Why Do Buyers Need A Mortgage Pre-Approval?
Every real estate professional should be asking their buyers in advance, if they are not paying for the property via cash, have they met with a lender and have a "pre-approval for a loan" Unfortunately some do not ask! This may seem very invasive or pushy to ask for this in the beginning of the relationship. I think it depends upon when and how the agent asks. It would be like going on a first date and asking the other person how much money they make.
Although a "pre-approval" does not mean you are 100% guaranteed a loan, it is very important for realtors to confirm they are working with someone who can qualify for the home they are trying to purchase. Many seller's agents will ask that the buyers offer to be accompanied with a "loan pre-approval letter." If you are in a multiple offer situation, it could put you in a secondary position without this.
Sometimes buyers will be overly confident in their abilities to qualify, or they want to find the home first. As a rookie agent, I learned my lesson the hard way when I working with a couple on purchasing a builder's inventory home. They told me not to worry about financing when I asked if they have met with a lender, due to their high down payment and high credit score. They put $200,000 down on $510,000 new builder's inventory home, while using the builder's mortgage company. They were denied the loan having a 815 Beacon credit score (currently the highest is credit score one can obtain is 850) They were told the loan was denied based on too high debit to income ratio!
Needless to say, I learned my lesson the hard way! Most lenders will give you a pre-approval letter based on your offer, while some will issue one letter showing the maximum amount they will allow you to borrow. I am not as keen on this, as it shows sellers you have the ability to pay more for the property when negotiating the purchase price.
Should I Accept The First Offer On My Home?
The short answer is usually going to be "yes." Seller's will most always feel that they "left money on the table" if they take that first offer. Therefore, they instruct their agent, to continue marketing the property for another offer. (Hopefully higher!) With today's technology, it is easy to overlook the efficiency in the real estate marketplace. However, with a very advanced Multiple Listing System, (MLS) licensed agents and their buyers can virtually access instant information about properties and new inventory that becomes available immediately.
A good buyer's agent will have electronically entered a "profile" of his/her client's needs and price range into the system. That might be MLS or some other database that will provide property information. The MLS is the most accurate and current database available to date. Whenever a potential buyer logs on to the MLS, he/she will be notified if a listing has been entered that matches that profile. In most data- base systems, the buyer's agent is able to place the buyer himself on a similar notification.
Sellers, will often want to list their property for an amount that is both higher than what they believe its value to be and higher than what they would be satisfied to receive. Why? Because they know that buyers almost always want and expect to pay less than the listed price. Additionally, sellers usually have a "net" number in mind that they would like to receive on the sale of the property (after commissions) and realtors will sometimes try to accommodate the sellers by setting a higher price. This is not good practice! If an offer comes in near the outset of a listing period, although you may be tempted to hold out for full price, or much closer to it than would normally be expected, you may want to re-consider. Sellers may want to consider the costs for waiting for another offer. (i.e., mortgage, insurance, taxes, utilities, etc.) The longer a property stays listed in the MLS, the less activity you may receive. Other considerations is what if there is a market shift from a "sellers" market to a "buyers" market. What if interest rates where to rise significantly?
River Strand Community June Updates
In the month of June, 8 properties were sold in River Strand community ranging from $164,500- $292,000. Currently there are a total of 32 available including single family homes, coach homes, villas, and condominiums available to purchase from $176,900 to $990,000.
If you, or you know of someone who is looking to sell, buy, or invest into real estate in the near future, please contact us at Keller Williams On The Water. We appreciate the opportunity to assist you, your family, or friends with all your real estate needs!