Pre-Qualification Letters vs. Pre-Approval Letters

BIG Difference. In fact, if you're looking to buy a foreclosure property at a great price, you better have cash or a rock solid Pre-Approval letter. Some banks and lenders are dumping foreclosure properties at great prices. They do this to meet deadlines or when they simply must reduce inventory. But either way, they want to make sure they are accepting a solid offer that will close. In fact, you want a REAL Pre-Approval letter for any house you are buying, and if you are a seller, you ONLY want REA Pre-Approval letters.

The last thing these sellers want to do, is to accept an offer with a 30 day financing contingency, only to find out on day 29, the buyer did not qualify. This means the seller must put the house back on the market . . . a waste of time and money. So the seller would much prefer to accept a lower offer if it is cash or a rock solid Pre-Approval.

What is a rock solid Pre-Approval? - I will give you an actual live example. We are selling a foreclosure property for a lender, and we have had more than a dozen offers. But only one of these offers was for cash, and the others were all pre-qualification letters masquerading as Pre-Approval letters. The cash offer was too low, so it was rejected. And all of the other offers were rejected, even though several of them were considerably HIGHER than the listed price.

Three of the offers that are in the running all have similar letters from the same mortgage broker at National City Bank. These letters state that the buyer is "pre-approved" BUT the bank still needs to verify documents, income, etc. Folks . . . that's not worth the paper it's written on, because the lender has done NOTHING to qualify or approve any of these buyers. What they have done is to waste my time, my clients' time, the buyer's time and the time of the buyers' agents.

Why? I believe it is because local, regional and national banks really don't want to make mortgages, so they make it difficult, if not impossible to get things done. We will no longer accept any pre-qualification or pre-approval letters from National City until they decide to get real.

What Can You Do? - Don't use a bank. Go to a mortgage broker and let them pre-qualify you AND then shop your needs around, and then verify your income, documents, etc. Once this is all done, they can give you a REAL Pre-Approval letter that locks you in . . . and moves your offer to the top of the pile with the seller.

How Do You Get Out? - The only things a REAL Pre-Approval letter should require is (1) contingent upon the appraisal, and (2) contingent upon the inspection. This means, you are ready to go, but if the house does not meet the appraisal and inspection standards . . . you get out of the contract!

It's that simple. So if you are dealing with a real estate agent that does not understand this, my advice to you is to find someone that does. And if you are dealing with a bank that does not understand this, find yourself a reputable mortgage broker to qualify you and shop your needs around to many lenders.

Questions? - If you still have questions, email or call me. Mike@FloridaHomes.PRO or (772) 260-5448

Website Answers - Visit our website for tons of information and FREE Super MLS Access - www.FloridaHomes.PRO
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