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Pre-Qualification, why?

By Candi Kinney

Mortgage and Lending with Tennessee Valley Home Loans

September 26, 2007 03:33 AM

Ok, so here's my thing. I've been a Mortgage Loan Consultant now for a whopping 4 months and in that span of time I have started wondering. Why do we even bother with a pre-qual? I mean to me it seems like such a waste of time.

Now don't get me wrong, I want to get these people pre-approved (which I know is different), but mortgage companies are so quick to whip out a pre-qual, but to me it seems sort of dishonest.

I mean when it comes down to it that piece of paper is basically a guess, assuming that what the buyer has told you is ALL correct. Why bother?

Why not make ONE appointment, tell them to bring some basic info, such as 2 years W-2's, 2 months bank statements, a recent pay-stub, their driver's license & s.s. card & give them a pre-approval that's based on more than their word?

What do you think? How do most people do it? I just hate wasting my time & the clients time when it seems much more efficient to do it all at once & get a clearer picture of their financial status.

Just wondering.

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Don Fabrizio-Garcia

Fab Real Estate - Danbury, CT

Owner/Broker/Trainer - Fab Real Estate

You're right.

Pre-qual means nothing.
I've received offers on my listings with a pre-qual letter instead of a pre-approval letter. Those offers are disregarded.

Sep 26, 2007 03:42 AM

Robert Monk

100% Realty, Inc. - Santa Rosa Beach, FL

Florida Real Estate

Thanks, Candi, for the 'heads-up'. I see your point. Big difference between pre-qualification and pre-approval. Excellent post.

Sep 26, 2007 03:48 AM

Gary L. Waters Broker Associate, Bucci Realty

Bucci Realty, Inc. - Melbourne, FL

Eighteen Years Experience in Brevard County

Pre-qual does not mean anything but maybe it helps get the one started who isn't fully committed to buying....but, as a Realtor, I want at a minimum a pre-approval letter before I start working with a buyer.

Sep 26, 2007 03:56 AM

Dave Cheatham

INC Financial - Bartlett, IL

Yes, You are right. Now we must watch out how we write a pre-approval.

1. The program may not last long in today's market.

2. The person might do things to change their situation. I see this alot. Make sure the pre-approval is right on the money.

3. I do think this needs to be done before people look at houses. This way you can get a true picture of what a person can afford and the Realtor is not wasting their time either.

Sep 26, 2007 03:57 AM

John Klassen

M & T Bank - Kingston, NY

Youy can pre-qual the planet. I tell folks that I won't pre-qual any more. I will meet with them, with the list you discussed. They are under no obligation, but they will be pre-approved. At this point you have earned the right to ask every single question you want an answer too. Anyone else they shop with won't. You will look like a pro for asking the right questions. 8 in 10 times you'll get the business. If they decide not to meet with you, go to your kids soccer game. It will be time better spent.

Sep 26, 2007 03:59 AM

Candi Kinney

Tennessee Valley Home Loans - Tullahoma, TN

Thanks guys for reaffirming what I was thinking!

John: I was thinking of doing just that, not doing the pre-qual thing anymore, but how do you say that to your potential clients?

Sep 26, 2007 04:04 AM

Cynthia Tilghman, Realtor® Onslow County NC Home Specialist

Kingsbridge Realty, Inc - Hubert, NC

Hi Candi,
Many people do not understand the difference and the difference is huge. I tell my Buyers and Sellers, it's the approval letter we want.

Sep 27, 2007 02:44 PM

Cynthia - You are so right. When I told one of the buyer's that I didn't do pre-quals that if he would get me the 5 things I need, his Realtor called me & said "You don't pre-qualify?" So I had to explain that yes I COULD pre-qualify people but that a pre-qualification isn't worth the paper that it's written on & that I'd rather pre-approve someone and then they would have a MUCH clearer picture of how much they can really afford.

It's scary doing it this way because NO ONE else does it like this & I don't want to turn any Realtors off, BUT I think it makes a huge difference and I don't want to be the one to have to dissapoint them when I finally do see their 2 months of bank statements and I go "Oh you have an overdraft on here, sorry can't do the loan." !!!

To me it's giving the buyer's the real picture & not the picture they paint.

Sep 30, 2007 03:42 AM

Pre-Qualification, why?

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Candi Kinney

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