DISCLAIMER: answer is based on YOUR information posted.
If the other offer DOES NOT HAVE LENDER APPROVAL letter most likely declined till buyer can submit qualifications letter purchase. We receive offers all day however buyers agent has not qualified their client, we decline those offers instructions to buyers agent provide proof of funding.
EXPRESSION: "show me the money"
Good luck great question.
~ National Featured Realtor and Consultant, Lecturer regarding Credit Repair, Mortgage Loan Officer
How exciting for you - and stressful!
Take deep breaths!
Certainly by having a pre- approval letter you are showing a stronger ability to buy than the other offer. I am amazed that any listing agent would even entertain an offer without a pre -approval letter (although, I must say, many of them aren't worth the paper they are written on - but that's for another dicussion). In this unstable economy, how qualified the buyer is becomes one of the most important issues - almost trumping the actual offer! (ok, I said almost!)
It seems, from what you said, that your offer is being given very serious consideration, so that's good news!
In my area, when there are multiple offers, if the terms are similar, we usually give both parties an opportunity to come back with their "highest and best" offer before making a final decision. Discuss with your spouse what your next move might be, if that's the case, so that you will be ready to respond.
Good luck to you - I hope you get it.
Let us know!