Should You Match Your Pre-Qualification Letter To Your Offer, Or Show Your Maximum?

September 18th, 2014

When a homebuyer makes an offer on a home they may need a pre-qualification letter to include with the offer. Most realtors will ask the lender who has pre-qualified their client to write a pre-qualification letter to match the exact sales price of the offer. But a few realtors will ask for the pre-qualification letter to be written for the maximum amount the buyer is qualified. The reason there are different interpretations is due to varying strategies.

 

So should a buyer disclose their maximum pre-qualification amount or should they tailor their pre-qualification letter to the exact offer? There are a lot of different thoughts and strategies to think through.

 

First, can’t many sellers and listing agents tell if a buyer is overqualified anyway? When a seller sees a financing information sheet, and sees a buyer’s income and assets, they can probably do some basic number crunching and have a good idea that a buyer is at their limit or not. If they cannot, then they can show one of their favorite lenders who can do the number crunching for them.

 

Plus, if Warren Buffet were getting a mortgage, would a seller counter offer him at a higher sales price than someone else simply because he is rich? If so would Warren pay it? He is pretty smart, and I am guessing he’d have a good idea of what a home was worth, or at the very least he’d have a good idea of what his limit would be on his offer price.

 

So why try and hide how much a buyer is pre-qualified for? Does it really affect the value of the home? Isn’t a house worth what it’s worth regardless of a buyer’s qualifications?

 

On the other hand, I have heard of realtors that want a seller to know the buyer’s maximum pre-qualification amount. They want to impress upon a seller how over qualified the buyer is to get their offer through in a competitive situation. So should you show you are overqualified, and show that you are qualified to a purchase price of $800,000 if you are offering a price of $700,000? Doesn’t that look good and help the seller pick your offer over another?

 

Maybe the strategy should be different based on the circumstances? What are your thoughts? Do you have a story to share?

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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