There are many 'angles' to look at the request to have a pre-approval letter.
- When you submit an offer to any REO listing, you must attach proof of funds.
- Good deals are under contract fast - before you are able to get your pre-approval letter.
- Asking for a 'tour' of foreclosed homes without to convince the agent that you can qualify to buy, or you have the funds - could be a stretch for many agents, and they are going to work with people that are ready and able to buy instead of someone that will just look at foreclosures.
- If you ask to see a listing of mine: I will show it to you, but I will not give you a tour of multiple listings from other agents or show to you that distant listing without proof that you can buy it.

As a piece of advice: you should be able to provide a pre-approval letter within an hour.This means that you already had the application filled with the lender, and you know exactly how much you can borrow.

JR

I do not think it is Wrong for an Agent to ask for a Pre-Approval....

I also do not think it is Wrong for a Consumer to consider that request when talking with an Agent and decide to choose an Agent that does not require Require a Pre-Approval to work with..Just as they consider Commission, other services ect...

I am merely stating that it is not a REQUIREMENT that a Consumer be Pre-Approved before an Agent shows them a property..

It may be the PREFERENCE of some Agents and just as you pointed out "Welll TP, we are all independent contractors and each agent runs their business in the way they prefer." they can decide to work with no one who does not get a Pre-Approval just as Consumers can decide not to work with an Agent that requires one.

Agents decide they will not work for less than or show properties to those who do not (Which is fine with me) and Consumers decide who they choose to work with

Thank-you Tp it is very appreciated..............

Dunes, do you think it is wrong for an agent to ask for a preapproval?

Tp

It's really all pretty simple..Some Agents say Pre-Approval required and some do not....

As a Consumer you only have to ask when you contact them and can move on to an Agent you are more comfortable with..
The comments so far suggest to me that the Required Pre-Approval seems to be something some Agents feel a need to use and that is OK but I am sure there are Agents who do not...
There are a lot of Agents, find one who doesn't require a Pre-Approval to be shown properties, that's your right as a consumer, find an Agent that's right for YOU...

Good luck, Dunes

Welll TP, we are all independent contractors and each agent runs their business in the way they prefer. Just think, you now have gotten your preapproval out of the way, and are in a position where you can put in an offer and move quickly. I recently lost a sale, we had an accepted offer and in the 3 days it took to get approval before we could get into contract (NO attorney will allow their client to enter into a contract without that preapproval) someone else came along and popped a higher number and they lost.

. While I can understand the Realtors point of a view in not wanting to show homes to people who just want a tour. I find that in this market those same realtors would take a chance on showing those homes rather than losing out on potential clients or future clients. I can't believe that people would drive around from house to house to look at homes in this ecomony ; and with these gas prices just for fun. But what do I know maybe there are still people out there that do this kind of thing.
I am however, speaking only from my perspective; being that back in May my husband and I found a home that we were interested in and were told by the listing agent that we needed to have a preapproval letter just to see it. The house was an hour and 1/2 drive from were we lived. We got the preapproval letter only to find out that the house had major water damage inside that had not been disclosed in the listing. The damage was something we could not overlook and so we passed on the house. At that time we were upset to have ran our credit simply to take a tour of a home that we ended up not purchasing. Now here we are again still looking, we find a house that we like and are again told by a listing agent that we need to have a preapproval letter to view the home. After thinking about it I decided to call another realtor to show us the home, and get this they did not ask us to provide a letter. So I will be seeing the home this week, and if we decide to get it, the listing agent will have to split the commission that could have been the realtor's alone had he/she taken us to see the home. Again, i can understand the realtors perspective, but that really is the nature of the beast (that one may have to show 200 homes before getting an offer) I know that realtor's don't want to waste their time, however I am positive that their clients (the bank or other home owners expect and anticipate that the realtors will be diligent in showing these properties to ALL perspective homebuyers not just the ones with preapproval letters in hand.

As for hiring a buyers agent; I would prefer not to go that route for many reasons.

Hopefully we are all able to appreciate each others point of view.

Few reasons:

a) Some bank won't accept certain type of loans THEREFORE lender approval letter might eliminate properties .
b) I receive close to 200 calls a month can you imagine if I or my team members ran out door everytime a person called wanting to look at properties DO YOU REALIZE how many people CAN'T qualify for a loan.
c) An agent who request a lender statement is a seasoned agent those who you want to work with than an agent unseasoned most likely could run out door show properties.
d) We have same practice in my office "show letter " we show you properties represent you

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

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Tp

Right or wrong.......when dealing with "foreclosed" property, lenders will normally require all offers to be accompanied by a letter of pre-approval for funding. Banks will do this in an effort to identify the serious buyers and and insure that the lack of funding does not stand in the way of completing the transaction....and so do agent.

Tp this is something the Realtor® has hatched to weed out those that are not serious about buying. You need to look at it from the perspective of the Realtor®. Someone calls out of the blue and wants to look at forclosed properties. Is this Realtor® who makes no money going to invest time, effort, and money into looking at homes that you may never be able to purchase.
If you are serious you need to get a preapproval letter and be ready to write an offer. By the way current clients of mine have decided to go the cash purchase route. While waitng for the equity line to be approved on their primary home three target properties went pending.
These are solid buyers and I know that they have the reserves but they must be able to the lender proof of funds.
I have another family that I am working with where the son would qualify for double the purchase price that they are looking at. They want to get the loan in the fathers name to help his credit and the father needed to do some credit repair. The father needed about 30 days for a challenge to the credit reporting companies to take effect. The "perfect" home went pending while we were waiting.
Can you imagine what the Realtor® and you would feel if the property that you selected went pending while you were trying to get a preapproval letter?
When you are prepared to purchase a property including having a preapproval letter so that you can act on it you will find many Realtors® willing to work with you.

All foreclosures I have shown have required offers to be submitted with preapprovals. In my opinion, every agent should have a preapproval letter on file for every buyer they take out. My last two buyers did not have preapprovals in place. The first lost a home that they had an accepted offer on. While they were getting their proof of funds, another buyer offered more. The second found out they could not borrow as much as they thought. FYI the selling prices were 500,000 on the first and 80,000 on the second. So it has nothing to do with the price of a home and all to do with being ready willing and ABLE to buy. And able to prove you can buy. No attorney will let their seller client sign without proof of funds. As of these two occurances, I will not be showing homes unless I have a buyer's preapproval.

Hi TP
In this market today alot of the good foreclosed properties you are looking for probably don't stay on the market too long. It would only be in your best interest to have spoken to a mortgage person, see where you are with financing and how much house you can afford as well as make sure you can cover the closing cost before you begin looking at properties. It is not about someone insulting you when they ask for a pre-approval letter as a matter of fact you might need more then just a pre approval letter. But you need to be ready to purchase if you see something you like or it will be gone. Recently the last 3 foreclosed properties I put offers in on had more then one offer. There is no time to wait for a buyer to get qualified at that time and if you are working with an agent that has your best interest, they will make sure you have your financing in place to buy no matter if the house is $100 or $1 million.

Good luck!
Pam Bava, e-Pro, Realtor

TP, in my opinion you should have a proof of funds letter or a bank pre-approval before you begin to look at any real estate, bank owned or otherwise. Why would it be in your best interest to look at homes you are not qualified to purchase? Sometimes consumers mix up their real estate professional with a tour guide so it is up to the agent to be the professional and treat the process of looking at homes as such. But to answer your question bank owned homes in my area require a proof of funds letter or pre-approval letter to accompany all offers regardless of price.

Tp ... all offers submitted do require pre-approval letters. As for just showing a home, I find it good practice to only spend time on those individuals who truly want to buy and not just "tour the home" for fun. As Maureen mentioned we earn our living ONLY when everyone signs on the dotted line. I wouldn't be able to service my serious buyers or sellers if I was spending all my time driving uninterested buyers to tour homes all day long. I find it insulting that someone would expect me to show them a home when they had no real intentions of buying a home in the near future. A lot of people also think they can get pre-approved for a loan only to find out after they and the Realtor have seen 15-20 homes do not qualify for a loan. Or learn their credit is worse than they thought. Why would a buyer want to waste their time as well?

Hopefully this helps put things into perspective.

Sincerely,
Lisa Bender

That is correct, it is not the Realtors who is requesting preapproval, it's a banks requirement. Since Bank is the owner, they have they own rules. They need to know if buyer is qualified, (to weed out those that aren't going to buy)., or those who are not qualify. And no reason to show propertie to buyer who is not going to cooperate when time come to make an offer. From my experience, they asking for prequal in Florida on properties that are less than 30,000., price does not realy matter. But Florida Law is different from law in other states.
Thank you
Margo

I doubt the bank would require that. They probably don't care.

The agents might be tired of going to show houses that people cannot buy. I can only guess that is the case. Afterall, the agent only gets paid when a house sells, not for showing it, and if the buyer can't afford to buy the home then there is not much point in spending time looking at it.

Personally, I have never seen pre-approval requirements on anything other than homes priced over a million dollars in my market, and even then they are rare.

If you have a buyer's agent, they should show you whatever you want to see. They will advocate for you. There are a number of pitfalls that come with foreclosed homes, so you will benefit from a buyer's agent's experience and knowledge.

Best of luck!