It’s hard for many people to believe, but there are times when buyers don’t actually end up buying a house.    I know, wild stuff, right?  It’s usually not even due to a real estate agent, but the particular story I’ll tell you is one where the real estate agent could have had an effect on the purchase.  I heard this from one of my lenders a couple of days ago.

The bad home purchase starts off wrong

A real estate agent in St. Louis got a call from a potential buyer she’s never met before.  The buyer was interested in going to look for houses on a Sunday, which happened to be Mother’s Day.  Ever the hard worker, our agent in this story met the buyer at a home showing at 10:00 a.m.

Questions about the bad home purchase

Even the beginning of the story shadows bad news in the future.  For one, the real estate agent didn’t know anything about the buyer.  That’s not the same as getting to know your client in a real estate transaction, which is what we stress at Deerwood Realty.  Also, what real estate agent is showing any property without a buyer’s agency agreement?  And finally, why is this real estate agent showing property to an unrepresented buyer with no mortgage pre-approval?

The bad home purchase story continued

Of course, this new home buyer likes the first house he sees and wants to write an offer on it.  Amazingly, the real estate agent writes the offer and submits it without a mortgage pre-approval!  At some point, I guess the agent figured out that the buyer was going to need financing because she called a lender on that Sunday night and asked the lender to get in touch with her buyer to start the mortgage pre-approval application.

More questions about the bad home purchase

At this point in the story, we have a real estate agent who has written a contract to purchase a property based on no pre approval from someone she met literally 2 hours ago.  Most lenders aren’t too excited to work on Sundays, especially holidays like Mother’s Day, so the chances of getting a pre-approval, even if the buyer is supremely qualified, is not great.

Purchase offer accepted!

Wonder of wonders, the offer is accepted by the sellers!  Who is their agent?  Who accepts offers on homes without pre-approvals subject to financing?  Talk about a waste of time!  So now we have an accepted offer, contingent on financing, with no financing work actually having been done before the mortgage pre-approval.

Will our buyer get financing for the home purchase?

Of course not!  After trying Sunday night and all of Monday, the lender could not get a mortgage pre-approval.  The buyer had no job.  The buyer had no savings.  The buyer had no assets.  This makes it very difficult to get a pre-approval.

Disappointment abounds

Who is most hurt in this bad real estate transaction?  The real estate agent representing the buyer wasted two days of her life and received no compensation for it.  The seller agent looks suspect to her clients because the deal fell through.  The sellers thought their home was sold and now it is going to sit on the market longer.  The mortgage lender spent his holiday and the next day working on a deal that he isn’t going to get paid for.  In this case, the home buyer is the least affected by all of this.  He probably had a good idea he wasn’t going to get approved for a mortgage and was looking for a real estate agent who would take him to homes so he could see them in person, with the real estate agent as a tour guide.

What should have happened?

Let’s just go over this mismatched home buying journey and see where everyone could have saved themselves time and money by just following three general guidelines.

  1. As a buyer’s agent, the real estate agent should have required a mortgage pre-approval before showing homes. This would have saved her time from being completely wasted.  You may think that wasting two days of one’s life is a small price to pay for the chance to earn some compensation, but there are many people who can’t qualify for a mortgage that want to buy a home, and they will take way more than two days in any given year if you get no pre-approval.


  1. The buyer’s agent should have gotten a buyer agency agreement before showing any homes. I know real estate agents in St. Louis that get very nervous about getting a buyer agency agreement first.  This is understandable…what you are really getting to is does my client really like me?  After all, if they refuse to sign the buyer agency agreement, then what?  They’ll probably find someone else.  I take a different approach to the buyer agency agreement.  I need to know if my home buyers are serious about buying a home.  We know countless former associates who spend all kinds of time working with buyers who never buy homes.  Why should we be one of those real estate agents?  We are professional real estate agents.  We are compensated only when a buyer buys a home or a seller sells their home.  There is no award for “almost” sold, or best tour guide.


  1. The seller’s agent should never have advised the client to accept an offer without some sort of mortgage pre-approval or proof of funds. Let’s get this straight:  You just got an offer to purchase subject to financing, and you didn’t get the financing letter?  How is that supposed to work?  It’s not.  Maybe the sellers were desperate for a quick sale?  Relying on hopes and dreams instead of cash or a mortgage to sell your home isn’t a solid plan.

There are always going to be instances where guidelines didn’t work or could have actually cost you a sale.  That is why they are guidelines and not hard rules.  However, I think it’s a form of cruelty to show buyers homes they can’t afford and have sellers accept offers that are never going to go through.  As real estate agents, we are better than that.  We need to explain why these things matter in a home purchase.