Pre-Approval letter for commercial loans???

Question

I'm dealing with a "residential" real estate agent on a commercial property. The agent keeps asking for a pre-approval letter and the deal is stalling out. Is it common to provide a pre-approval letter from the lender on a commercial loan?

Alex Bekeza · Answer

@Sean Grady They're probably used to their standard home buying process on SFRs. However, sometimes I run into this same request. The issue is that most of these loans are so subject property based (rather than your income) that a pre approval drafted prior to a review of the properties financials is really worth less than the paper it's printed on. That being said, I often draft pre approval letters on these types of purchases as long as I have enough details on the deal to crunch a DSCR and proof of assets from the borrower.

Sean Grady · Answer

@Alex Bekeza LOL...and YOU are the lender 🤣

Account Closed · Answer

@Sean Grady are you using a commercial loan product? Can your lender provide a letter?

Chris Mason · Answer

You are right, realtor is wrong. Tell them to check with either their broker (if they do commercial) or whomever is serving as their commercial real estate mentor. Letter of intent and/or proof of funds is more the norm.

Tarik Turner · Answer

Typically a POF letter and executed term sheet from a lender can satisfy realtors seeking approval

Sean Grady · Answer

@Alex Bekeza interesting. So you draft the letter, do you then get the lender to sign off on it? Thank you for the reply 🙏

Pre-Approval letter for commercial loans???

Pre-Approval letter for commercial loans???

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