Should I get pre-approved for a loan before I speak to an agent?

6 Replies

Looking to invest in my first flip I have 50k to start. 15-20k for a down payment and 30k for a rehab,plus emergency funds. Do I have to get pre-approved for a loan before speaking to an agent about an offer?

For example.

Home is up for 100k and I want to make an offer say 75k. Do I try and get a loan off the asking price or do I wait to til the offer is accepted and then get the loan. Also if my loan includes the rehab ,do I make the offer and get the rehab estimates first or would I need to get pre-approved?

Need to find an agent and financing before making an offer. A lot of times a good agent can recommend a lender but you will need proof of funds, for a cash offer, or a letter stating you qualify for a loan before submitting an offer.  

Pre -approval is essential to have an agent take you seriously. You might find the perfect property , it can happen at anytime, but it would be difficult for an agent to write an offer with your financing in place.

@Clay O. Thanks Clay. Say I want to use a HML to get a loan. Wouldn't they need to know details like the purchese cost, rehab, closing cost, holding cost and a bunch of other info before I can get pre-approved.Or can I can they just give me a general amount on how much they would lend?

A HML can give you their parameters for financing purchase and rehab, along with looking at your financials. They can give you a general preapproval based on that, but since there are more parameters such as actual rehab costs, a HML Preapproval, which is what you need, is less reliable than a traditional preapproval.

you can usually get pre-approved and get a proof of funds from a hard/private money lender prior to working with an agent. If a client approaches me without one i usually refer them to a lender before we get started. I work a lot of off market deals where a non-refundable deposit is required. It would be bad business if i let someone put down $5k or more then they lose it because they didn't have their lending in place. No matter what, they'd blame me and everyone else as to why they lost their money. Furthermore, I don't get paid working with someone who can't perform. So getting the financing situated before hand is a must for many reasons.