How would a seller determine if the buyer is a qualified buyer?

Asked by Victor Tarin, Miami, FL Mon Aug 12, 2013

Help the community by answering this question:

+ web reference
Web reference:

Answers

41
Tatiana Asai…, Agent, Hallandale, FL
Fri Jan 31, 2014
We recommend requiring a letter from a lender.
0 votes
Tim Elmes, Agent, Fort Lauderdale, FL
Fri Jan 31, 2014
You may require a pre-approval letter from a lender. If you have a realtor also, they qualify buyers. Best of luck!
Web Reference:  http://www.timelmes.com/
0 votes
Tim Elmes, Agent, Fort Lauderdale, FL
Fri Jan 31, 2014
You may require a pre-approval letter from a lender. If you have a realtor also, they qualify buyers. Best of luck!
Web Reference:  http://www.timelmes.com/
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Wed Jan 29, 2014
BTW- Ted Rood below gave good advice
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Wed Jan 29, 2014
-
-
TIP from a FL Mortgage Broker....If borrower is SELF EMPLOYED and not putting at least 25% to 30% down....MAJOR RED FLAG!...Why?....Because the fact are, 80% of them can't qualify for FHA or Conventional Fannie Mae loans.....They would need a STATED INCOME ALT loan program for FL

----- I can get them approved with as little as 10% down, but the likelihood of them finding a lender on their own is very slim!
0 votes
Ted Rood, Mortgage Broker Or Lender, Maryland Heights, MO
Wed Jan 29, 2014
Pre-approval is the operative word here. It can have a variety of definitions, but SHOULD mean the lender has pulled credit, examined income docs, and obtained an automated underwriting approval. I would advise any listing agent (or FSBO seller) to call the lender listed on the pre-approval and ask "did you examine their income and asset docs, and did you obtain an automated underwriting approval"? If the answer is NO, probably not worth the paper it's written on.
0 votes
Tammy Hayes, Agent, Port Charlotte, FL
Wed Jan 29, 2014
Have them provide you with a pre-approval letter from a lender.

•Prequalification: Prequalification is a preliminary estimate of how much you can afford to pay for a home based on information you provide. Because credit and employment information aren’t validated for prequalification, it can only be considered a rough idea of a monthly mortgage payment and loan size. This can be a useful guide as you begin the home buying process, however.


•Pre-approval: Pre-approval is a written commitment from a lender to finance your home purchase up to a set amount. This indicates that the lender has taken a close look into your financial history and has agreed to lend you a specific amount of money, reliant on certain details like a finalized sales contract and professional inspection. Pre-approval indicates to sellers that you are a serious homebuyer.

Tammy Hayes, Realtor
Re/Max Palm Realty
tammyhayesre@gmail.com
941-276-6185
http://www.tammyhayes.remaxagent.com/
0 votes
Samantha Ten…, Agent, Boca Raton, FL
Wed Jan 29, 2014
HI . The best way to find out if a buyer is qualified is to ask for pre approval letter or a d/u from the Loan officer . The more the buyer puts down the more solid of a buyer they are . If the buyer is a cash buyer . You would need to request proof of funds from the buyer . To make sure the funds are present . If you have any other questions . Feel Free to reach out to me .

Samantha Tenzer Friedman
Tenzer Realty Inc
Cell 786 314 6100
Email: SamanthaTenzer@yahoo.com
Website http://www.tenzersellshomes.com
0 votes
Scott Freerk…, , Truro, MA
Thu Jan 16, 2014
This thread is entertaining, but I did not see anyone provide what I feel is the best way a seller (or real estate agent) can tell if a buyer is qualified or not which would be an actual loan commitment.

As indicated by a few, pre-qualifications and pre-approvals are basically worthless. A loan commitment on the other hand is the result of a fully underwritten loan.

Usually most mortgage companies only issue loan commitments when a property has been identified and it is under contract, but there are a few that will issue them on TBD (to be determined) properties.
0 votes
Iceisit, , New River, AZ
Mon Sep 16, 2013
Also, if you are working with an agent they should call the minute they get an offer to the LENDING professional to be sure the deal is rock solid BEFORE you accept the offer.

I can't tell you the number of times I have gone to closing to hear the mortgage broker messed up and there are delays ... after a couple of those I very carefully interviewed mortgage brokers to find out what sort of "pre-qual" they were willing to do to save grief later on ... good luck
0 votes
Iceisit, , New River, AZ
Mon Sep 16, 2013
If you know someone who is a mortgage broker they can do the work for you, but unless the people have given a release, they cannot release the documents... without permission.

Standard docs you need:

2 years bank statement
2 years back tax reports or more if you want
pay stubs or proof of ability to pay (social security, stock dividends etc)
driving license
social security card
release to do credit check
and criminal background check
history of current or past mortgage payments (remaining balance on current home
and likely sale price if they need to sell a house).
Letters of references, etc.
0 votes
Bill Eckler, Agent, Venice, FL
Sun Aug 18, 2013
There are certain risks involved with any undertaking...some that are near impossible to anticipate. However, in this situation taking the position of requesting a proof of funds letter or pre-approval letter might shave away some of the doubt.

Best wishes,

Bill
0 votes
Gerry McLoug…, , Naples, FL
Thu Aug 15, 2013
Showings on condition of copy of preapproval being sent to listing agent, or copy of bank funds balance in advance. (Pre approved beats pre qualified)
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Thu Aug 15, 2013
-
-
MORTGAGE BROKER RESPONDING....

The Seller and Listing Agent are actually at the mercy as they really can't be sure the borrower is truly qualified.

As a Mortgage Broker, if I ask borrowers if they'd prefer to have their loan application Pre Processed, where they produce all the standard documentation for an actual loan processor to do a dry run, basically pre-underwriting the loan, I'd say approx. 70% to 75% will resist!

At least 80% of borrowers would much rather and do actually shop for a home, tour 10 to 60 homes over multiple weekends with a realtor, make multiple offers, finally obtain a contract....and THEN deal with that menial and trivial thing called the Mortgage Loan and supplying all the basic info required to obtain a loan.

Responses welcomed.....

==
0 votes
J, Agent, Greensboro, NC
Thu Aug 15, 2013
Hi Victor. Are you a new agent? Thanks.
0 votes
Terry McCarl…, Agent, Cape Coral, FL
Tue Aug 13, 2013
I was just getting ready to respond to this question when I realized it was posted by a real estate agent!!!??? This might make for a good subject in your blog.
0 votes
Irina Karan, Agent, Aventura, FL
Tue Aug 13, 2013
Hello Victor,

Great question!

What sellers want is a qualified buyer - we call it "ready and willing".
Why willing is important? Because people do change their minds...buyers do too.
It is much better when the buyer is in love with the property - if it is a principal residence purchase.
Or, if the buyer is an investor, the numbers work our well for the purchaser and there is enough time to do the due diligence and financing (if applicable) - that way the pace is normal and the buyer is not worried/afraid to loose his/her escrow money.
If the buyer is a short sale purchaser - the seller's dream buyer is the one who will wait till the very closing to close on the deal and won't walk out on it if it takes too long to get the answer from the bank. I could continue, but you get the point.

That's where letters to the seller help when buying a principal residence, especially when there are competing offers...just as an example.

Otherwise - 1) Pre-approval (not pre-qualification - pre-qual does not mean anything, just that the mortgage person and the buyer did talk 2) Proof of funds if cash 3) Escrow money in sufficient amount that is put into escrow at the time of offer or immediately after the offer is made

In addition, to many foreclosure lenders, a qualified buyer is the one who applied in timely manner,
according to the rigorous instructions, making the best and highest offer, and sometimes - a principal resident going through a special time period like First Look by Homepath, f.e.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
-
-
I say Maria Elena Ramirez Malca below posted one of the best responses so far

--
0 votes
Thank you, Steve
Flag Sat Aug 17, 2013
Yanoska Diaz, Agent, Miami, FL
Mon Aug 12, 2013
Having someone you trust qualified the Buyer. Often approvals or pre-approvals are merely based on information obtain from the Borrower and the documentation has not been verified. If the Buyer is a cash Buyer, there is nothing else but to review a recent bank statement showing sufficient available funds to close the transaction.
0 votes
Maria Elena…, Agent, Miami, FL
Mon Aug 12, 2013
The Seller's Realtor will surely make sure the pre-qual comes from a reputable mortgage broker.
Of late the pre-quals provided by most large banks are not worth the paper they are written one,
they just sign the pre-qual too quickly. But if the pre-qual comes from a reputable broker, the Realtor can make sure the credit has been run, that income has been verified and make a professional evaluation of buyer. When I have represented Buyers trying to acquire a property where it is to be expected that there are competing offers, I always suggest Buyer to provide also proof of funds to show there is enough money to close, as well as the credit score, mind you, not the report, just the score. Usually that suffices to give peace of mind to a Seller.
If the Buyer is buying cash, the Realtor will make sure that there is irrefutable proof of funds. Once the contract is executed, the Seller's Agent will request an escrow letter to make sure the deposit has cleared. That is one more sign that the Buyer is serious. If those two first conditions are met, Seller can expect to close.


Maria Elena Ramirez Malca
Sellstate God Realty
954-608-8726
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
And Iraq is an awesome vacation desination too in this alternate universe?

Well, in the world I do loans in down here in FL....things are not all peaches and cream like they seem to be in NY.

And its getting worse for self employed borrowers each day in FL.
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 12, 2013
To this day, I've never met a buyer who looks at the 60 disclosures and says "you know what? This is too many disclosures for me. I'll pass on buying a house or refinancing" I also never met a Loan Officer who said "I'm no longer doing loans because of all of 60 pages my clients can e-sign in about 10 minutes. I prefer to go into another business and leave all these loans behind". Just saying, I've never seen it! Maybe in Floriday but not here in NY. If it's 30, or 40 or 100 pages of disclosures, the fact is, if you don't have the cash to buy a home, you will sign those disclosures!
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 12, 2013
I understand how you feel, I just disagree. I do loans all the time, and I don't need any of my clients to go through the loan process or a stack of disclosures to know if that deal is going to happen or not. I can review a borrower's credit report, income and asset documents and a short interview with them, and I know all I need to know as far as the buyer's ability to qualify. Disclosures and the loan process in general is just part of what mortgages is these days. Without some of these regulations, some borrowers would still borrow at subprime rates which would be higher, we would be doing stated loans, and pretty much getting ourselves back into the same whole everyone has been in the past several years. I personally like the way things are, you don't hear of the madness that used to happen, less opportunity for fraud, better rates for clients, and yes we as Loan Officers make less, but we make it up in volume. It's just a better environment in my opinion. I don't know any Loan Officers who let a few additional signatures stop them. Still close in 30 days and everything goes smooth.
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
-
-
I tell it like it is!

Read this below article from Forbes Magazine. And since this was written, it’s even actually gotten worse than this article tries to convey to borrowers

http://www.forbes.com/sites/moneybuilder/2012/03/09/the-perf…

---
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
-
-
Again, those who are not in the mortgage industry seem to be so knowledgeable, but the facts are, they have no earthly idea as to the horrendous and ridiculous over regulations we deal with just trying to get a loan submitted into U/W!

The question was..."How would a seller determine if the buyer is a qualified buyer?"

The fact is, they can't really know these days without waiting for the buyer to actually go thru the loan process. And about the 40 to 60 pages of disclosures? Heck yes! And then the lenders they send out even more!

My gosh, Bank of Internet (an awesome Lender I might add) sends out ........113 PAGES IN THEIR INITIAL DISCLOSURE PKG! One Hundred and Thirteen Pages and growing!!! Why? Because of this CRUSHING over-regulation this administration has crippled the mortgage industry with!

Question: Why is it that thousands of people in the Mortgage Industry have become realtors, but few (IF ANY) have become Mortgage Brokers?

So you like more Regulations? Well come Jan 14th 2014 a whole new round of further implementation of the DODD FRANK ACT is going to arrive like the DEATH STAR on the movie Star Wars! Its predicted to cause millions to be locked out of being able to purchase or refi real estate and/or prevent them from purchasing the home they can afford, but the Government will tell them no!

"Yes We Can" seems to be turning into "No You Can't" as we watch it unfold!

----
0 votes
Sharon Jannu…, Agent, Schaumburg, IL
Mon Aug 12, 2013
Determining how qualified a buyer is depends a lot on the selling agent doing the research on the pre-approval letter that should accompany all offers on the home.
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 12, 2013
Again, how is 60 pages of disclosures linked to the credibility of a pre-approval? You're going into an entirely different topic. The question is "how would a seller determine if the buyer is a qualified buyer?" And you're bringing up disclosures, Realtors driving lenders crazy, etc.

I would like to say this, I think if more Loan Officers have Realtors in general a little more credit, things would function much better. I know plenty of Realtors who have a very good understanding of what happens in our end as Loan Officers. When a Loan Officer takes the approach of not informing a Realtor of roadblocks or any sort of issues that come along with every loan, this is exactly what creates the headaches. There has to be communication along with Loan Officers educating their referral partners of what and how things are about in the mortgage side of things. This will allow them to have a better understanding and bring you to a point where you can work as a team.

In my opinion some of this regulation has done out business good. It has resulted in better terms and rates for borrowers, transparency and more of a universal way of doing things as oppose to the chop shop style many mortgage firms did things before.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
Mortgage Broker Responding ...

Again what I posted below are the facts.

Unfortunanty realtors very rarely know what's really going on with a loan while its in processing because if they were kept informed of every road block or issue discovered during the process they would drive lenders insane with an avelanche of calls and emails asking a million questions causing extra issues, doubt and discontent between lender and borrower.

Its like trying to do open heart surgery during a CAT5 hurricane with someone jumping up and down screaming and yelling and pushing you to hurry up!

Unless you have been a loan originator, loan processor or loan rep for a lender over the past 6 years you truly DO NOT understand the terrible effects of this massive Over regulation and its comical to hear those who are not in the mortgage industy try to seem as if they even know how things are now.

Imagine listening to a someone in Junior ROTC talk about how bad the day to day combat was along the DMZ in Viet Nam in 1972!

--
0 votes
Annette Law…, Agent, Palm Harbor, FL
Mon Aug 12, 2013
A seller CAN NOT, a professional can. The key parties involved WILL NOT and SHOULD NOT engage a citizen in conversation regarding another citizens buyer qualifications under any conditions....even with a signed release!
-
Here are the troubling aspects to which Stever refers but spent little energy exposing. THEY ARE realted to lending changes since 2008. Be aware, this is REALLY IMPORTANT...it is NOT THE QUALIFICATIONS of the buyer that will sink the deal but the trustworthiness of the lender involved.
If it's Bank of American, Chase, Wells Fargo or Never Ever Bank of Clearwater FL, the probability of spending a lot of money and being left at the alter is much, much, much greater. A qualified buyer WILL and CAN go with a local lender with a history of closing on time and under budget without the histeria.
-
Why are the top 14 banks earned the reputation of being treacherous?
#1. They ALL intend to resell the mortgage. The appraisal process is about reselling the mortgage, NOT THE VALUE OF THE HOUSE!
-
#2. They are required to comply with two additional federal buracracies that is not a high priority for local lenders. When complience is questionable, the mortage is rejected (for other reasons) without disclosing the real issue.
-
#3. The underwriters for the top 14 do not comply with their own published underwrtiing manuals.

In summary,,,,a seller should take comfort in kicking any offer financed by the biggies to the curb and suggest to the buyer.."BUY LOCAL!" The buyer's agent should have know better.

-
Therer are six other indicators to identifying a qualified buyer. Again, for the use of professinoals, not the homeowner, DIYer, or investor.
0 votes
Thomas Moser, Agent, East Northport, NY
Mon Aug 12, 2013
The very best way is to have the buyer present a pre-approval from a mortgage lender.
0 votes
Jean belizai…, Home Buyer, Miami, FL
Mon Aug 12, 2013
I think prove of Credit Report and Score is needed.
I already pulled my Credit Report and Score.
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 12, 2013
Totally disagree with Steve's response. Regulation or a stack of disclosures have absolutely nothing to do with the credibility of a pre-approval. Many Realtors couldn't trust pre-approvals before anyone even heard of Obama, an if you speak to most Realtors, at least in NY, they'd tell you that over the past couple of years, Loan Officers and lenders have become more reliable and trust worthy. Just my opinion. Fact is a pre-approval was worth much less in 2006 than what it's worth today.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
Leonardo da…, Agent, Doral, FL
Mon Aug 12, 2013
Dear Victor: as everything else in life, it is all relative. Sellers have a lot of different factors when determining what a "qualified" buyer is or not. Firstly, it will vary from Seller to Seller, in general terms. What I can tell you, is what I, as an experienced Real Estate Broker, observed happening with more frequency, whenever I had a situation of a Seller making that determination. Therefore, there are a few very frequent "trends" I saw happening, whenever a Seller was determining whether a buyer was "qualified" or not. For example, if a Seller has a property located in an area with excellent schools, excellent infra-structure, many parks, many amenities, many golf courses, with a decent traffic level (except rush hours of course), lots o community events, like, let us say, Doral. This becomes a sought after area. A Seller in Doral, with a property located in certain preferred condominiums/ areas, property priced at market price or even about 10 % above market price, have a major preference for cash buyers, period. Sellers in the same area, or a similar area, who price their property way above market price, usually have a tendency to "sit" on it for longer time, to have a lower flow of buyers coming to see it and showing interest on it. Consequently , they seem to be a little more accommodating, and tend to accept cash or pre- approved buyers, meaning buyers who have already gone to a Bank/ Lender, presented all the necessary paperwork, got vetted by that Bank/ Lender, and have received a pre- approval for a loan under that Bank/ Lender's standards, conditions and terms. Basically, what the Buyer needs to do is to find a property, and provide that property is under the value approved and within the terms pre- approved, a deal/ Closing is easily reached. The last level of interest we observe in Sellers in general, is for "pre-qualified" buyers, the ones that come up with a Bank/ Lender letter showing that based on a preliminary basic evaluation, the Bank/ Lender is pre-qualifying that Buyer, to a formal and more thorough Mortgage application, so that they can be approved for a Mortgage. Of course I am not a Mortgage Broker, or an specialist in Mortgages, but certainly that is what I can tell you about my observations as a Realtor dealing with Sellers and Buyers. Summarizing: cash is the absolute preference I observe. Pre- approved buyers, might run a chance depending on pricing and interest on a property, and pre- qualifications , I observe a lesser chance with Sellers. Buyers with none of the above, will have a hard time in this case.
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Mon Aug 12, 2013
-
-
MORTGAGE BROKER RESPONDING... and everyone in the mortgage industry knows I'm telling the truth below....

Pre-qual letters and pre-approval letters are basically worthless when it comes down to it as they are only as good as the info a borrower puts on their application and is entered electronically to get the what's called "DU, DO or LP" findings.

The issue is, due to all the new Crippling Over -regulations lenders don't want to or can't take a loan file in and have U/Ws review it without a sales contract and the loan being fully disclosed (about 40 to 60 pages of disclosures) so that they are in compliance.

So.....here is the issue, due to Obama's Over-Regulation, basically lenders expect the borrower to search for weeks or months with a realtor to get a contract, then have the loan fully disclosed.....and only then will the borrower find out after a few weeks if they actually can get a loan funded.

----
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 12, 2013
Most buyers are financing, so I would say it's important for the listing agent to call the Loan Officer on the buyer's pre-approval letter and ask what the credit scores are, debt-to-income ratio, downpayment and reserves amount, etc. most of this info the Loan Officer must get a verbal authorization from the borrower for, but it's a good way to get a feel for the details of a borrower's loan and also a way to get a feel for the Loan Officer. Another way, not the most popular but certainly the most efficient, is to deman that the buyer is pre-approved with a lender that the listing agent trusts. Make it clear that you're not looking for the borrower to obtain their mortgage from your lender but simply for them to be pre-approve by them to make sure the seller isn't tied up in a transaction that will never close. I've often been asked by Realtors to pre-approve a buyer just to see if it's a good deal or not, I wouldn't even pull credit as long as they are able to have their current Loan Officer email a copy of their report. Social security #s can be blacked out along with bank account #s, and this gives a Loan Officer enough to determine if they really pre-approve or not.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
Alan Drecksl…, , Miami, FL
Mon Aug 12, 2013
Each seller in today's market requires that the buyer provide a pre-qualification letter from a lending institution. This will let you know how much house you can afford and how much down payment is required. This will help you prior to looking at any property, so you know what you can afford and can focus in on specific properties within your price range. It should not take long for you to get a pre-qualification letter from a mortgage lender. Should you have any further questions, please let me know. Thanks Alan Drecksler Rose Realty & Associates, Inc. 305-984-5300
0 votes
Lila Henry, Agent, South Miami, FL
Mon Aug 12, 2013
Good Morning Mr. Tarin,

A pre-approval letter that indicates that the buyer's credit and assets have been verified would be the best. The additional approval a buyer can provide is one that is referred to as a Desk Top Underwritten approval, which is a strong an approval as you can get, meaning the buyer has been fully approved, all they need to do is find a property that meets their search requirements. The stronger a buyer's offer can be the better the chances in having your offer accepted , especially these days where many properties are in a multiple offer situation. Good luck with your home search.
0 votes
Meg Sahdala, Agent, Coral Gables, FL
Mon Aug 12, 2013
If it's a cash transaction, seller needs a proof of funds from the buyer's financial institution.
If this is a financed transaction, the preapproval letter with DU findings is needed.
0 votes
Luis Guevara, Agent, Miami, FL
Mon Aug 12, 2013
Be sure to ask if its a cash buyer, a bank statement for proof of funds.
0 votes
Ismael Gonza…, Agent, Aventura, FL
Mon Aug 12, 2013
Victor: The best way to see if a buyer is qualified to purchase a home is to require a pre-approval letter from the buyer's lender. This pre-approval may be included at the time the contract is presented to you. I also recommend avoiding very long finance contingencies in the contract. Additionally, must contracts will require that the buyer use "good faith" in the loan process, with that said the buyer should keep you updated as their loan process.
0 votes
Manon Mohamm…, Agent, Coral Gables, FL
Mon Aug 12, 2013
The seller would ask for a pre-approval letter from a reputable mortgage broker or lender. Not a pre-qualification letter but a pre-approval letter. I advise my sellers not to accept any offer without this letter.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more