Top Reasons Why Real Estate Agents Request A Pre-Approval Letter Before Showing Houses
One of the most common home-buying myths that exist is that when buying a home, you should find a home before getting pre-approved. There are some real estate agents who will show a home, or several homes, to a buyer without know whether a buyer is pre-approved or not. This is trait that you will find in an agent who likely does not sell many homes.
Some of the most common things buyers say who do not want to get a pre-approval to include;
- "I'm going to wait until I find the right home to speak with a mortgage company."
- "I don't need to speak with a mortgage company first; I'll be able to get a mortgage, no problem."
- "I'm just looking at homes right now."
A top-notch buyer's agent will request a pre-approval letter from a buyer prior to showing them a home. There are many reasons why real estate agents request a pre-approval letter before getting in their car and driving buyers around town showing them homes.
Below are the top reasons why real estate agents will request a pre-approval letter before showing homes to a buyer. Read on to find out why this is a standard practice of top real estate agents before you get upset when a real estate agent requests a pre-approval letter from the start.
Arguably the biggest reason a real estate agent will request a pre-approval prior to showing buyer homes relates to the safety of themselves. Realtor safety has been a very popular topic in the news as of late. There has been in the past year several Realtors who have tragically lost their lives while performing day-to-day tasks.
You may ask yourself, "How does requesting a pre-approval letter provide any safety for the Realtor?" If a buyer has been to a lender to discuss mortgage options and has obtained pre-approval, the lender has done their research on the potential buyer(s). The lender has information on the buyer, such as their social security number, their job history, and other pertinent information.
Requesting a pre-approval from a buyer is one of the top Realtor safety tips that is preached by real estate professionals. If you're in the market to buy a home and haven't received a pre-approval letter when a Realtor requests it, chances are you won't be looking at homes. Remember, it's a safety concern.
Provides Proof Of Ability To Obtain Financing
Another big reason real estate agents request a pre-approval before showing homes to a buyer is because it provides proof of the ability to obtain financing. The reality is that not everyone can get a pre-approval. Real estate agents want to make sure that a buyer can get a pre-approval before spending their time driving around town showing homes to a buyer who cannot obtain financing.
Nine out of ten "serious" buyers will have no problem with obtaining a pre-approval. Getting one does not take much time; in fact, a top lender should be able to pre-approve a buyer within minutes after getting necessary information.
Buyers shouldn't take it personally when a real estate agent request a pre-approval. A real estate agent who is showing homes to a buyer who hasn't taken the time to get pre-approved is only running a costly taxi cab and tour guide business.
Saves Time & Frustration
In today's society, most people are very busy and don't have a lot of extra time. Another top reason why a real estate agent will request a pre-approval before showing buyers homes is that they are no only attempting to save themselves times but also trying to save the buyer time.
A pre-approval provides a buyer, and their real estate agent, information as to what price range they should stay within as well as the yearly tax range. A real estate agent who requests a pre-approval before showing buyers homes is trying to save the buyer time and frustration.
It makes no sense for a buyer who is pre-approved for up to a $200,000 mortgage loan to look at homes listed for $300,000. There are not many homeowners who are going to accept an offer for $100,000 less than their asking price, period.
A buyer who works with an agent who shows them houses before getting a pre-approval is doing a disservice to them self. What can end up happening is they find out they cannot afford the home they fall in love with which leads to wasted time, frustration, and heartbreak.
Strengthens Negotiation Ability
Top real estate agents will request a pre-approval before showing buyer home because it strengthens the buyer's negotiation ability. Depending on the local real estate market conditions, if a buyer is attempting to buy a home in a seller's market, it's critical to have a pre-approval before looking at houses.
A buyer who has a pre-approval has a distinct advantage over those buyers who decide to look at homes without a pre-approval. If a seller receives multiple offers on their home, which is pretty standard in a seller's market, they are going to select a purchase offer from the buyer who provides a pre-approval.
To win in a multiple offer situation, it's paramount you have a pre-approval letter. Having a pre-approval letter is critical, but it also can matter which lender issued the pre-approval. In most cases, it's best to get a pre-approval from a local mortgage lender and from one who also has a good reputation.
Sellers May Require It
Another reason why real estate agents will request a pre-approval before showing homes to a buyer is that the seller may require it. Some homeowners do not want buyers walking through their home who haven't spoken with a mortgage company as they do not want to waste their time.
Some sellers also do not want unqualified buyers walking through their home, which is common practice at real estate open houses. There are many pros and cons to open houses in real estate, and certainly one of the drawbacks is there is no ability to screen potential buyers who are visiting an open house. Don't be offended if a real estate agent requests a pre-approval before showing you a home as it may be a direct request from the homeowner.
In addition to requesting a pre-approval from buyers before accommodating a showing, most sellers will also require a pre-approval with any purchase offer. A purchase offer without a pre-approval is only as good as the paper it is written on as it's nearly impossible for the seller to honestly know if a buyer will be able to obtain financing.
It's important to note that even though a buyer may have a pre-approval, there are certain situations where a buyer can be denied for their mortgage loan even after being pre-approved. The likelihood of this happening is slim, but it's essential that buyers and sellers understand that a pre-approval is not a guarantee of funding.
Buying a home is big deal. There are specific steps that need to be taken to be successful in purchasing a home. A real estate agent who requests a pre-approval from a buyer before showing houses is only attempting to represent the buyer's best interests.
It's essential when buying a home; you hire a top buyer's agent. To successfully recruit a top buyer's agent in real estate, you should know what questions to ask prospective real estate agents.
Remember, looking at homes without a pre-approval is silly. Shopping for a home before getting pre-approved for a mortgage is like walking into a grocery store without a wallet. You may have the desire to buy, but you lack the ability. This makes sense, right? When you hire an agent, he/she will invest countless hours showing you homes in the pursuit of finding your dream home. So, now that you've come to me for my experience, let's get started on finding you the perfect lender and the perfect home!
Erica Rivera, Realtor®