Some of this material is taken from our previous blog on why Buyers should Shop for Lenders. To see that post, click here. The material here has been modified to apply more to Sellers and fit our title.
When a Buyer submits a offer to purchase your home, you have no idea whether they can really afford it. Perhaps it’s just “wishful thinking”, or maybe they are hopeful a parent or other close relative will help them. How can you protect yourself as a Seller?
One way is to require a “Pre-Approval Letter” be submitted with all contract offers to purchase your home. A Pre-Approval is this is generally based upon the mortgage application and other written materials you submitted, and upon the Buyer’s background and credit check. Getting one from Buyers who submit an offer will give you some added comfort that the Buyer likely to be approved for a loan. The lender has NOT yet committed to the Buyer, though, and there are still some steps to go through.
Sometimes a Buyer will submit nothing or just a “Pre-Qualification Letter”. This is generally based only upon what Buyer has told the lender or mortgage broker verbally and the lender cannot rely upon it. It is just the preliminary part of the loan shopping process. Make sure you, as a Seller don’t confuse this with the Pre-Approval Letter that gives you superior peace of mind.
This might seem like common-sense advice you can get basically anywhere, and we admit that’s probably true, but we do still see clients making this mistake, and getting their hopes up for a sale where a Buyer really had no chance of getting a loan. We thought sharing that experience might be helpful.
In our next blog post, we plan to explore, “Not Using a Lawyer Who Knows How to Work with Your Lawyer (#4 of the 15 Mistakes We See Home Sellers Make Most Often)”. We hope you find the information helpful.
If you would like to have your own lawyer to help you on your next home sale, just click here to sign up to be a client and pay nothing up front!