Nearly 80 per cent of agents do not request a confirmation from either a broker or a bank manager before a contract has been agreed on, according to a recent straw poll.
The latest Real Estate Business straw poll asked 'Do you request a confirmation from either a broker or a bank manager before a contract has been agreed on?' and 77.7 per cent of 197 respondents said 'no', while 22.3 per cent said 'yes'.
Director of hockingstuart Werribee and Melton Julian Conte said requesting financial pre-approval was standard practice in his network.
“With our training from head office, they always teach us to be thorough in everything we do because at the end of the day, we are dealing with people’s biggest assets,” he said.
“What we try to do is protect our vendors a little bit and ask clients to provide pre-approval letters with their offers,” he said. “It’s a huge issue whereby we are to make sure people have sought financial advice before they’ve signed a contract because these contracts last two to three weeks and vendors are basically removing their property from the market. So if things fall over, they could have missed out on a whole lot of potential clients."
Mr Conte added that pre-approvals also protect the buyer.
“For them to actually physically buy a home is a massive financial and emotional process, and if they secure the house of their dreams and then they go to the bank and find out their finances aren’t good, it’s a very heart-breaking process for the buyer," he said.
Office manager for Realty Blue Carol Visser said it was not a practice undertaken by anyone in Queensland.
“We just don't enter into it,” she said. “Some people go to their brokers or banks and get pre-approval, but they still have to have the contract eventually. However, we do have a clause in the contract that we prepare, giving them 14 to 21 days to get the final stamped approval.”
Licensee of Brisbane-based Northside Residential Properties, Kay Denny, told Real Estate Business she always asked her buyers if they had received financial approval from the banks before signing them up.
“I’ve never asked for a letter from the bank,” she said. “In 19 years of real estate I have only lost one sale on finance approval and that is due to the fact that the buyer refused to try another bank for an investment property and he would only use that particular building society,” she said.
Ms Denny said there were only two occasions where she had to approach a broker.
“I remember in one year, a lady couldn’t get the finance and I got the broker to get her finances done. Another client fell over on finance and I fixed it up again through another broker, but that’s all,” she said.