As a full time, professional Realtor it is important that I guide my clients as best I can. Even if it means not showing one single home until a buyer is fully, pre-approved. I know this sounds very regimented, however in the San Francisco Bay Area Real Estate market – a buyer needs to present their very best if they want to compete.
There’s been a bit of confusion on what it means to be “pre-qualified” versus “pre-approved” by a mortgage lender. To the average Joe – isn’t a phone conversation just as good as a letter? In one word – NO! It’s important to know the difference because it can have a major impact on your real estate transaction. Here in our market – it is the difference between having your offer presented in its best light – or having your offer outright rejected by the seller.
Here’s what you need to know:
Pre-qualified means the buyer hasn’t yet been vetted by a third-party credit institution. The underwriter, or he who makes the decision, hasn’t even seen the file. Because their credit and documents haven’t actually been verified, a letter of pre qualification is the result of a conversation with a lender. Nothing more. That isn’t to say a talk with your mortgage broker about options is a bad thing. It’s actually a buyers very first step. It’s just that when it comes to your transaction, it carries little weight. An offer with a pre-qualified letter will not gain any light in todays competitive market. No seller needs to grant a buyer time to get their loan pre-approved. Not when a buyer is one of several offers and the seller will pick the very best, buttoned down one.
That said, a pre-approval letter is truly valuable! In fact in our San Francisco Bay Area Market – a letter of commitment is becoming the new pre-approval letter. Both the buyer’s credit (and documents) have been verified by a reputable third party and accepted by the lender. Meaning, the underwriter has seen the buyers credit report, reviewed all their supporting documents, called the employer to verify employment and is ready to order an appraisal once the buyer is in contract. Ideal buyers are pre-approved – and in a hot market like ours, it makes a difference. Sellers want pre-approved buyers. Period. In fact, The Caton Team will not show property to anyone until they have been pre-approved with a lender. Our market moves fast, very fast. Homes are sold within two weeks or less. And often times, when a buyer finds a home they like, the offer date is usually just days away. So having the buyer, fully pre-approved puts them in a position of best competition. They buyers knows the loan they are getting, the payment to expect and are comfortable moving forward at a quick pace.
If you have any questions – we are here to help. Email or call The Caton Team at any time. We can answer your questions or refer you to our wonderful team of trusted lenders. 650.568.5522 / Info@TheCatonTeam.com
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The Caton Team – Susan & Sabrina – A Family of Realtors
Berkshire Hathaway HomeServices – Drysdale Properties
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