the lender should not be giving that information.... that's outrageous....

I don't know if it's a question of ethics...just maybe a question of boundaries. I don't know...I am going to think about this one!

Wanda - This is absolutely none of the listing agent's business. As long as the pre-qual letter states the buyer qualifies for the amount of the offer, that's all that matters.

Also, the lender should not disclose this information to the listing agent. That is personal information, and I would have to agree with Fred Cope. 

I think it's sneaky Wanda, but I wouldn't say unethical.  It could get a new loan officer in a lot of hot water with a client if it were found out, and for that reason I think it's bad business practice.  I also think it's a sly move by the listing agent to potentially get their client more money, and I can't fault them for that.

I wrote a blog about this a while back because I field these calls pretty frequently.  My policy is to disclose nothing to a listing agent without clearing it with my client and their buyers agent first. 

The agent is soliciting information from a lender that would be a violation of that borrower's financial privacy.  It is more common than one may imagine.  Numerous times I had to say No to such requests when I was an MLO.  A few agents would demand I tell them.  I once asked an agent, "How much did you and your husband earn last year.  Incensed, she said it was none of my business, and I agreed.  Neither is it any of her business how much the bortower makes: she was in possession of our commitment letter, and that was all she needed.

Real Estate licenses do not guarantee a functioning brain nor conscience.

Good topic, Wanda.

What? I would never even consider such a thing.

Absolutely not! If the lender answered, then that lender would no longer be getting any of my business and my lenders know it. It is only acceptable if the listing agent first clears approval to call the lender by the buyers' agent. And the questions need to be specifically concerning the prurchase offer on the table at the price and terms presented.

On that direct question...NO!   I have no problem of an agent calling the bank and making sure that the buyers are actually working with him or her.  I have seen forged letters so I call and verify that the lender did indeed write the letter but no other questions are asked.

No.  And the lender should not give out privileged information to the listing agent.

If the listing agent gets a financial statement with the offer, they should be able to see that for themselves. 

Also, there's no reason a buyer has to disclose financial ability for more than their offer.

From a lender's point of view, I wouldn't give this information to the listing agent just because they ask. The borrower is my client. I would let them know about this and let them make a decision about how to proceed.    

This is always a good question that generates lots of discussion at in the office kitchen.

I agree with Jeff Pearl. No need to say more. Thanks for posting this.

Usually they should get permission from buyers to talk to their lender. But normally, I would just counter no matter what amount was written on the lender letter. The buyer might have more savings and can raise their downpayment amount even if the lender won't lend them a higher amount.

I think best practice would dictate alerting the Buyers agent first, but if the Buyers agent indicates his/her clients want to stay in the game at a higher price then it's fine to call the Lender to inquire.

Hi Wanda -- it seems as if this question is being asked before an offer has been accepted.  In our market, we are still experiencing multiple offers and many properties still sell in excess of the list price.   Buyers are removing the loan and appraisal contingencies sometimes in order to be competitive and some use an escalation clause.  It's important to clarify that a buyer can qualify and close based on what is reflected in the purchase agreement, mortgage pre-approval letter and the proof of funds that have been submitted as part of the buyer's offer presentation package.

My duty is to represent the seller as a listing agent and if there are multiple offers, I will tell the agent as well as the lender about the situation.  If they can't, they likely will not be part of a counter offer scenario.   I don't see it as an ethical situation at least in the manner how you are describing it and as I am interpreting it.  

Under no circumstances should they be able to ask this question; questions of progress would be ok and thats all!

Wanda Kubat-Nerdin well, it's okay to ask this question. Your seller has accepted the offer in good faith with the assumption that buyer's agent has done due diligence. However, you want to protect your client (seller's) interest - so getting an assurance from buyer's lender is justified.

Why not?

I don't see it as being unethical but certainly unprofessional. The lender should not disclose the buyer's ability to the listing agent without the written permission of the buyer.

This just happened to me.  I am respresenting buyers of a property.  We submitted our offer with their lenders pre-approval letter.  Unbeknownst to me, the listing agent called my buyer's lender and was asking him if the buyer could qualify for more, wanted to know what his ratios were and wanted to know how the buyer qualified for the interest rate he had stated.  When I took my buyers through the property for a second look (after our offer was submitted) that is when the listing agent told me he had called their lender.  I didn't say anything at the time because I didn't want it to sour the deal for my clients but I found this to be highly unethical.  However I think it happens more often than not.