ALSO, I would like to say, make sure you clarify that you want a PRE-APPROVAL not just a PRE-QUALIFICATION. Anyone can get pre-qualified but until that lender actually looks at their proof of income, their debt and credit, they really haven't done anything for that buyer.
Thanks for giving us all the opportunity to answer your question. I hope it has not just overwhelmed you.
Good Luck and God Speed in your process.
If you are about to become a Seller, I am sure you will want your agent to request one.
1) As a homeowner, if my home were listed for sale, I would only want people viewing my home that were financially qualified to purchase a home in the amount my home is marketed for or above.
2) If a buyer presents their prequalification letter with their offer to be submitted to the seller, the seller is going to weigh their offer more heavily than an offer submitted without proof of financing.
3) If a buyer gets prequalified they will then know how much home they can afford and what their comfort zone is for their mortgage payments...meaning they will know if they want to spend up to the maximum they are qualified for or smartly look in a less expensive amount. I advice all of my buyers, do not marry your mortgage note...a buyer still needs to be able to have a financial life outside of the monthly mortgage payment.
4) It is a personal thing for me. This is a business, my business and time is money and showing properties is how an agent gets paid...this is our job, how we support our family. We are not tour guides for a Sunday afternoon episode. There are too many advertised open houses an unqualified buyer can visit without an agent. We are licensed professionals and deserve the respect of prospects being honest with us. If a buyer geniunely has an interest in purchasing a home, they will ask what do they need to do including financial prequalification and they will go do obtain it.
Financial prequalification is in the best interest of all parties. Besides, to perform my job well, I need to know what my buyer is qualified for. It would be frustrating to a buyer to be taken to a home well outside of their purchasing range. It would be a waste of their time and the seller's trust.
Lots of great responses here. Clearly, pre-approval is overwhelmingly beneficial.
1. Your offer to purchase is supported with proof of your ability to pay at the price point you offered when a pre-approval accompanies your purchase offer. A seller can accept your offer quickly.
2. If they wait for you to obtain a pre-approval, (did not sign offer) after you have submitted the offer, the seller can troll for a better offer. The list of others who have expressed interest will be called. Don't give them time to do this by not having a pre-approval.
3. Real estate agents representing buyers know the price point of properties which to show you.
4. Sellers really have an expectation their home will be shown to buyers qualified to purchase their home.
5. Most sellers are wise to not accept (sign) any purchase offer until the buyers ability to pay has been confirmed.
6. Yes, a seller can stipulate financing must be secured within x days or simply state offer without pre-approval will not be considered. I advise sellers to wait for approval letter and I advise agents representing buyers to submit purchase offer with pre-approval. There are other ramifications to a seller to pull the home off the market only to find the buyer can not obtain financing.
By failing to provide pre-approval you are injecting elements of uncertainty that are not favorable to you and can be easily avoided.
Hopefully you can see the overwhelming benefits of obtaining a pre-approval and submitting it at the time you submit a purchase offer. Your agent will be able to protect your interests in the proper use of the pre-approval. Don't reveal all your cards!
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
You were fortunate they signed the contract without having that first.
The Seller is trying to work with you.
Best of Luck,
Faizur Rahman, Ph.D.
Broker (Realtor) /Loan Officer (NMLS ID: 351183)
2070 W Spring Creek Pkwy, Suite #314, Plano, TX, 75023
Phone: (469) 766-4015, Fax: (214) 764-4047
7+ Years of Real Estate & Mortgage Lending.
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Could be your first letter had a specific address or price on it.
Maybe your realtor wanted to better your offer by having the correct info on the letter.
It would be nice for you to be involved in the process, but maybe your realtor thought
they were saving you time by going directly to the lender.
I supposed they could have called you and had you call the lender to get a new letter.
The seller never even has to accept your offer without a preapproval. Some will...some won't.
It doesn't prove anything other than that you have met or talked with a loan officer and
they are comfortable writing a letter on your behalf.
Sounds like there is a bigger issue...What is that?
It doesn't accomplish much to submit it after the contract's been signed.
The one scenario I can think of where it might make sense is for the seller to have required submission within x days of signing the contract. Maybe, for instance, the buyer didn't have it in hand yet and the seller was willing to give the buyer a few extra days to get it--and the seller made submission of the pre-approval letter a requirement of the contract. In that case, it could be submitted after. And, yes: If the seller required it and the buyer doesn't provide it, then the seller could cancel the contract.
Check with your Realtor to find out if that's the case, or why the request is being made now.
Hope that helps.
However, if I read your question correctly, it appears that you have a signed contract but have not provided the letter. The seller can't make you provide it - you haven't agreed to do so in your contract. However, in order to encourage parties on both sides to continue to "play nice", why not provide the letter? If you are serious about purchasing their home, giving them the letter should not be any big deal.
No, the seller can't back out for this reason. Your benefit in providing the letter is to keep the transaction moving along smoothly - and not cause the seller to feel like you are just kind of playing a game with them just to "see" if you can buy their home. Give them the letter - everybody wins.
BEST OF LUCK.
If done correctly, a Pre-Approval letter will outline a buyer's buying ability buy confirming that the lender has reviewed credit, debts, income & assets. The lender has determined what the buyer's price range, loan program(s) and down payment required.
Can the seller back out if not provided? Just depends if that was a contingency written into the contract or not. Has the contract been receipted?
Normally the listing agent asks for the pre-approval letter when you offer is presented to the seller but nothing says it could not be done after. If at some point before you close you want a change to the contract because of needed repairs, price adjustment due to low appraisal, or maybe an extension of time; you will want the seller to feel good about your ability to close.
Communication is a very important part of any transaction. If there is not anything in your letter that would show a problem with your ability to close then share the letter.
Best of luck on purchasing the home ... Bruce