In this market they should be happy to have a buyer making an offer. I say ask them for the loan amount they have left on the home in exchange for the amount you've been preapproved for and see how they feel about that.
It's important to have a pre-approval while in the process of buying a home so the sellers broker knows you are serious about buying and what price range you can afford. It's up to you to decide how much you want to offer on any home based on certain factors.
In today's market before a seller's broker has his or her client sign and get locked into a contract they want to see some sort of proof that the buyer can afford the home. Many seller's brokers demand the preapproval is present to include with the offer. Believe me if you don't do it some other buyer will come up behind you and present theirs and have a stronger offer.
The answer to your question is no, you don't have to, but if you really want the property you should provide them with whatever they ask for. If the seller's agent is asking your agent (buyers agent) for information, your best way to make the deal would be to provide it.
As a buyer's broker, I would not object to letting the seller's agent know if we are qualified to go higher, it makes you look stronger as a perspective buyer. However, I would usually reiterate to the selling broker that our offer is not based on what we are qualified to spend but more so on what we perceive the market value of the property to be. I would advise against making a statement such as "this is the highest we can afford to go." Such a statement may cause the seller or selling agent to question if you are getting in over your head.
If the seller asks for information that you feel is too personal or you chose not to provide, that is fine, just make sure you are willing to lose the deal because that is just what may happen. Do not fail to see the forest for the trees! Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Broker Associate/Realtor http://www.CarolineSellsTheCity.com
Absolutely Not, but if you want your offer to be considered you will want to provide a letter showing loan approval for the amount that you are offering and proof of funds sufficient to cover your down payment and closing costs.
Many sellers (especially on Bank owned homes) are also asking their potential buyers to 'cross qualify' with the sellers lender to confirm the buyers ability to get a loan.
Best of luck,
Scott Miller, Realty Associates, Boca Raton, FL