Why Do Sellers and Realtors Want Me To Be Pre-Approved?

June 24th, 2018

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Homeownership is a major component of the American dream as it provides you with your own piece of property to put down roots and live your life. You might think the process starts when you first go out hunting for houses or condominiums, but it often begins long before the initial meeting with a realtor when you contact a lender for pre-approval. Homes are major purchases, and it’s understandable that you have to meet certain qualifications before the transaction goes through. Here are a few reasons why the seller and realtor might want you to get pre-approved, as well as an overview of the entire process.


Pre-Approval Makes You More Attractive


While market tendencies fluctuate due to a number of different factors, a “seller’s market” can be overwhelming to anyone trying to sell his or her property. A realtor’s job is to get the best possible price for the client, but it needs to be one that’s likely to close. When multiple buyers submit offers on a property, it’s up to the realtor and seller to choose the most attractive one.


Sellers want the entire transaction to go through smoothly, and hang-ups in financing could cause delays and even cancellations. Even worse, a house listed in the system as being “under contract” could deter other potential buyers from making offers or requesting showings. By submitting a letter that includes your pre-approval for a loan, you’re demonstrating a lender’s faith in your ability to complete the sale, and that can make you more attractive to a realtor.


The Process Often Goes Faster


For many homeowners, time is of the essence as there are a number of different reasons why he or she might want to move out of the home. Whatever the reason, a faster transaction is usually preferable.


While it takes the successful completion of a number of different tasks before the transaction is finalized, there are things that can be done to move the process along faster. When you take the time to go to a lender for pre-approval, you’ve already gone through a credit check and income and asset verification, which could shave time off of the process.


You’ll Get a Better Idea About Your Price Range


House hunting can be exciting as you get to go from one property to the next and think about the different possibilities. While your realtor will be more than happy to show you as many homes as is necessary to find the perfect match, he or she might want you to first find out how much property you can afford. By going through the pre-approval process, you’ll get an independent opinion on your buying power before you make any appointments for showings.


You might be wondering why your realtor wants you to add this step to your homebuying process, and there are a number of different reasons. It’s always best to work with informed buyers, and an evaluation of your finances is an important piece of information. You will also need to narrow down the possibilities from the thousands of properties on the market, and your pre-approval amount can provide some guidance. The realtor also doesn’t have to be the one who gives you a reality check about whether or not a home falls in your range.


You Could Have Extra Negotiating Power


In a hot market, it’s not uncommon for a seller to get a number of full-price offers. By including a pre-approval letter with your offer, you’re making an assurance you’re financially able to complete the purchase. This could be the leverage you need if you’re competing with another buyer who didn’t go through this step.


What It Means To Be Pre-Qualified


When you hear the term pre-qualification, you might think of it as interchangeable with the process of getting pre-approved, but the differences are much more than semantic. Getting pre-qualified is a much less thorough vetting that can often be done quickly over the phone. It’s a decision made by a financial institution based solely on information provided by the borrower. While it’s a good first step in your overall approval process, you shouldn’t rely on this distinction to help you at the negotiating table, and some realtors might not take you seriously as a potential buyer. You also won’t get the same level of insight into your overall purchasing power.


The Process of Getting Pre-Approved


Now that you know some of the reasons why it makes sense to get a pre-approval from your lender, it can also be helpful to gain some insight into the overall process used to make the decision. Before you choose a lender to get pre-approved, you should first organize the documentation needed to support your financial claims:


  • Proof of income, which is usually two recent pay stubs
  • Social Security numbers to verify identities and run credit checks on everybody who will be listed on the eventual loan
  • Proof of employment, which should list all of your employers for a minimum of two years, complete with addresses and phone numbers for verification
  • Bank account information, so the lender can verify your available cash
  • Gift letters to verify any gifts from family members you might be using to bolster your finances
  • Information about debts such as credit cards, student loans, car loan, etc.
  • Tax documents, which normally means W-2 statements and tax returns for the previous two years
  • Your list of residences for the last two years


Once you’ve gotten everything together, you’re ready to choose a lender and make your case for pre-approval. You will fill out a mortgage application. Since you’re at the beginning of the home buying process, you’ll leave the property information section blank.


Get Pre-Approved Today


No matter if you’re in the market for your starter home, you need something bigger for a growing family or you’re simply looking for a change in scenery, the first step in the process should be pre-approval for your eventual mortgage. Once you’ve gotten the go-ahead from your financial institution, you’ll be armed with the information necessary to find the perfect house and make a competitive offer. Let Brian Martucci help you get pre-qualified and then pre-approved.






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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