Pre approval for every house?

Question

I noticed that my pre approval has a price on it and I am getting one for each house I put an offer on. This slows me down because I have to rely on the loan broker to type these up for me as I find each deal.

I am concerned that if I present a general one with a price of say 100k and I offer lower, the seller will have leverage to try to go up?

What do you guys do for pre approval letters?

Wayne Brooks · Answer

Get One, for the max you can be approved for. Thinking a seller will negotiate up because you “can afford it” is silly. Many cash buyers show a POF for $1M when buying $100k properties. Besides, I’d much rather sell a $100k property to someone approved for $200k as opposed to someone approved for exactly $100k.....better chance of them actually qualifying and closing.

Michael T. · Answer

@Josh C. do as others have suggested either get a few prequal letters or have a buffer in the range of 15-25% as @Josue Vargas recommended.

You want to look strong when offering but don't want to be over by $100-200k in every offer.

Jason D. · Answer

@Josh C. I get property specific approvals. Contrary to what others are saying, I also agree that being "over-approved" can hurt your negotiating. My lender will email them to me within an hour

Josue Vargas · Answer

If you are looking for a property in the ranges between X-XX, give yourself 15-25% buffer beyond that.  They know you are looking on that range so why telling them you can afford a $1M deal?   Doing a pre-qual for just about the $ on the deal is a red flag.

Scott Anderson · Answer

I had my lender get me 4 prequals in $10k increments in my price range.

Russell Brazil · Answer

What Wayne said. Listing agent is going to call the lender anyways to inquire how much you can afford. If you are at your borrowing limit already, the listing agent will see that as a red flag that the transaction might blow up in their faces. We want buyers who can afford much more than the price of the subject property.

Josh C. · Answer

@Michael Noto makes perfect sense! Great suggestion

Michael Noto · Answer

@Josh C. Just have your lender write up a generic pre qual with no dollar amount that says you are pre qualified for whatever type of financing you are getting (conventional, FHA, 203k, etc) and submit that with the original offer.

From there just let it play out and if gets to the point where the seller asks for a property specific pre qual for a certain dollar amount get it at that point.

I submit offers for my clients like this regularly in situations where time is of the essence to get the offer in and there isn't time to wait for a pre qual from the lender.

Pre approval for every house?

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