Skip to main content

Selling your home? Ask for a loan preapproval letter!

Ask anyone who’s been in real estate for a while they’ll tell you: “We spend a bunch of time working with you on selling your home, spend money to market the home, host open houses and show the home to prospective buyers, finally getting an offer in writing that everyone is happy with and putting the home under contract – only to discover the buyer can’t qualify for a mortgage.  That wastes and agent’s time, wastes your time and can cost valuable time that the home is off the market. We can protect your interests by asking for a pre-approval or at least a pre-qualification letter with any offer submitted on your home.  This minimizes the chance that we’ll be working with an unqualified buyer.   
 
Note that there is a difference between being pre-qualified and being pre-approved. Someone who is pre-qualified has not actually put in a formal loan application. The borrower has simply stated his or her assets and income to the lender, and they’ve probably pulled a credit bureau report. But at the pre-qualification stage, the lender usually hasn’t verified the information with any reliable third party.
 
If a buyer is pre-approved, it’s still not an ironclad guarantee that he will get a mortgage issued on a particular property. But it does generally mean that the lender has already looked at the buyer’s W-2 statements, tax returns, income statements, and bank and financial accounts.
From your perspective, a pre-approval letter is much stronger – but also much more elusive.
What do you need to see in a pre-qualification letter? At a minimum, you want to see these things nailed down:
  • Your buyer identified by name – whether a corporation or individual.
  • The loan amount they can qualify for.
  • A statement that the lender has determined that the buyer has the assets on hand to go through with the transaction.
  • An expiration date – say, 60 days from the date of the issuance of the letter.
That said, it’s nowhere near as strong as a pre-approval letter. When someone comes pre-approved, you know that individual has invested some time in the process. They have also put their own credibility on the line, and sworn under penalty of law that they have the assets they stated they have – and face jail time for mortgage fraud if they are caught lying, because now the bank has loan documents with their signature on them.
 
Once someone goes through that process, and only has a certain amount of time in the pre-approval window to buy a house, he or she is much more eager to close a deal – and less likely to waste your time or theirs with unproductive lowball offers.
 
As Realtors®, when we see offers with a pre-approval or at least a pre-qualification letter, we tend to advise clients to consider those offers over offers with no letters.  When it comes to considering a written offer from a buyer, don’t be shy about protecting your time by insisting on some sort of pre-qualification documentation.
 
Cheers and I hope to hear from you soon!
 
Jeff



Jeff Williams
REALTOR, RSPS
Resort & Second Home Markets Specialist
 
Hodnett Cooper Real Estate
520 Ocean Boulevard, St. Simons Island, GA 31522
Cell: (912)-270-0032

Comments

Post a Comment

Popular posts from this blog

Christmas Creek Entrance

UPDATE: 10-25-13 The Christmas Creek entrance this year is to the North of the creek mouth.  As you go South along Cumberland Beach you'll see the shoaling a few hundred yards East of the mouth of the creek.  Enter Christmas Creek between the shoaling and the beach as you go South.  As you enter the entrance between the shoals and the beach, look for your hard right turn to go directly into the creek mouth.  Best to try at least an hour after low tide for that area.  If you plan on coming out after high tide, best to be at the mouth no later than 4 1/2 hours after high tide unless your boat draws less than a foot like flats boats and Carolina Skifs.  I like to go in about an hour after low tide and fish through the rising tide and then make my way out.   I made this update because this Blog post is one of my top posts which I wouldn't have know when I originally wrote it. Christmas Creek has some of the best fishing around and if you are...
Post a Comment
Read more

How to catch Blue Crabs on St. Simons Island

I know I love to eat our local blue crabs and if you do too, then here is an excellent video from Capt. Mark Noble.  Mark has been a long time friend of mine and he grew up on St. Simons Island.  There are many ways to catch blue crabs and in this video Mark can show you how he does it.  You don't need a boat either - I've caught some beautiful stone crabs with a crab net right off one of the many docks that surround the area.  Many times, I'll hang a crab net off the back of my boat while I'm fishing and catch plenty.  So a crab net off the St. Simons Pier or one or two of the crab baskets in this video and you can have yourself a big time. Here's Mark's website - he is one of the top charter captains around so check him out if you'd like to take a Golden Isles fishing charter.  http://www.georgiafishing.net I shot the video and edited this for Mark and as my reward, he let me take the crabs home for a terrific family crab boil!   ...
Post a Comment
Read more

4th of July on St. Simons Island Georgia

It really has been a super busy July 4th week!  Of course there were fireworks on the 4th and we watched them from East Beach on St. Simons Island.  From our vantage point, you could see the fireworks on Jekyll Island, St. Simons Island AND Sea Island.  Three for the price of one!  The weather was perfect albeit a bit warm but sitting on the beach at night with fireworks going off was just a fun time.  St. Simons Island is always busy around the 4th of July and this year was no exception.  Visitors flocked to our island and hotels, condos and rental homes all seemed to be maxed out.  The weekend after the 4th was just as busy with the big event being the St. Simons Island Kids Fishing Rodeo.  This is an annual event hosted by Captain Billy Bice.  It is a very easy going children's fishing tournament where you catch a Redfish - Whiting - Bluefish (Red White and Blue).  Every child wins a prize and kids who catch all three of the...
1 comment
Read more