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The Commonwealth Blog

Monday, April 24, 2017

Realtors: Help Educate Buyers About the Pre-Approval Process

First-time home buyers sometimes come into the process knowing everything about the process—or nothing, but usually, it’s somewhere in between. It’s your job as a Realtor to educate your first-time home buyers about the pre-approval process, so they don’t get denied after they’ve found their dream home.

Every Realtor has heard horror stories about buyers in the mortgage approval process, getting denied or setting themselves up for failure. By walking your clients through the pre-approval process and making sure their expectations are in line with reality, you can help them achieve success. A good Realtor will help save clients from heartbreak and the collateral damage that could come from a lack of pre-approval.

The Benefits of Pre-Approval

While some buyers may think that pre-approval only helps Realtors and sellers, you can point out that it also helps buyers in many ways. By knowing how much they can borrow in advance, buyers can be confident in making an offer. Pre-approval also offers peace of mind, letting buyers know they have a loan they can rely on once their offer is accepted. A buyer without pre-approval will have a weaker offer and may miss out on their dream home if they can’t secure a loan to match their offer.

Provide a Checklist and Gather Documents

Getting pre-approval isn’t that complicated, but it can seem so to the buyer with the many documents they need. Give them a basic checklist of what they’ll need for their lender: income tax returns, W2s, bank statements, past rental information, titles, deeds, and additional documents related to their income. You can make this checklist once and hand it out to all your prospective first-time homebuyers.

Also, remind homebuyers who begin the process to save older documents as they might need to submit those documents to keep the pre-approval process from stalling.

Help Them Find the Right Lender

While you won’t go to the bank with your clients, make sure to let them know to discuss several different options for their mortgage. They need to look for the best combination of rates and features for a loan that meets their needs. By shopping around, they can find the best loan that offers flexibility and an excellent rate.

Show Them Houses Within Their Budget

Once you know what they’ve been pre-approved for, talk to your first-time home buyers about their down payment as well. You want to ensure that they only see homes that fit within their price range and budget—a pre-approval is usually all a bank will lend and attempting to make a more expensive offer can result in failure.

Make Sure the Pre-Approval Still Qualifies

Pre-approvals are only valid for so many months and then need to be renewed. While some first-time home buyers want to buy something immediately, you may need to ensure that your clients renew their pre-approval before making any offer. Keeping the pre-approval up-to-date will help you and your first-time home buyers. By following these tips, you can lead home buyers in the right direction with pre-approvals. When they’re armed with knowledge, you can help them find the perfect home.


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