It seems that since day one (just two months ago) of my real estate career here in South Lake Tahoe, experienced agents have stressed the importance of getting a loan preapproval letter early from buyers. Asking for one, however, seemed awkward to me. It seemed like I was asking them, "You don't really have enough money to buy a house, do you? I want proof!"
I've learned from my latest buyer that I should always ask for a preapproval letter. For sake of the buyer's privacy, I won't go into details from this transaction. I will say, however, that if I had requested a preapproval letter earlier, an actual offer may have been submitted.
So why will I always ask for a preapproval letter immediately?
1. The obvious reason: So I don't waste my time with a buyer who won't qualify for a loan. FYI, I knew this wouldn't be a problem with the buyer I mentioned above.
2. People don't like dealing with several stressful situations at once. Seeing the terms of a loan, how much a down payment and monthly payments will be, can be pretty stressful. Get this out of the way at the beginning. Don't stack it upon the stresses of choosing a house and writing an offer. Heck, your buyer may even get stressed out from just seeing the terms of the loan and back out ... better now than after having shown 25 homes.
3. Having a preapproval letter will always make an offer stronger. A seller will consider the offer much more knowing that the loan contingency will probably not be an issue.
Thus, I will almost always ask for a preapproval letter up front. And with reasons #2 and #3, I can communicate the need for this letter pretty effectively.
Any other thoughts on preapproval letters are welcome!
Drew Kondo
South Lake Tahoe Real Estate (in progress)
Comments(4)