Pre-approved vs Pre-Qualified Buyers
Are you selling you own home in this hot market? Are you interested in saving on commission? Well, how will you tell the real buyers from the wholesalers who will not close the transaction on your home?! One way to tell a real buyer from a wholesale buyer is through their approvals since most wholesalers are pre-qualified and are not typically pre-approved for a loan. So, what is the difference between a Pre-Qualified and and a Pre-Approved buyer ?
1) Pre-Approval: Pre-approval process is identical to a purchase loan application without having a property identified. To pre-approve a buyer for a loan, most reputable lenders will require a completed and signed 1003 Mortgage Loan Application by everyone who is going to be on the loan. The application for a pre-approval will require borrower’s full employment history, bank accounts, assets and other real estate holdings. The lender is authorized to complete employment and asset verification as part of their due diligence before then can issue a pre-approval. The final step in the Pre-Approval process is to determine the borrower’s buying power and how much loan they could afford. Once mortgage loan application is underwritten, then the bank will issue a conditional approval or a Pre-Approval which will show the maximum loan amount a borrowers is approved for the purchase. Naturally, this pre-approval will not have a property address since the buyer has not found a property at the time of their loan application. But the pre-approval should have a loan Number, Rate and term of the loan as well.
2) Pre-Qualification: Pre-Qualification is a simple letter that is issued by some lenders without requiring a mortgage loan application from the borrower. Mortgage brokers, Correspondence Lenders and loan officers are typically the parties who issue these Pre-Qualification letters. These pre-qualifications should be worthless to you since there has been no due diligence done on the buyers background and ability to pay for the mortgage they will need to purchase your home. So, if you can confirm a pre-approval with Mortgage lender or Loan Officer that has been identified in the pre-approval, then you are dealing with a un-qualified buyer that you should avoid on your For Sale By Owner (FSBO).
Feel free to Contact Us if you need help identifying qualified buyers for your FSBO.