Recently I lost a client because I insisted they get a pre-approval letter before I showed them a home. I would like to write this post to my future clients and any future home buyer that wants to start looking for a home.
The pre-approval letter is a very important step in the process of buying a home, it tells you the price range you should start looking in and also gives you a chance to clear up any errors on your credit report that may arise prior to the closing on your new home.
From the seller's point of view, they want to see a pre-approval letter to see how serious you are about buying their home. They don't want to accept your offer and then 3 days later find out you are not qualified to purchase their home. A seller has to vacate their home when you call for a showing and if you are not pre-approved then you are just wasting their time. They have to do a quick clean job of their house and then exit. How would you like it if you were called by complete strangers and said we want you out for an hour so we can come see your home... every night.
From an agent's point of view, it tells them that you are serious about buying, that you are willing to take the 15 minutes to fill out the paperwork and get what needs to be done to the lender prior to looking at homes. I don't like to show homes to someone who hasn't been pre-approved for two reasons. The first being is my own security. I work in a business that I meet new people everyday and I don't know you. By getting a pre-approval letter, I at least know that someone now knows who you are, because you gave the lender your SS# so they could pull your credit. The second reason is that I get paid to sell homes and I have lots of buyers that are pre-approved. If they find the home of their dreams, they are ready to write the offer then and there. Not wait one week for an answer from a mortgage professional, by that time the house you want may be gone!
From your point of view, it says I'm ready to buy a home, I'm not just window shopping. It also tells you how much you can afford. If you only pre-approved for $250,000 and you are looking at $350,000 homes then you are just wasting your time, the seller's time and your agent's time. If you are just window shopping, then don't hire an agent to drive you around and waste their time and gas. Go out on Sundays and look at homes when they are already being held open by agents. Then when you are serious and are ready to go, get the pre-approval, call your agent and find your dream home!
I hope this helps you understand why agents require you to get a pre-approval before they take you out to see homes.
Todd Clark - Broker / Sales Coach
Palazzo Realty Group