It happens almost every day. I see offers coming in with no lender pre-qualification letters.  I have had buyers call me to say that "the other Realtor I was working with would not even show me houses until I get a pre-qualification letter," as if the Realtor had some wrong motive for requesting the buyer do what was in their best interests.  Why should you take the time to get this most important step done prior to shopping for homes?  Because lending guidelines have changed so severely in the past few years and it is much harder than it used to be to get a loan.  I say that. It is not difficult if you have credit of 640 or higher, have documented income, and reasonable other revolving debt.  

I can hear someone asking, "but Hank why can't we put into an offer on a home that we will get the pre-qualification done within a day or two of a binding contract?"  You can, but here is where you might miss out on that dream home.

Yesterday we were negotiating a counter offer on a listing of mine.  The counter from the buyer contained a stipulation that I had included with the previous counter that the buyer would "provide a pre-qualification letter within 24 hours of a binding agreement or the seller has the right to terminate the contract."  All other terms and conditions were looking like this would be the offer my client accepted.  It was all going in the right direction for this buyer until we got another offer after lunch yesterday.  This offer contained a pre-qualification letter showing the buyer more than qualified for the purchase. It was a clean offer and the buyer's agent had all their "ducks in a row" so to speak.  

The first buyer was heart broken when I had to let their agent know that we now had multiple offers and while we were about ready to sign their offer, both offers were so very close, the second offer showed a buyer who was pre-qualified to buy this home while the first buyer only could offer a promise that they would try and deliver a pre-qualification letter within the next day or two!  So buyer #1 was on the door step of getting that house they wanted under contract just when their offer stalled and another offer was allowed to step around them mainly because the seller would not lock up a house even for a day on a promise with no guarantees.  If we let the second buyer go away because we accepted the first offer and then the first buyer failed in their pre-qualification process we miss out on both!  It puts that first buyer in a negative situation needlessly.  

The agent for the first buyer pointed out to me that the buyer was just going to look and get pre-qualified later. Wasn't going to make an offers until he found the one the house that he fell in love with! Always happens. This is the reason, with four kids at home, I don't look at new cars.  I don't want to smell that new car smell and touch new leather. I don't want to see all the new toys in a new car my car doesn't have because it isn't in my budget to make that purchase today!  Yet I have met people who will run right out and want to look at homes who have no idea if they can even afford them!  I had a guy call me yesterday.  Said he wanted a 4-6 bedroom home, spending up to $150k, and all the details.  He wanted to look at homes "right now."  Anxious to start!!  I asked him if he was pre-qualified yet for a mortgage and the response I got back was that "no but I am going VA (a VA loan)." Sent him to a trusted lender and the call I got from the lender was that this potential buyer's credit was miserable.  Could not get a loan for some time to come! Now he had all the enthusiasm you could have for a motivated buyer, but he could not get a loan.  My point is that lending is not what it was 6-8 years ago.  Looking at houses is fun, but get the homework done upfront. It takes 10-15 minutes online today to get pre-qualified, and most will update that pre-qual letter if nothing changes with employment, with no further credit pulls during the shopping process.  Painless!

You see we really have a reason as agents for requesting that this most important of the buying process be done first.  It gets you as a buyer in the position to buy when you see that dream house and not be side-stepped by others who already got pre-qualification completed. It also helps you know sooner rather later if you need to work on your credit to get yourself in position to get a loan down the road.  My lender helped this VA buyer, even though his dreams were doused regarding home ownership today, because he has him working now towards restoring his credit and he can be in the position to buy within the next 8-12 months. 

Don't side step the process and put the "cart before the horse" and it will reduce the amount of stress and anxiety as you work through the process!  I have had clients tell me they didn't have all the problems that they heard exist when buying a home. Said it seemed easy! That is always the goal!