How to Make an Offer!

6 Replies

 There is a house in my neighborhood that has been sitting for a few months and I would like to make an offer on it, my RE agent says I need to get pre-approved for a conventional loan in order to make an official offer.  The problem is I don't think they will accept my offer right away but will come back to me later on if it doesn't sell at their price.  

How do I make an offer to let them know I am interested without going through the process and paying application fee's in order to get pre-approved?

I don't think that you have to pay application fees to get preapproved. It is basically a credit check and a quick income survey to make sure you meet the minimum requirements for a mortgage. Would you be financing this property with a conventional mortgage? If not then that would really be a waste of time. You perhaps can tell your realtor that you are an investor and would be using private money etc. but they would still probably need proof of funds. It's basically so the seller doesn't waste your time with offers from people who really cannot afford the property. I suppose one thing you could do if you just want to submit an offer with no proof of funds is print up the standard real estate contract for your state fill it out and fax it over to the listing agent and say you are representing yourself.

Thank for your input!  I will be using conventional financing 

@Patrick Barker

Another suggestion to bypass the Realtor and keep you from getting preapproved would be to write a simple letter of intent (LOI)

The LOI has been used effectively by people such as Grant Cardone who was featured on podcast #108.

A simple google search of this term will show some samples....good luck!

Good Idea, I will look into it, thank you.

Get pre-approved for the property, you should not have to pay the application fee until you have an offer that is accepted.  One thing about the pre-approval letter is to have it written close to your offer amount.  If you are going to offer 200K for a 240K asking price, don't send a pre-approval letter for 280K.  You could do 200 or even 210K.  210K gives them a good target for their counter offer.  It also shows you have a little room to go up, but they should expect a 5K drop is going to get much movement from you.  

Not sure about GA, but in FL the only downside to getting pre-approved is that your credit score will reflect the fact that you had a mortgage company check your credit score.

Other that that, there really is no downside to getting pre-approved that I know of.  It usually takes less than an hour and can be done over the phone.  

Another thing - most listing agents and sellers would completely disregard a letter of intent.  It means absolutely nothing to someone who wants to sell their house because there is no commitment behind it.  An executable contract is the only thing that most realtors I know would take seriously.

So, I guess I don't understand your hesitation.  If you are serious about buying the house and you're planning to use a conventional loan, why not just get the pre-approval letter and make the offer?

Disclaimer:  I am not an attorney, and anything I share on this forum is strictly my personal opinion, and is NOT intended to be legal advice of any kind.