Throughout the process of selling a home, owners have to deal with different offers coming in with the potential for wildly varying details. Part of selling your home is making sure you select the right person behind the offer, so let’s look into what home sellers need to know buyers who are pre-qualified or pre-approved.
Pre-Qualified vs. Pre-Approved
The average home buyer and seller don’t have a great idea of what the difference is between a lender pre-qualifying and pre-approving someone.
Each mortgage lender has minimum qualifications that any borrower must meet in order to pass the initial application process.
A borrower who has been pre-qualified means they made it past these first few hurdles, but have not been thoroughly scrutinized to deem their request for a loan acceptable to the lender. A lender then goes about doing a complete check through the borrower’s credit history and current financial situation in order to make the final determination of their capability to carry and pay off the loan amount over the established timeline.
To you, as a home seller, this means the difference between the terms pre-qualified and pre-approved are night and day.
A buyer coming forward openly stating they are pre-qualified for a loan carries very little weight. On the other hand, a buyer who has been pre-approved has already jumped through the lender’s hoops and is a much safer prospect for you.
Spotting the Diligent Buyer
Now that we know the difference between pre-qualified and pre-approved, what else matters when it comes to finding the right buyer for your property?
If a buyer has been pre-approved, they can present you with a pre-approval letter from their lender included with their offer. This is a great way to officially show you that they have done everything necessary up to this point in order to secure financing based on the current circumstances of the transaction.
Since the vast majority of real estate transactions require the financial backing of a mortgage lender, this means the lender ends up having a substantial level of control based on the stipulations of any agreed offer and the results of any inspections of appraisals.
After all, the lender is looking for the safest possible route for them to receive a return on their investment, and they want to have a way of mitigating any losses in the event their borrower fails to make the required payments.
Dissect All Offers
It should come as no surprise that not all offers are created equal, and you want to dig into every little detail to spot these discrepancies before signing off on anything.
An offer is more than a price, and the addition of inspections, contingencies, or even rarer circumstances such as escalation clauses come together to compose these offers.
An offer that is presented with a high price but comes packaged with a laundry list of repair and inspection contingencies is likely to cost you serious time and money while an offer for slightly less money with few-to-no contingencies could be the better choice for you. Other offers may present you with a large down payment, which should absolutely be combined with proof of funds from their lender. It’s about weighing all of the options, seeing the big picture, and not making any rash decisions.
Finally, if you find yourself confused or stuck in a swamp of indecision, take a breath and consult your agent to gain more perspective.
Help Finding Pre-Qualified and Pre-Approved Buyers
If you’re looking for a team to help you spot the difference between pre-qualified and pre-approved buyers when it comes to selling your home, contact us today at 866-593-7012!