Prior to shopping for a new home, the preapproval process is crucial. Why? What if you're only looking? The truth is, once you're physically taking time out of your busy life to visit a home, you are at a minimum somewhat considering the purchase process. And something we see happening all the time is somebody loving a house, but not being fully ready to buy at the time and missing out on the hot property they could've made their new home. The video below explains the process from a mortgage lender's perspective. This post is ALSO about the importance from a Realtor's point of view.
It's no secret, well priced homes are selling fast. Equally as frequent to a fast sale, homes (especially under $300,000) are selling for more than asking price. The seller works with their Realtor to discuss goals - fast sale, highest sale, most money possible sale, and many more options. So not every single home will go to a highest and best scenario just because multiple offers are received. Additionally, not every highest and best is the same. Some sellers will receive two offers and ask for highest and best offers due 48 hours from now. Others will say the highest and best due the same night at 8 pm. And, like I previously said, sometimes they don't even call for highest and best. Without a pre-approval ready, you can not even submit an offer.
From a listing side, we always place Public Remarks and Realtor Remarks. In the realtor remarks, we specifically state offers must be submitted with a pre-approval or proof of funds (cash offers). The second part of the statement is "no pre-qualifications will be accepted". There are a few banks that do the process Jarod speaks about in the video but still call it a pre-qualification. That is acceptable but not desirable.