Do I Need a Pre-Qualification to See a Home For Sale?
Yes....
No....
Well.... Maybe....
OK, here's the deal....
What Exactly Is A Pre-Qualification?
A pre-qualification letter is an estimate of what a lender will loan you based on what a buyer states they make and what they owe on their bills, but without actually verifying any of this information. This is not to be confused with actually applying for a loan. A step above a pre-qualification letter is a pre-approval letter. To be pre-approved a buyer must have given a lender documentation to verify income(s) and debt(s) and authorize credit checks.
How Does a PreQualification Help a Buyer?
The simple truth is sellers don't not want to waste their time and efforts with buyers that are either not serious or unable to purchase. In fact, in the real estate world we have a term: Willing and Able Buyer. This means the buyer must have the motivation to buy, AND the means to buy!
That's where the pre-qualification letter comes in. The pre-qual (what it is sometimes called), means that a buyer is both motivated enough to get one, and the bank or lender the buyer obtained the pre-qualification letter from claims that if all income and debt clears underwriting, the buyer will be able to obtain said loan to complete the purchase. In another words, the pre-qual letter says to a seller that the buyer is more serious and capable than just someone off the street!
Does That Mean a Buyer Needs A Pre-Qual Letter To View Homes?
Technically, no, a buyer does not need a pre-qual to view a home. Unless....
- The homeowner requires it. This happens sometimes if the home is a higher-priced home, or luxury home that could attract looky-loos. It's not a typical request for the average home listing.
- The agent you're working with requires it.
Wait, Why Would a Real Estate Agent Require a Pre-Qual Letter to Show a Home?
Again, there's a few reasons for this as well.
First, some REALTORS®/real estate agents require a pre-qualification letter for security reasons. We've all heard about real estate agents, especially female agents, being ambushed, robbed, beaten and worse by criminals tempting them to houses by acting like a buyer interested in purchasing it. A pre-qualification letter requires the would-be buyer to go the extra steps in obtaining it. A savvy agent intent on being safe would then contact the lender on the pre-qual to verify the buyer and discuss any details pertaining to the buyer. All that information would be hard for a criminal to fake.
OK, this next part is where the boys and girls are separated from the men and women....
The other reason an agent would require a pre-qualification letter is to separate serious buyers from the "tire-kickers". Not all agents take this stance, but many do and here's why:
A pre-qualification tells an agent the same thing it tells a seller, that a buyer is serious and can actually buy a home. Remember the Willing and Able Buyer?
But Why would a REALTOR® not show a home when the buyer could still get a pre-qual after seeing the home? Won't the buyer just go use a different agent and buy with them?
Yes, this is true, but in this business the sheer number of "tire-kickers" that want to waste time poking around homes with no intent on buying out-weigh the occasional buyer without a pre-qual that actually comes through with a home purchase.
When a buyer does have a pre-qual, or is serious enough to get one if asked about it, its not a problem. When someone that refuses or cannot get a pre-qual letter is asked for one, they either avoid it or push back on the request. Its a tough stance for a real estate agent to take, but it can also save them a lot of time and heartache showing homes to unwilling and unable buyers can cause!
So What About Us - Do We Require a Pre-qual?
It depends. We take each buyer case by case. We try to employ our instincts because every buyer's situation is different. If we turned away every buyer without a pre-qual, we'd be out of business. But that effort to get one, or honestly give us some insight into their plans whether buying now or in two years, is imperative. Of course, some buyers don't need one at all, like cash buyers.
A buyer (if you can call them that), that resists the discussion of a pre-qualification letter or to pursue one, exposes their lack of seriousness by not doing the one thing serious buyers do: Get a Pre-Qual.
Written by Genuine Beaumont CA REALTORS
Todd & Devona Garrigus
Garrigus Real Estate Group
Call (888) 9-List-It
That's (888) 954-7848
GarrigusRealEstate@yahoo.com
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