Pre-approval: how to keep maximum amount a secret from seller and agent?

Question

How do I keep the maximum amount I'm approved for private from my real estate agent and the seller?

I don't want either one to know the maximum amount I'm approved for.  All they need to know is I can afford the home I'm looking for.

Gary Parker · Answer

Ask your lender to give you a letter specific to each offer you make stating the amount you are approved for is your offer price. Not sure how you would handle negotiations if they want to counter.

David Niles · Answer

Absolutely my point, just human nature to see more and think "gee their approved for $xx amount more, lets counter closer to that. 
Never tip your hand in negotiating.  ;)

Lolita Ellis · Answer

I agree with J Scott and Bill Gulley and probably everyone else. Your agent has a code of ethic they are to adhere to. So hopefully you didnt select one with lose lips (Lol). But you tell your agent if they want to burn gas in showing house above what you are willing to pay thats on them, but let them know you will not consider homes over XX amount of dollars. I think it saves everybody gas, and time. As far as the seller and offers being presented, I suggest submitting a prequel pretty close to what you are offering.

J Scott · Answer

I agree that -- assuming you have a good agent -- you shouldn't worry about him or her knowing how much you have to spend.  They will not reveal it and they shouldn't try to encourage you to buy more than you're comfortable with.

As for letting the seller know what you're qualified for, I'm going to disagree with a couple responses above.  When we see a buyer with a pre-qual letter for far above what they've offered on one of our houses, we'll use that as negotiating leverage and will typically try to get a lot more than if the pre-qual letter were at the offer price.

So, I'd try not to present a pre-qual letter at much higher than my offer price.

Just my $.02...

Brian W. · Answer

Very well put.  Thanks a lot David.

David Niles · Answer

You shouldnt be worried about your agent knowing what your max approval is because they submit the offers you make, so you decide what you want to pay not them.

On the other hand, selling agents here require a pre approval letter submitted with any offers before they will consider them, those letters we only have done to the offer price we are making, your lender should have no problem making you additional ones higher if needed.  
Bottom line is, its human nature to see more and then ask for more.  Your top line isnt the sellers business, just the dollar amount you are currently offering.

Brian W. · Answer

Yeah Bill, this is what I think I will do.  If they counter with a higher number than I'm willing to pay, I'll simply stick to my plan and indicate I'll walk away just as I would if they had no idea how much I was approved for.

Thanks for your advice.

Bill Gulley · Answer

As Wayne mentioned, it will look better. If I got an offer at 96K and saw a POF and a committment at 96K or a 100K, and at the same time was considering an offer at 95 with a committment at 150K, I'd probably take the guy with the 150K letter, better chance of doing the deal! Of course I'd counter the 150K guy, but I'd be targeting him more than the other guy. :)

Brian W. · Answer

Thanks for everyone's replies.

Now I just have to decide whether I want to have a separate letter emailed to me for every offer I make that shows I'm qualified for that dollar amount or if I want to have one letter that shows I'm qualified for quite a bit more than any offer I'm going to make.

Ryan Moses · Answer

The best way to approach this is to be open with your agent and let them know how much you want to spend, despite your approval being a higher amount.

Pre-approval: how to keep maximum amount a secret from seller and agent?

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