It seems like a very simple thing, but it is important for you to remember the power of your pre-approval as compared to others in your market. In the last few weeks, a number of my clients have been contacted by Realtors® and frustrated buyers when their “lender” couldn’t honor their pre-approval when the time came to close and now an entire transaction was hanging on by a thread! In some cases, these deals were never going to close, and in others; changes in the market made a once valid pre-approval, now unobtainable by that particular issuer.
The first part of this is doing the work up front on a client before issuing the letter! You know you lose all leverage on both the potential buyer and the Realtor® once you have issued that letter. Trying to chase needed documentation becomes a nightmare, and often leads to a hectic time right before closing, which is the last thing anyone needs! Getting everything upfront saves a great deal of time and potential disappointment later on!
This is not only a helpful practice that makes the customer experience much more pleasant; but it also becomes a competitive advantage down the road when making an offer on a property. By clearly stating your pre-approval process, the documents you have seen, accounts that have been verified, and a situation that has already been underwritten, you make your buyer stand out over another who just holds a piece of paper that has some numbers without any explanation as to how they were obtained.
Many of my clients now issue a video pre-approval so they can explain to the seller and seller’s agent, all the steps already taken to review the borrower and to be sure that the offer made will be able to close in less than 30 days if the house appraises for value, proper title insurance and homeowners insurance, and inspections have been received and of none of the buyers circumstances have changed since the pre-approval had been issued! This is a very powerful tool that wins deals!
Some of my people also stress the fact that they are licensed professionals with a proven history. They encourage their clients to go to www.NMLS.com and search their license number to see their years of experience. They also encourage their client’s and all of those involved, to search ALL the “lenders” pre-approval license numbers to see their history as well. In some areas of the country, we see people claiming to be lenders who have no ability to actually lend money! There is nothing wrong with working with a broker, but a broker can’t lend you any money, they work strictly as a conduit for an actual lender.
It’s important for everyone to have the clear facts of what stands behind the paper the buyer is presenting as their qualifications to obtain financing. It can help you as a lender, to clearly define who you are, what you have reviewed, and why your signature on the letter or presenter of the pre-approval has standing enough to represent any real value!
Pre-approval letters have to be about the person doing the work AND the process they followed to reach the determination they did. Taking advantage of a proven process can help your clients win deals and help your transactions close smoothly and quickly!
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