Pre Approval Letters for Westchester Homes Should be Accurate

Thanks so much for the post and to all those who voice an opinion. I have often tried to discourage buyers who say "I dont want to show all my assets, they will think I am too rich to negotiate price". Its interesting that almost everyone seems to agree, whether they are in hi-priced competitive markets like the Metro DC area, or more depressed markets. Negotiating from strength is the best. For the same reason, I try to get my clients to get pre-approved with a lender I know and have counted on in the past, that way I know its for real and if they want to shop around for a day or two after the contract is ratified they can do that too.

pre approvals FOR ANYWHERE should be accurate

Pre's are only good as the person behind the pre...............

I'm a local Westchester Loan Officer(born and raised in the area).....if you ever want someone to give you a REAL YES or even an honest REAL NO...........I'm your man

my phone is ALWAYS ON

please feel free to contact me I would be more than happy to help you in any way

DOMINICK GACCINO
ABC123 Mortgage Corp

914-391-2388

Good post.  There are valid points on both sides.  In this market, however, I think that showing the full pre-approval amount is a better idea since sellers generally expect below list offers anyway.

In the old days I used to be able to get lenders to give me a pre-approval letter for what ever offer amount we were putting in.  Most agents knew this and we were not giving away what are top dollar was.

Phillip.... first off, it was nice meeting you in NYC. Sorry that we didn't have much time to talk. Hopefully next time.

In any case, I loved your perspective on this with a very good twist. I do agree with what you have stated. One thing I won't do, if the realtor or buyer wants a lesser pre-approval letter, I will accomadate them. If not, I give them the amount of the home they are wanting to put an offer on.

Now, I will say this, and I know it wasn't really part of what you wrote about. But there are many people that can be qualified for more, but want to buy for less, because if the mortgage payment. There are also some that just want that bargain, so they want a pre-approval that says less. I will say this, there are many reasons for certain things. As a loan officer, I won't haggle over this, if the buyer and or realtor wants a certain amount, as long as it is less than what I can approve them for. And one other thing that you pointed out... you said..."If you are approved for 525k, your pre approval letter should at least say you are approved for asking price. Otherwise, you'll appear to be barely qualified for a low price. That might fly in other markets, but not in Westchester County."

Now, one big thing here... yes, each market is very different. I even know this because I can lend in 13 different states, but that I have done loans in at least 11 different states before. Overall, good stuff here. But one scary thing that I have seen in the comments.  That is not knowing the difference between a pre-qualification letter and a pre-approval letter. Which I think I will write about again. Thanks and again, it was good to meet you.

I agree. Always show strength in negotiating.

What a great discussion!  I'd say 80% of my business comes from Realtor referrals and they almost unanimously want the pre-approval letter to specify an amount equal to the offer made on the property.  My letter does not say that is the maximum the buyer is approved for, it says that the borrower is capable of making the down payment specified in the contract offer and of borrowering the amount of the loan specified in the offer.

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I don't allow numbers to be inserted on my letters.  If questioned, I have the Agent speak with the Lender to assure them that the Buyers are qualified.

I am not quite sure I agree that showing an amount well in excess of the offer is a good negotiating practice on the part of the buyer/buyer agent... not quite convinced... I have seen sales not close because the seller says that I want $X for the property, and you show a qualification for that, and so that is what we are sticking to... seems they think that if the buyer really wants the house, they will fork up the $$$... of course, many buyers say they are not comfortable paying $X per month, regardless of whether the lender says they can afford it or not...

And of course, we can see how many people in recent years undertook mortgages that were approved, only to find they cannot really afford them...

I sent an email to my agents asking them all to provide their thoughts on this matter. Several are also loan officers, so we shall see waht they think... as practicioners...

I've discussed this with each client and luckily they have listened.  It is true...everything point you've made. 

Thanks!

Pre-approval is just a starting point. Before I get my Sellers all tied up, I at least want the Buyer approved through automated underwriting.

The lenders that i work with state on the preapproval letter that the buyers are approved to purchase the property at and state the address.  I would rather keep the sellers side guessing as to how high the buyer could go.  This is the ususal practice in my area.  Of course if I was in a market where we were seeing competing offers, then miy strategy might be different.
Thanks for a thought provoking post.

I have to agree with others & Lenn, it doesn't show the buyers financial strength by only showing prequal for the offer price only.  There are some agents in my area that do that so the seller doesn't know what they really can qualify for.  Personally I think that is stupid, because as far as I'm concerned, they better be qualified to buy that priced home at list price or hit the road.  Total nonsense to show $550,000 houses to a marginal $500,000 buyer.

Great post and discussion. A case could be made for either side - I do think that on the higher end homes it could be advantageous to the buyer to submit a letter with a dollar amount. However, when dealing with the lower end market I would not advise a buyer to show their hand by revealing a dollar amount.

Great thought provoking post. I have seen and used both with dollar amounts, and with the property address only. I prefer the property address only.

Interesting, on a deal I just negotiated, the buyers agent sent a prequal (not preapproval) with a much higher amount than they offered, 75.000 higher. My clients were LIVID when they saw this. It took more than 5 days to negotiate this offer, and I truly believe that if the dollar amount had not been on the prequal, my clients would not have gone through the range of emotions they felt.

And I certainly prefer a preapproval to a prequal any day!

I agree with Doug (#9). Seller's can become stubborn & greedy. My workaround has been to submit the Pre-approval letter with the amount darkened so it is unreadable. When we reach an agreement, I resubmit the pre-approval letter with the amount. This seems to keep everybody happy during theprocess. When asked by a Listing agent what amount the buyer is pre-approved for, I just simply say" They can afford it, otherwise I wouldn't be showing it".

there are pros and cons to both sides it see...I think i will take each situation/negoiation as  its own and not force one side or the other, for each sale is differ...now to commit about approvals...I only use a loan office that can submitt a loan for CREDIT APPROVAL WITH OR  with out a property and appraisal...I want ot know the buyer is credit worthly