Would you be insulted if

[Franny]

As a buyer would you be insulted if you were required to submit a pre approved letter from your bank when submitting an offer/contract on a multi-million dollar home?

[John R]

not really, i'd want to come prepared, and have the seller know that i'm serious.


jr

[SHELLY]

As a buyer would you be insulted if you were required to submit a pre approved letter from your bank when submitting an offer/contract on a multi-million dollar home?

If the buyer is serious about the home and has nothing to hide, I don't see why it would be problem.

[Franny]

Thank you both for the input.

[Donna]

No qualified person should be insulted. That is what pre-qualifying a buyer amounts to and any seller is more inclined towards an offer that has been pre-qualified. Good luck.

[Mermaid]

No qualified person should be insulted. That is what pre-qualifying a buyer amounts to and any seller is more inclined towards an offer that has been pre-qualified. Good luck.

That is what I've always gone by, too. If you are pre-qualified for a mortgage before you even start with negotiations, you are working from a point of strength.

Very eye-catching title for this post! :clap_1:

[Bob]

Bankrate.com had an interesting article on this. The prequal letter is great to have, but may be more worthless than the paper it's written on depending on the source.

[Garner]

My first broker taught me that if a buyer states that "money is no object", that literally, money is probably not an object that they posess. I think the same logic could easily apply here.
However, there is a different side to it - because pre-qual and pre-approval letters have specific dollar amounts stated, a buyer might be hesitant to show their cards, i.e. inform the seller that they can afford 1.25X when the offer is X. If that's the case, then the buyer should be willing to produce the name and phone number of his banker, who would (with the buyer's permission) be able to verify that the buyer is qualified.

[Donna]

This knife cuts both ways. A seller might also realize the true ceiling of their buyer's purchasing power and be more inclined to a compromise on price...i.e., can't get blood from a turnip. This assumes there are no other offers. Keep in mind that just because a buyer could qualify for more doesn't mean they're going to pay more. The jeep can stop pretty quickly and get thrown into reverse when one's upset point is exceeded.

[Garner]

Keep in mind that just because a buyer could qualify for more doesn't mean they're going to pay more.

You're absolutely right about that, but generally the pre-qual letters have the property address on them, and when working with a buyer, you don't want the seller aware of the buyer's top price.

[Smiling JOe]

You're absolutely right about that, but generally the pre-qual letters have the property address on them, and when working with a buyer, you don't want the seller aware of the buyer's top price.

I think Donna said it well. Just because the buyer can qualify for x amount doesn't mean they are willing to pay x amount for a particular property. As a buyer, I may qualify for a substantial loan, but that doesn't mean that I can afford it.

Typically, I pre-qualify my buyers before presenting an offer. I can have them pre-qualify within 15 minutes after a two minute phone call. Most buyers are more than willing to show that they are serious, and I question the ones who are not so willing. I like to present strong offers and pre-qual letters do help, however, they are, as someone mentioned here, not quite as good as the paper upon which they are written. Even pre-approval letters are not set in stone. A buyer can have other things change in their financial life within the typical 30-40 day close, and thereby not get the loan. Also, if a property doesn't appraise, the bank is not giving the loan on the agreed sale price, thereby releasing the buyer from the contract in many instances (depends on the number of days to obtain financing, written in the contract).

Franny, I know that you know the above info, but I am sharing with those who may not. ;-)

[Franny]

Good points. Thanks for all the great information and insight. We had an incident last year where a buyer brought a very strong contract and had the means to purchase according to the mortgagge broker but did not like paying their bills and would never qualify. This cost us a good month and a lot of frustration so now you know... the rest of the story!

[Cork On the Ocean]

Franny, I'm guessing that you didn't have a pre-qual from that buyer and think that the situation might have been different if they did but the reality is they probably would have presented one and still busted. As Joe and Bob said, pre-quals don't mean a lot. My ex-hubby is a good friend and a mtg broker and I place virtually no value in pre-qual letters. It's liars poker at that point, nothing is confirmed except perhaps the FICO. When it's time to cough up the documentation and right up to the clear to close, they can bust.

Requiring one shouldn't be a problem if you want one with a contract because if the person is serious they'll produce it. $10K EMD however, also shows they're serious. But when people want a pre-qual to show the house, I think that's unwise and significantly decreases the property's exposure.

[Franny]

That is very true Cork and I agree with the EMD statement but if they do not qualify they get it back anyway. And I strongly agree that showing a property should not require a pre-qua letter..that would be a big turn off!

[SHELLY]

And I strongly agree that showing a property should not require a pre-qua letter..that would be a big turn off!

....But it certainly keeps the Lookie-Lou's from soiling the "Welcome" mat.

[Franny]

....But it certainly keeps the Lookie-Lou's from soiling the "Welcome" mat.
Hey the more the merrier. Those lookie-lou's could be a future buyer!