Why, Why, Why does this happen? Wrong?

Question

Hello all. Please tell me this is wrong because I feel like it is when I do it. Here's what happened. I get a call in the evening from my Agent saying that HUD just accepted a offer on a Property. He said I can get it financed, but I need a Pre Approval by tomorrow Morning. I've been working with a couple of banks, and they said they can most likely finance me, but I know that they won't be able to produce a Pre Approval that quick. So, here's what I had to do instead. I called a Hard Money Broker who did it for me. Even though, I probably won't use the Hard Money, I did it anyway so I have a chance of getting this thing financed. I feel like I lied to the Hard Money or deceived them by thinking that I was going to go through them, but in reality I'm probably going to go through a local bank because their rates are better. Does anyone else go through this in RE? It's like in the spur of the moment, you are not FLAT out lying but somewhat telling a white lie. This happened in other situations as well. It's like a grey area. Sigh. Thank you.

Jon Holdman · Answer

You should have your pre-approval from your lenders all arranged before you start making offers. Then you can attach the pre-approval to your offers. This is happening because you're making offers without getting your ducks in a row.

Ann Bellamy · Answer

Speaking from the hard money side, I'd rather you were upfront about it. It is common that hard money pre-approvals are more approvals to do business, like Alice said, than approvals of a specific deal. Since hard money approves the deal and not the person, until there is a deal, it's hard to specifically approve a property. I'm all tangled up in my own words, so I hope that made sense. And believe me, that lender won't be shocked that you went conventional. I tell everyone that if they can go conventional, they should.

Justin S. · Answer

While I agree with Jon and Bill, I also know $hit happens and you need to react quickly. If you feel bad or do not want to burn any bridges, then send them some gratitude in the form of an edible arrangement or something. That is half joking, but a small gesture of your appreciation would make them (and you) feel better. Next time get your ducks in a row though.

Jon Holdman · Answer

I don't understand. When you wrote the offer, you would have had to specify if you were financing it or paying cash. If you're paying cash, they will want bank statements or some other forum of cash. If you're financing, they will want a pre-approval. I'm surprised your agent let you make a financed offer without the pre-approval letter in hand.

Alice Green · Answer

I guess you don't need to feel bad as if someone is getting pre-approved with a hard money broker,, it not always mean that they will going to have business with them. Its kind of getting an approval that whenever needed you will use their services. So, if not now but in future, you can use their services.

Alice Green · Answer

Then that's it, if you are helping them with WOM. Don't need to worry about guilt.:) But I would really like to know how your deal is turning out.

Greg P. · Answer

I was planning on buying it Cash, then I realized I was able to get Financing that I recently found, and totally forgot HUD can be financed...Timing was just really off on all aspects, so I guess I did what I had to do. As far as the Hard Money company goes, I know they do a good job so I will give them good word of mouth. Thanks all.

Tom C · Answer

Flipp, so you submitted an offer on a HUD, including your required Earnest Money and you didn't have funding lined up? That's an awful good way to loose your deposit.

Mark Anderson · Answer

I agree with Jon but on the flipside, I have seen some hard money lenders and transactional lenders advertise they will provide pre-approval letters for investors. They know there is a demand for this "service". Usually there is a fee involved because you have to be a "member" or their program. So I wouldn't feel too bad. I've done it once before. I used a pre-approval letter from a hard money lender even though I ended up purchasing with private money. I felt wierd about it too.

Ben Kevan · Answer

For my first investment deal, I had pre-approval and all looked great. Then shit hit the fan. Couldn't get funding because the amount was too low (even though THEY APPROVED THE AMOUNT), then others couldn't fund because of this, or that, or then or now.. Just silly stuff. All in all I went through 6 finance companies. If you want it, you'll get it. But make sure you ask your realtor to help you through the process and getting everything aligned prior to shopping.