Pre-Approval from Agent's Recommendation but Closing on different

[Llewelyn A.]

Just curious what others might think about this scenario.

I'm a NYC Investor.

I have 2 partners that are looking to buy a 3 Family buildings. One of the Partners will be house hacking, the other is going to be a non-occupying Co-Borrower.

They found a listed deal that they wanted to place an offer. However, there was a cash offer on the property around $1.85 Million.

The Real Estate Broker called me up after the Seller decided that the Cash Buyer had too many problems and asked if my Partners were interested in the deal.

I informed the RE Broker that yes, they were definitely interested. Also, to make things move along quickly, I told him that we would use any associated Mortgage Broker or Bank that he wanted to get the Pre-Approval so he knows that my Partners can close.

I also mentioned to him that we would still use our long term Bank because we have a really good relationship with them.

After a week, the RE Broker's Mortgage Bank gave the Pre-Approval by checking the Partner's Income, DTI, Tax Returns, etc. There was no issues which they could not close this deal.

After the Pre-Approval was issued to the RE Broker, he then submitted it to his Seller. The Seller approved the Offer at $1.9 Million, $50k higher than the Cash Offer.

I then informed the RE Broker about the Partner's Attorney Information so that the Seller's Attorney can send the Contract of Sale to her.

I mentioned that we will not be using the Bank that Issued the Pre-Approval but that we will use our Bank that we have an intimate relationship. They will give him their Pre-Approval so that it won't be a problem.

The RE Broker got a bit upset. He said that this was really Shady.

I informed him that getting a Pre-Approval from one bank does not mean I have to stay with that Bank. I am allowed to shop around and get the best deal. However, no matter which Bank I choose, that bank will give a Pre-Approval and the Seller can sign the Contract at that time.

This is about where we are. My Partners have not yet received the Contract and in a day or so, the Bank we are associated with will give their Pre-Approval to the RE Broker.

I'm just curious if other find my method to be somehow dishonest, shady, savvy?

My personal opinion is that I'm making the RE Broker comfortable that we can Close the deal with his Bank if ours cannot. How is that shady?

I was thinking that the RE Broker may be getting some kind of kick back because the RE Broker's bank may be charging the Buyers more in something like Interest Rates or Points?

What do you think? Just curious.

[Wayne Brooks]

Not shady at all.  The seller/seller agent are justified in wanting a "real" preapproval (submitted tax returns, etc.) from a lender they trust as opposed to some "2 minute" preapproval process from some yahoo mtg broker.  But, the whole purpose of that is to make sure a buyer is really qualified.  While the seller's agent may have confidence in their lender, you are certainly free to use whoever you want.