,000, for 510,000? Can you tell me if they’re approved for more than 510,000?”
These are questions that would be really useful for the seller to know. But the seller’s agent and the seller are not who that lender is working with, that lender is actually helping the buyer. And in fact, it’s against many of the lending laws for lending officers to share that information with anybody that they don’t give permission to. And so, as a seller agent, you can technically go ask as a lender if the buyer is qualified for this amount, but the lender should not be sharing that information with you unless they have explicit permission from their buyer. It’s probably better just to ask the buyer’s agent.
What is a seller agent allowed to ask?
Sometimes people get worried. They say, “Well, if I ask the buyer’s agent, aren’t they going to lie or fib or hedge and try to tell me that what I want to hear instead of what’s really true?” Well, they may be tempted to do that, but if they tell you something that’s not true, that is against license law. The buyer agent cannot tell you anything that’s not true.
So, I know we might be worried sometimes that they want to tell us specifically what we want to hear instead of what’s really going on, but that’s why we have those license laws, and we wouldn’t want someone to share our personal information with other people.
Buyer Information is Protected by Fiduciary Duty
In the same way the buyer doesn’t want their lender to be sharing all of their financial information about what they can actually afford. It might affect their negotiating position. You could have a buyer who only barely qualifies for the $500,000 loan for this home that we have listed, and that might affect the way the seller views them.
If they can only barely afford it, the seller might somehow inappropriately think that it’s a risk because they’re right at the edge of what they can afford. On the other hand, the borrower could be someone who already has the ability to finance a one million dollar home twice the size of this $500,000 that they’re buying, but if the seller knew that they might ask for more money knowing that the other side can afford it.
So, this private information can be used against the person if that’s received by the seller side. It’s important for seller agents and buyer agents to remember when information is confidential, to remember how to protect our clients and get the best deal for both sides. Ideally, ending in something where both sides win and not something where one side feels like a loser.
So, should the seller agent ask the lender about the buyer’s ability to qualify? No, that’s private information. Talk to your buyer agent. Communicate through the proper channels and everything will work out just fine.