Privacy Violated?

Recently a buyer became agitated when they realized that the sellers agent had called and talked to their lender. They were upset because they thought their privacy had been violated. Even though the lender was tight lipped about the buyer’s personal information and just offered general information about how the loan process was going, the buyer was upset and shy about providing any information to the seller.  This is not an unusual case, since many people feel their financial stability is not anyone else’s business. That may be generally true, but not if you have obligated yourself to purchase real estate. “Show me the money“ is what any real estate transaction requests of the buyer in any type of transaction.

A typical purchase and sale agreement used by Realtors® in Washington State (whether cash or financing) requires a buyer to “represent that they have sufficient funds to close” and augments that by later requiring actual proof of those funds. Buyers must show that down payment or cash funds are immediately available to them. In the case where an offer must be contingent upon the buyer obtaining financing, the buyer presents an offer crafted by their Realtor® that shows to the seller the path they are willing to take as they progress towards lender approval. One of those terms is to allow the seller to see and verify that buyer has actually made application, name of the lender and type of loan, and a list of documents that lender has requested. In other words the buyer agrees to allow some monitoring of the loan process and then in the specified time period, seller can request buyer to remove the financing contingency so seller is not left high and dry with no remedy, in case buyer bails out or financing is denied.

If you are a buyer, think about it from the seller’s perspective. Once the parties sign an agreement, the seller’s property comes off the market for up to 60 days while they wait (impatiently) for the buyer to secure financing. In the meantime they are potentially missing out on qualified buyers. In most cases the buyer has no skin in the game until the financing contingency is removed. How is it unreasonable for a seller to require the buyer to prove they have funds for the down payment and proof that they have credit worthiness to secure financing on the balance? Don’t be shy about opening your wallet and letting them look.