Preapproval or Proof of Funds...Why?
One of the questions I get ask a lot is 'Why do the Realtors want the buyer to provide a pre-approval letter or proof of funds'? This is a very good question. There are four answers to this question. First an agent is required to show a seller's home to ready and willing buyers. Second is every seller/sellers require a pre-approval and or proof of funds be supplied when an offer is submitted to purchase their property. The the third reason is the Realtor wants to know the buyer he/she is working with can afford the homes they will view. The fourth reason is for safety purposes.
Reason number 1 is pretty simple. The buyer must be willing and able to purchase a home.
The reason the sellers want the pre-approval and or proof of funds is simple. They want to know the buyer is qualified to purchase the home before taking their home off of the market. Just imagine if you were the seller of a home and you accepted a purchase offer from a buyer only to find out three days later the buyer is not qualified to purchase your home. If the home is off of the market for just one day, it may cost the seller a qualified buyer they may never see again. This can be avoided by getting the proper information up front.
When I first started out in real estate, I was happy like most new agents just to find a client that wanted to go look at homes/condos. I can't tell you the amount of time and gas I wasted my first year in the business because I was driving people around that could not afford the homes they wanted to view. Then I realized there is a more professional way to do things that does not waste anyone's time. I now request a pre-approval letter and or proof of funds before viewing homes with a client. This allows everyone involved to know they can afford the home they are viewing. It also helps save time and stress on the buyer. Once they find a home they like and want to write an offer on, the buyer does not have to rush around trying to get pre-approved, print bank statements or get a letter from their bank stating they can afford to pay cash for a home. It's much easier on everyone.
In today's world safety is a big issue. Unfortunately, we have had Realtors and Property Managers beaten, robbed and rapped. This is another reason that Realtors ask for a pre-approval or proof of funds. Most criminals do not want to go through the process of sending personal information to you if they plan on harming you. Most Real Estate Companies have had a police officer talk to Realtors at our weekly meetings about how to be safe on the job. The first thing they tell us is to get a pre-approval, proof of funds and a copy of a driver license. Safety first!
Now you can see why a Realtor requests that you speak to a lender to get a pre-approval letter an or requests proof of funds before looking at homes. They do not want to waste anyone's time and they want to make sure they have done everything possible to make sure they are safe. Thanks for your time. I hope this helps you understand the process better.
Blog Archive2016-07-31 12:49:01
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