Howard,

I think we need to always have our buyers get pre-approval letters. As a listing agent I want one with all offers! There is no need to enter into a negotiation with a "buyer" who can not buy the property.

As a buyer's agent, at the the first visit, I look at it as a fact finding mission for both the prospect and me. During my initial contact, I try to provide useful info to the prospective buyer and one of the bits of info I impart is the necessity of getting pre-approved.

Getting pre-approved has numerous advantages for your buyer client

1. Lets them know how much home they can afford.

2. Lets them decide how much they are really willing to spend

3. Makes their offer more appealing to seller

4. Saves them time (not looking at homes the can not afford)

Getting a pre-approval has numerous advantages for me too.

1. Saves me time and money

2. Saves me time and money

3. Saves me time and money

It is not difficult to get your buyer to get pre-approved, you just have to explain the benifits of it to them.

Good Selling

Lenn

In my area of the country most sellers will not accept an offer without a pre-approval letter included and consider the offer weak - a very good practice in my opinion.  I will not show properties to shoppers unless they are working with a lender or are willing to talk to a lender I can hook them up with.  I inform my clients I will not present offers without the pre-approval letter included. I then find out what their real price range should be and make sure I show homes within that range.

So far I have not had any problems with this issue and the serious buyers will always come up with a letter.  The others I let other agents waste time on.

I would rather have a committment letter than a pre-approval contingent on so many variables that haven't been checked. But, I at least want a pre-approval on either side.

Good morning, Howard.

As the Listing Agent, I do request/suggest that the Buyer's Agent include a pre-approval letter with their offer, but also as the LA, I am obligated to submit all offers received (quickly) regardless of the content or quality of the offer, so no, it is not a requirement.

As a Buyer's Agent, I certainly would like to know that my clients (the buyers) have at least spoken with a lender and were verbally pre-qualified for a certain amount.  

Personally, I like to present offers with letters stating the address and the $ offer amount, so I wait until we've IDd a property before I request a letter from their lender.  (And I get letters at night and on the weekends, no problem.)

I think an offer with a pre-approval letter stating the address and specific offer amount in it looks pretty strong to a seller and/or their agent.

IMHO, just about anyone with a job and a pulse can get a pre-qualification letter, and generally the same goes for a pre-approval letter.  Unfortunately, I have met mortgage brokers that will write them for anyone, at anytime, without even checking into their client's ability.

I really wish there were laws in place to prevent this, or if there are, I wish I knew more about such.

Phil

I think an bona fide offer should include a bank approval letter. This eliminates a gap in that part of negotiations, where another more complete offer can be considered.

When we receive an offer without a Pre-Qual letter and/or credit report, I usually consult my seller to counter-offer and raise the earnest money and push all the 17 day contingencies to within 7 days. Put your money where your mouth is...Whether they are going to fall out or perform on their contract, I want to know quickly..

Many lenders won't give a Pre-Approval without a signed contract and appraisal. Most lenders will also be able to get an approval (w/ doc stipulations) within 48-72 hours of getting a full package. 1003 app, 1008, appraisal, and escrow.

I like seeing something from the buyer besides the purchase agreement so I can counsel my seller better.

If I see an offer from a person who has a 620 or even 630 fico score, asking for 3% in closing costs and they are coming in @ 100% financing...

...right now in the current lending climate, that buyer will have a difficult time getting a loan. Even with the 1 or 2 lenders that will do those deals now, chances are they will condition the buyer heavily, possibly damaging the escrow...

Negotiating the contingencies can be an extremely useful tool for sellers to "help" buyers perform on their contracts.

In Arizona we use LSR forms (Loan Status Reports) and quite a few agents in the area abuse these printable forms from our zip library.

These are given to the lender and they are suppose to update the sellers on a regular basis, The problem is the banks and some brokers do not follow through on these agreements.

The pre-approval letters can come from so many places now that I am finding many times that  the buyer applied online and in some cases at least here they have no idea what the properties are.

An example happened to me Friday, The pre approval was in line for the price but I called the online company to find that they do not lend on Manufactured homes and the buyers had not told them they were looking at these types of homes.

The buyers agent had not asked the clients about the terms of the so called approval so when I called the agent back they rescinded and will be looking at site built this week.

Had I just taken this offer to the sellers and they had accepted before doing the homework for the other agent we could have spent a week or two with a buyer that paid for an appraisal only to find out they needed to start over. My point is that in some cases the pre-qualified and pre-approval letters may not be enough.

Another case in point was a closing date for the 20th on March, The lenders were up until three days before closing telling myself and the buyers agent they were almost ready and should be fine. Then on the day of closing the call came that they were 40k short and the loan couldn't be done.

Again they were pre-approved for 275k and when all the dust cleared they could get 214k on a 259k contract. So my answer to this question is that these letters are fine but if not done properly waste a bunch of time.

Most pre-aproval letters are not worth the paper they are printed on. Even if it's a commitment letter, a lot of them have a VOE (EDIT: Verification of Employment) condition.

However I do like to see one. It shows they talked to someone and are not looking blind. I have taken another Realtors word several times and have only been burned once.

So do I require one? No. But I do make sure the buyer has talked to someone. And if it's my buyer, I asked them which mortgage broker they wish to use, If I may provide them with one, or if they wish to pay cash.

Hi, I agree with David Barone. Here in Texas the pre-approval letter isn't really worth anything because it always includes conditions and the lender generally rechecks the credit a couple of days before closing.  If anything has changed about their credit (amount extended, savings amount, job, whatever) it could affect their loan. Having said that, I still prefer to see one because it shows that the buyer has at least contacted a lender to begin the loan process. This gives me and my seller a little bit of peace of mind. With buyers it's good also because they've at least started the process but in addition you don't waste your time showing them homes they can't afford.

Pre-approvals are absolutely mandatory!  Before I spend time away from my children I want to know that you can buy what you're looking at.  I would never present an offer to another Agent or to my own Seller without a pre-approval letter in hand, and do you have something to sell first?

I had Buyer call today without pre-approval.  I emailed her the names and phone numbers of five mortgage brokers I know and trust and told her to shop around.  If you, as a Buyer, are not going to work on a pre-approval, you're just window-shopping.

Howard,

While my "litmus test" is my kids, we all have other things to devote our time to.  Many people don't realize...We actually have lives!  Now that's a shocker. What a concept.

Regarding contingencies....I'm not completely opposed to them.  On Cape Cod, we differentiate between "Pending" and "Pending w/Contingencies".  "PWC's" are still, technically, Active with a 48-hour kick-out clause.  I don't know if other areas have these distinctions.

If the offer is really good and in line with what my Seller wants, the Buyer who has something to sell must put their house on the market at a "reasonable" asking price with "reasonable" expectations.  I really don't care if they list with me or someone else, just make sure the Buyer (now another Seller) is realistic.  The Buyer is informed that the house s/he wants to buy is still on the market, being actively marketed and shown.  If another offer comes in that meets my Seller's expectations, the Buyer with contingencies has 48 hours to "do or die".  If the Buyer wants to put his/her house on the market for an unreasonable asking price, I advise my Seller to decline the offer.

I tell my Buyers the same thing.  Make an offer, put your own house on the market, at a reasonable price that will sell and understand that, if a better offer comes in, they stand to lose it. How Bad Do You Want It (to quote Don Henley)?

Be real.  If you want it, you want it.  Otherwise, don't waste my time.  I don't get paid unless I close.  And, yes, I have said this to both Sellers and Buyers.  I know I've lost a few clients because of my philosophy but I can honestly say that those Buyers/Sellers are still trying to sell /buy their homes 2 years later.  They go from active, to PWC, to back on market, to withdrawn, to expired.  

I do empathize with them but they need to get real.

I do believe I got "off-subject" and I apologize.  I'll get off my soap-box now.  

Cathy