Bryan Vogt: Welcome back everyone to Ready, Set, Sold. As I told you in the last segment, I kind of left you hanging on the pre-approval process. I’m here with Mark Dill of US Bank, who has 20 plus years of experience. I mean, Mark basically, you’ve seen it all, I mean, right?
Mark Dill: Absolutely. There’s very little that I have not experienced in those 22 years. You know, the pre-qualification versus pre-approval is pretty simple. The pre-approval process is just a more thorough, a more clean, a more definite letter. Pre-qualification does not involve needing hard documents such as W2s and pay stubs and tax returns and so forth, but it is not as solid as a pre-approval letter. In this day and age, like you’ve said before, sellers are wanting that letter versus a pre-qualification letter because a pre-approval letter has went to the underwriter.
The income has been analyzed and figured. The assets, checking savings and so forth has been reviewed, and we know that we have enough down payment funds for the deal. If there’s a gift we know that the gift-giver has the ability to gift it and is able. Pre-qualification is basically just taking the information over the phone and hoping that what I’m being told is true. Many people do not … they say they make 60,000 a year, you get the W2 and actually it’s less. So, it makes it very difficult to be able to give them a maximum purchase price that they can qualify for without doing a true pre-approval.
Bryan Vogt: What I’m hearing you say though, it’s a lose-lose on both sides. I mean, number one that you have the seller that has some doubt, and that’s the seller’s worst nightmare is the buyer doesn’t have the money. The second thing, though, on the buying side is that you don’t know exactly what your money actually can buy.
Mark Dill: Exactly.
Bryan Vogt: We’ve seen that on our side, on the real estate side, where buyers could’ve bought and easily afforded — that wasn’t the issue — but didn’t go through the process of really sitting down and talking to a lender like yourself, and getting the information so they had a clear picture of how far, or how much their money could buy them, and they settled for far less house. I mean they liked it, I guess, but it wasn’t the dream home that they’d been looking for.
Mark Dill: Exactly. You know, and the pre-approval process, yes. Does it take a little bit more time? Yes. But in the long run, it makes things quicker. Because once a property is found, you’ve already been through the underwriting process. You’re plugging in a property, you’re getting an appraisal done, you’re getting the title work, you’re getting insurance on it, but the main nuts and bolts of the deal, being the income and assets has been reviewed. We don’t have to worry about that. Sellers should feel much more confident with a pre-approval letter over a pre-qualification letter.
Bryan Vogt: It’s something have to do anyway. If you’re buying a home, you’re going to have to go through this process. It’s not like you’re doing an extra step of work that you wouldn’t normally have to do.
Mark Dill: Exactly.
Bryan Vogt: Right.
Mark Dill: Right.
Bryan Vogt: And I think that’s the same thing with the sellers. More and more sellers are asking for that pre-approval versus a pre-qual. Now, just so you know, I’m not sitting here saying that everyone that has a pre-qualification letter, if you’re on the market right now, or if you just accepted a contract that had a prequalification letter, that it’s going fail. I don’t mean that, okay? But it does happen.
And when we see it — and maybe if you got homes in your area, if you are a homeowner, and you’re looking at houses, and all of a sudden they come back on the market — more times than not, it was a pre-qual letter, and they said the financing fell through. So, something didn’t jive.
And, again, if you’re a seller, understand, is that a risk that you really want to take? It doesn’t happen every day, and it doesn’t. But why take that risk when you’re off the market now? And that’s virtually what happens. You really become off the market once you’ve go have a contract, offer, and acceptance. For seven days, for a week. In a hot market, who knows what opportunities that you may be missing out on.
We don’t own the houses that we sell. Okay? Some agents might think that, but we don’t. I don’t think it’s your money that your giving out. It would be nice, if it was your money. That wouldn’t be a bad thing, but, it’s not our money. So basically, our way of looking upon it is for an informational basis. Sounds like the same way with you. You’re just trying to give people information, and the correct information they can make their decisions on their own.
Mark Dill: You got it.
Bryan Vogt: And that’s the real thing that we’re really talking about. And that’s what an agent or a good lender like Mark can do, is they can give you the information that you need to make sure that you’re doing the right things. At least you’re making the decisions on how you want to move forward with it, whether you’re buying a home, or on the selling side, your realtor is give you the information of what a pre-qual versus a pre-approval letter is like.
With that said, we’re going to stick with Mark the next segment, we’re going to talk about the appraisal process. Yes, that scary, terrible thing that most sellers fear. We’re going to try to take some of that fear out of it and kind of tell you exactly how the appraisal process works.
You’re listening to Ready, Set, Sold. This is your host, Bryan Vogt, and hey, just before I forget, ReadySetSold.org..com, go get that book. See you on the other side.