What Does Being Pre-Qualified Mean?

The ability to point out the best potential buyer is a great skill both real estate agents or home sellers should possess. Qualifying in the real estate vocabulary means having enough money to buy the house. Most real estate agencies require that the buyer be qualified before they are shown a property and allowed to negotiate with the seller. This means a lot of time and headaches saved for the agents as well as sellers.

Unfortunately, not many people take this requirement seriously. The agent will show the house to anyone that arrives at the agency’s door, even go to the length of preparing contract for sale. What they fail to understand is that determining buyer’s eligibility is a mandatory process in the current real estate market. This means learning about the gross income of the prospects, the amount of money they can afford on mortgage as well as their equity and debt information. The buyer may have a high desire in buying the property but be on a tight budget and handful of loans and obligations. It could be car payments, student debt, even child support or alimony. The agent should compute these numbers and come up with the monthly payment that the buyer can afford.

Asking these details with the buyer may be a little inconvenience for the agents but almost impossible for sellers on their own. As a result, many sales fall through before closing date. Many months are wasted due to the buyer’s inability to obtain mortgage. The seller is hurt and the agent is frustrated. Houses tied up in pending sales go back into the market making other prospects skeptical and hesitant to deal further. It is a nightmare!

These days more and more agents are better prepared for situations like the above. They avoid future pitfalls completely by requiring that the buyer show documents pertaining to mortgage approval from reliable lenders like Hard Money Lenders Houston. And they will not stop at that. They may want to look at the buyer’s tax returns, credit score, spending habits and much else. The buyer on the other hand may try to be evasive in answering questions. They may try to hide their debts or gambling habits but appear to be truthful without any evidence to prove. Then if the deal seems to be in danger of falling apart, they may become irritated as well. However, if the buyer presents the needed documentation, then the agent knows how to move forward with it. The agent will also determine how much the buyer can afford and accept or deny the offer accordingly.

In essence, when a potential buyer is pre-qualified, he or she is eligible to obtain a loan from the lender based on the information provided. This will tell the agency or seller whether or not the buyer can afford the house. The mortgage application process that buyer has to go through may be a lengthy one, but worth the effort if the sale should take place as expected.

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