Everyone seems to be upset by what I said but it is simply the truth. There is no need for "pre-approval", "pre-qualification" or anything else when the customer is paying with cash.
QUESTION: Suppose his credit was horrible, he could not get approved for the mortgage, but he still had the cash? What then?
ANSWER: He would have been denied the sale although he could make the purchase.
WHY?: I'll let the real pros answer this one because what I said wasn't good enough.
But I do know this:
1. Credit is not cash. Having a credit score of 790 does not mean you have cash money on hand.
2. Verification and Release forms have been used in business transactions for as long as I can remember. I've made large purchases from India for my retail business and all funds were verified before hand and my credit was never an issue. In fact, it never even came up. It is no problem to have the funds verified and secured before the transaction is completed.
What you guys seem to have missed is the part about the guy paying with "cash". Cash means "I have the money to buy it without the NEED OF CREDIT or MORTGAGES". He did not say that they wanted "proof of funds", they wanted a "pre-approved mortgage". Thats a big difference, and if I am the only one here that can see the true reason why they do this then so be it.
And J.R., what "qualification" does one need when they have the cash in hand? And what "word" can be verified by a "pre-approved mortgage"? I say again, suppose his credit was horrible and he still had the cash? What then? He would have been denied the sale although he could make the purchase.
To Sylvia, first of all nothing I said about percentages was in "theory", what I said is what my clients experience because the homes I sell are always a lot cheaper. If you were not familiar with this REALITY you should not have commented on it and it is "relevant" as an EXAMPLE of how they attempt to deny certain transactions; (2) You've taken all of my words completely out of context, most likely because you don't know what I know or you don't understand; And (3) I'm the naive one because I believe that people are basically smart and intelligent. And to trust corporations and assume that their business practices are honorable, with good intent, is not smart nor intelligent. You cannot read what I said with an open mind and not see the truth in what I said. They did this for a reason and it had nothing to do with any of the reasons you guys have given.
But I know what the problem is here, you guys are stuck on "loans". You are stuck on credit. Steveandjoan did not mention a loan, he said that he had cash. Therefore, every counter-argument that mentions "loans", "means", "qualification", "approval", and any other term other than CASH is without merits.
Steveandjoan, the reason I gave below is the truth. Email me if you have any other questions.