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I'll try to keep this short but will likely fail. My wife and I have about 10% down for a house we may be interested in buying. We didn't plan on buying anything until we had 20% (to avoid PMI) but we think it could be a good deal and would like to take a closer look at the place. Affording it is not a problem even with 10% down, BTW. Problem: I've browsed Redfin for the past 2 years and planned to use them as my agent when we go to make an offer. I find out after trying to go set up a tour that they require a preapproval letter prior to looking at anything. I've already been to the bank (Navy Federal) to check out different types of loans and the lender I spoke with briefly said they would likely approve me for way more than we were planning on spending anyway, so I'm personally not concerned. I just don't want to shell out $265 to them for the app fee and credit check just to look at one house. Any harm in going with the seller's agent directly? I'm inherently wary of someone who is paid based on a sale. Even if the Redfin agent ended up being a creep, the refund you get back from them is nothing to sneeze at. Thoughts?
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| # ? Nov 04, 2009 03:32 |
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| # ? Nov 21, 2009 23:17 |
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If the deal is good enough that you're willing to shell out thousands for PMI and pay considerably more interest over the course of the amortisation due to the reduced down payment, it's good enough that you can pay $265 for a pre-approval.
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| # ? Nov 04, 2009 03:37 |
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Fraternite
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I'm just not sure how good of a deal it is. I actually saw it last Sunday at an open house. It's outdated (lots of original fixtures from 1978 when it was built) but new furnace, roof, and seemed to be structurally sound from my untrained eye. My stepfather has a much better eye for these things and knowledge of what the updates would cost, if there are any red flags, etc. The tour would be mostly for him and my wife to see it in person since they haven't yet. If it's prohibitively expensive to do a lot of these things, then it's not such a good deal. Kind of a catch-22.
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| # ? Nov 04, 2009 04:12 |
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I think the point is $265 shouldn't make or break the deal. If it does, then it wasn't even a good deal in the first place because of all the extra you're paying for buying early.
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| # ? Nov 04, 2009 04:16 |
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You might want to shop them with a good broker who can give you a preapproval too. Where I work we don't allow our loan officers to charge an app fee, because they're required to go into an escrow account. We don't want to mess with the escrow, so we just tell everyone we don't allow it. Most good brokers should beat the banks or credit unions on rates and/or closing costs anyway.
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| # ? Nov 04, 2009 05:22 |
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I'd suggest threatening to take your business elsewhere but the bank sounds like it's been pretty reasonable to you so far. You could make the point that you're going to be paying them more than $265 a month that in interest every month anyway over a long period of time, but it may just be worth eating the fee and not pissing the bank manager off. That said, it shouldn't (theoretically) be a big deal for a good manager to waive the fee to keep a good customer. When I got my loan they had all these application and approval fees but I ended up paying none of them because: a.) it was a "deposit payment" that was returned if the approval was successful - still had to pay it up front though; or b.) they waived the fee as a favour to a "special customer" who had banked with them for years - could be that just the suckers or the dodgy people had to pay the fee, but I'm under no illusion as to how special I am to the bank.
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| # ? Nov 04, 2009 10:09 |
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I don't blame you for not wanting to spend a bunch of money if you don't have to, even if you can afford it. I can't remember ever paying for a pre-approval letter, but maybe I'm thinking of a pre-qualification letter, which is similar but they don't get into all the credit checks. I don't really know what Redfin is, but even if you go through a buyer's agent they're still only paid when you buy something. But the seller generally pays the broker fees, so it shouldn't affect you unless they're going to give you a discount.
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| # ? Nov 04, 2009 16:00 |
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My wife and I went to our savings/checking bank first. They did the pre-qual/pre-approval letters for free. We even asked a broker just for some comparisons, and we used his services so he did the pre-approval for free. you are spending at least a 100k, and commission checks will be flying around like panties on prom night. 35 dollars is nothing for these folks. Just work em.
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| # ? Nov 04, 2009 19:49 |
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I got a free approval letter from AimLoan.com. I may not get an actual loan from them, but the process took about 15-20 minutes. Their rates are pretty competitive, however, but that's a topic for another thread. Going to see the house on Monday. 
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| # ? Nov 06, 2009 16:14 |
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It's bullshit for a listing agent to "require" a pre-approval letter, and it's bullshit for a broker/banker to charge for a pre-approval.
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| # ? Nov 06, 2009 18:23 |
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I agree, that bullshit was the reason for this thread.
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| # ? Nov 06, 2009 20:06 |
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revmoo posted:It's bullshit for a listing agent to "require" a pre-approval letter, and it's bullshit for a broker/banker to charge for a pre-approval. In Redfin's case as a "Discount Realtor" they don't want to waste their time with people who aren't pre-approved (i.e. serious about buying). The bank charging you is total BS though. A full service buyer's agent should take you on without a letter if you just want to see the house. You aren't obligated to sign an exclusivity agreement or anything. If you want to see the house and get raped on the price, go through the seller's agent.
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| # ? Nov 06, 2009 22:33 |
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