Ever Seen a Pre-Approval Letter That Reads Like a Sweepstakes Mailer?

Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

Ever Seen a Pre-Approval Letter That Reads Like a Sweepstakes Mailer?

In the Bristow, VA real estate market, properties are not staying on the market very long at all.  In fact, I have had the pleasure of listing a handful of single family homes in Bristow that have resulted in multiple offer situations in less than two days.  Not all buyers are putting their best foot forward and fail to realize it.  Some have homes to sell that they haven't even gotten on the market yet.  Why are they making offers?  Bristow sellers are getting at least two non-home sale contingent offers in every multiple offer pile.  A buyer that is ready, willing and ABLE to act is what every Bristow seller is seeking.

Then there are buyers that appear to be reading, willing and able to act on paper.  Twenty percent down payments and a lender lettter that, at first glance, looks very good.  A well known credit union tells you they are qualified.  Then this Top Bristow Listing Agents takes a closer look and the words leap off the page like a flashing danger sign.

Based on the information you provided, you may be qualified for a mortgage of up to (insert amount here.)

They may be qualified for the mortgage?  MAY?  Top Bristow Listing Agents love certainty.  The word "may" has no business in a lender pre-approval letter.  That's the kind of thing you see in a Publisher's Clearing House Sweepstakes.  "You may already be a winner."  Not confidence inspiring at all.

Having represented a buyer that swore up and down that Navy Federal Credit Union had qualified her for a mortgage of waaay more than we were about to write an offer on, I asked to see the letter.  There were the words.  "You may be qualified for a mortgage up to.."  Ugh.  I asked how she got this letter.  My first time buyer, having no clue how the process worked, answered, "I just filled in the answers to how much money I make and what my debts are and I got this letter emailed to me."  In other words, no one had taken paystubs to verify her income or run credit to verify her debts.

Turns out, the answers she gave online were not even accurate, based on what underwriteres would be requiring.  I called a trusted, local lender at 8pm that night and had him talk her through his online application.  What popped out the other side was a pre-approval letter for a lot LESS than what Navy Federal had given her.  Why?  There was no lender to ask her questions and verify the answers.  She had put in answers that were guesstimates and based on last year's salary.  She didn't take into account her pay decrease that was only lasting six more months.  She had put in a second income for a job that she had not worked the minimum two years that the underwriters required.  Without the guidance of a lender, she was left to put in any answer that her untrained real estate mind thought was right.  In her mind, it was logical that this decrease was only lasting one year, while she was a teacher's assistant and learned from one of the best.  She would be back teaching at the helm of a classroom next year.  That's not how lenders see it.  What is happening NOW is what matters if you are an employee.  What has happened in the last two years with regard to your adjustable gross incomes in your tax returns is what matters if you are self-employed.  Real estate agents and lenders know this.  The majority of buyers don't.

Credit unions like Navy Federal, USAA and others that do not put you with a lender, but keep with a call center until you are under contract, write those "may be qualified" letters because they really don't know your qualifications.  Yet, many agents see the names, think of the big marketing campaigns instilling trust and loyalty and think those letter are golden.  If there isn't a lender with a direct phone line on the bottom that a listing agent can call and verify the pre-approval, the letters are worthless.

Credit unions are great when it comes to car loans, credit cards and saving accounts.  They are unreliable and terribly expensive when it comes to mortgages.  How much a buyer wants to pay for a mortgage is their business, but if you are running around town with a sweepstakes lender letter from a credit union and wondering why your offers aren't getting accepted, try getting a legitimate pre-approval letter from a local lender that can attest that they have verified your income and assets.  Your results are very likely to change. 


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Christine Pini
David Lyng Real Estate - Aptos, CA
Your Santa Cruz Real Estate Connection

Great article thanks! I had a transaction where the buyer brought a pre-qual letter and thank god I asked for the pre-approval! She's wasn't able to perform due to some faulty spousal payments. Which is just terrible for her but saved my client time and money.


May 06, 2019 05:45 PM #16
Jackie Adams
ERA Archibald Real Estate - Idaho Falls, ID

I'm going through this in my market of multiple offers. I work with USAA buyers. Even though I call USAA and get an approval letter, with amount included and everything tip top shape, and send it with the offer, sellers with more than 1 good offer are coached by their agent to take the offer that includes a local lender. These loans lose out and cause sorrow with my buyer clients. The buyers don't know any better and want to stick with their USAA benefits. Tough situation.

May 06, 2019 06:19 PM #17
John Juarez
The Medford Real Estate Team - Fremont, CA

Have you seen the movie, Nebraska, Chris Ann Cleland? It is about an older gentleman who receives a magazine sweepstakes potential winner notice in the mail and sincerely believes that he has won the big prize. He and his son travel to the company headquarters in an attempt to collect the money. Great adventures along the way. Fun movie!

May 06, 2019 06:25 PM #18
Steven Brand
Hancock Mtg Partners - Stillwater, MN
NMLS# 261849

That is a WHOLE LOTTA TRUTH in that.   Its sad.. but our industry has to just get BETTER.  

May 06, 2019 06:53 PM #19
Carolyn Roland-Historic Homes For Sale In Delaware and S. Chester County PA
Patterson-Schwartz Real Estate - Wilmington, DE
Carolyn Roland, GRI, CRS

A call center doing pre-qualifying? You would have to be "off with the fairies" to take their word for anything!

May 06, 2019 07:08 PM #20
Greg Mona
Faira Homes Corp - Scottsdale, AZ
Real Estate in the 21st Century!

Not much more to add here, Chris Ann Cleland. There is certainly these type of letters in circulation. As a matter of fact, I once received one with an offer that was, get this, a photograph of the letter! Yet another "shake your head" moment! 

May 06, 2019 07:47 PM #21
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

Nice post. The Lender Letter (no matter what it says) is only as good as the Lender who wrote it.

May 06, 2019 07:53 PM #22
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

That's so awful - and people who don't know about real estate don't even know they're being conned. All you can do is keep trying to educate them.

May 06, 2019 08:06 PM #23
Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Chris Ann Cleland 
Lots of well-deserved praise in the comments!
Congrats on all the FEATURES!!! All the best - Lynn

May 06, 2019 08:28 PM #24
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Chris Ann funny you should write this post, I just had a buyer with a USAA pre-approval letter... and then he switched to another credit union... 12 days before Close of Escrow we are going with my best lender who has been California/LA county's number one lender for the past 20 years...  he is pulling a rabbit out of the hat, Endre

p.s.: there are some Banks that I could name that are just as bad...

May 06, 2019 10:20 PM #25
Susan McCall, Independent Listing and Buyer Agent
Compass Realty Solutions - Portland, OR
Bringing buyers and sellers together!

I closed a buyer loan with USAA a number of years ago and it went through like a well oiled machine, no problems.  I also closed a buyer loan with a credit union.  It took extra long and the lender would NOT GIVE ME ANY information nor talk to me about the status.  Quoted privacy for their client.  Hard to pass on no information to the seller.  So frustrating.

May 06, 2019 11:04 PM #26
Myron Lund
Real Estate Directory - Rochester, MN
Serving the Rochester area for 30 years

This just happened to me and my seller.  We had an offer along with a letter from a lender stating based on the info the buyer provided they are qualified to purchase in an amount that indicated thy would not have a problem purchasing the house.  A week before closing the lender is saying we won't be closing because she needs verification of employment.  Really?? She had met with the buyer and wrote the letter 3 months before the purcahse agreement was written and had nearly another 2 months to process it!

May 07, 2019 06:36 AM #27
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

Chris, thanks for your excellent and very timely post. When I originated my 1st Mortgage in 1995, my broker had a magic wand he would wave to approve buyers. Being new to the biz I still thought this was a silly way to do critical business. The activity you are talking about is still very common. My wife is a Retail Mortgage Underwriter for the past 20 years. I can see that some of the file submissions prove that the magic wand still exists. Be careful out there...

May 07, 2019 07:24 AM #28
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
Santa Cruz Mountains Property Specialist

And this is why the public still needs an expert REALTOR to investigate all of the details of the transaction.      In the case of pre-approval letters, I couldn't agree more:     "If there isn't a lender with a direct phone line on the bottom that a listing agent can call and verify the pre-approval, the letters are worthless."

May 07, 2019 09:55 AM #29
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

I have worked with both USAA and Navy Federal and have never had a problem.  However, the sentence in your Blog that really Jumped Out at me as TRUTH was: If there isn't a lender with a direct phone line on the bottom that a listing agent can call and verify the pre-approval, the letters are worthless. 

So TRUE!  "Caveat Emptor" -- Buyer Beware!

May 07, 2019 03:40 PM #30
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Great post!!

As agents we have to keep on top of what we have to work with.

As you point out some of these letters of approval are not worth the paper they are written on.

Making sure of the wording and even a phone call to the lender to verify what they have done to back up their letter can save a lot of problems.


May 08, 2019 02:00 PM #31
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

personally I don't like working with out of town lenders for exactly the reasons you stated--and their customer service is horrible.  Local lenders--like the one you called--give the best service and you can trust them

May 09, 2019 07:26 AM #32
Ricardo Mello
Manhattan Miami Real Estate - Manhattan, NY
Manhattan & Miami Real Estate Agent

Great post Chris Ann...;)

May 10, 2019 03:09 AM #33
Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

These are definitely NOT reassuring words:

'you may be qualified for a mortgage of up to (insert amount here.)''

May 11, 2019 09:30 AM #34
Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
Your agent under the sun

I love the analogy with the sweepstakes letters! Thanks for the great post. Aloha!

May 11, 2019 04:57 PM #35
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Chris Ann Cleland

Associate Broker, Bristow, VA
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