It is not uncommon when selling your home to want some guarantees that you’re not wasting your time showing your home to or being tied into a deal with a buyer who ultimately cannot afford your home. There is nothing wrong with noting in your advertising and letting buyer’s agents know that you will only show your home to pre-qualified or pre-approved buyers. Also, if you’re a buyer, you have a lot more negotiating power if you present your offer as a qualified buyer. BUT it’s important in both roles to understand the difference between pre-qualified and pre-approved.
DEFINITIONS:
Pre-qualified: Based on what you report for income, assets, liabilities and credit rating, it appears that you can afford a specific price range home.
Pre-approved: Based on verified data regarding income, assets, liabilities and credit rating you have been approved for a mortgage by a lender.
IS IT WORTH DOING AS A BUYER OR REQUIRING OF BUYERS AS A SELLER?
Absolutely! Being a pre-qualified or pre-approved buyer allows you to take advantage of the best rate for your needs, enables you to know your spending budget, and makes you much more desirable to the seller. If you want the best deal, become the seller’s best buyer!
OBTAIN THE BEST RATE Just like the internet has made it possible to research available properties for sale, it also allows buyers to explore rates, benefits and offerings of multiple lending companies allowing you or your buyer to obtain the best possible rate based on their qualifications.
WHAT CAN YOU (YOUR BUYER) REALLY AFFORD?
Taking the time to get pre-qualified or better, pre-approved allows you to realize what you truly can spend so you won’t waste time viewing/bidding on properties you wouldn’t be able to get a mortgage for. It’s just like the old saying; “don’t try on a wedding dress you can’t afford because surely it is the one you’ll fall in love with”. You can be pretty assured that when you look at homes above your true price point, you will find yourself with the feeling of settling for something less than your dream home instead of being excited about your new home owning adventure.
This really is a common sense factor of home selling or buying. If you’re a buyer, put yourself in the seller’s shoes. Would you tie up your home with someone who isn’t willing to prove they can qualify for a mortgage? Doubtful! If you’re the seller, it certainly makes sense to choose a buyer who provides proof that there is no risk that they won’t get a mortgage and complete the transaction. Bringing strength to your negotiations allows you to reap the greatest result!