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Ready Set Sold with Bryan Vogt #15-04: Scott Miles of BarCom Security and Joanna Theismann of Delmar Financial: Make sure your agent knows the difference between a pre-qualifying vs. pre-approval before accepting an offer

September 2, 2017

Bryan Vogt: Hey, welcome back to Ready Set Sold. I’m your host Bryan Vogt and, as I mentioned in the very first segment today, we talked about pre-approvals, and we’ve talked about these before. Pre-approvals versus pre-qualifications as you as the seller and hopefully your agent already knows what the difference is. It’s a huge difference.
Now, the good news is that, yes, even though it’s a pre-qualification, it can work but boy, getting that pre-approval is really, really, very, very important. We just had some situations happen with sellers. Yes, the deal went through, but we were literally at the last minute, the last period of time. The sellers had already moved out and now we were just waiting for that clear to close, meaning is that they actually have the money and the buyers can bring the money to closing.
With that, I want to bring in a top expert. She’s been doing this for a very long time. I don’t know, at least 10 years, but probably longer than that, Joanna Theismann with Delmar Financial. Hi, Joanna.
Joanna T.: Yes, thank you for having me, and it has been well over 10 years.
Bryan Vogt: It has been well over 10 years, but you started when you were 19, so that’s okay, and that’s one thing about Delmar Financial, and Joanna in particular. We’ve talked before, numerous times, and the truth of the matter is, is if they have the right lender, how long does it really take to get a pre-approval, versus pre-qual, and maybe you could explain the difference between the two?
Joanna T.: Well sure, so I mean the difference is, is pretty drastic. So a pre-qualification is, in essence, just having a conversation with the client, and based on what they’ve told you, you can say, “Yeah, it sounds like you would qualify for the loan.” A pre-approval is much more in-depth, and you’re making a complete loan application. You’re pulling their credit report, may verify pay stubs and bank statements and tax returns to where you can really get a good feel that they are fully qualified.
At that point too, we also run the application through our automated underwriting system powered through Fannie Mae, which goes through the guidelines and make sure that they’re meeting that criteria for the true pre-approval. That can be done relatively quickly when you’re dealing with a great lender and a great company such as Delmar Financial, or any local lender. So typically you’re going to be looking at being able to have that as quickly as 30 minutes.
Bryan Vogt: Wow.
Joanna T.: Sometimes it can take longer, you know, if it’s a more complex situation. You know, if they’re self-employed and you’ve got to analyze tax returns, it could take a couple hours if they get you documentation quickly, but that process really can’t happen in a very short period of time.
Bryan Vogt: And I think that’s the thing, and many times, whether you’re a first-time home buyer or maybe you know what? You’re selling your home, and now you’re, but it’s been 10 years or 15 years, and again, the days of weeks and the traditional banks, nothing wrong with banks, but the period of time that it used to take was number one, nail-biting, and number two, it just made it more difficult for people to make decisions.
And now again, when you’re talking 30 minutes, and that’s the part that we always want to try to emphasize, not only with buyers who we’re working with, but basically educating the sellers, that getting this pre-approval process done, even if they started off with a pre-qualification letter. As you said, it sounds good. It doesn’t mean it doesn’t work, many times it does. But the difference is, as you well know, is it also gives the buyer, what we find, is confidence in making their decisions. Do you agree?
Joanna T.: It certainly does, yeah. I completely agree. You know, the buyers have to be comfortable with their price range and with their payments, and down payment requirements, and all those parts that go into it when they’re making that offer. I mean, they have to feel comfortable with what they’re going into, and it does help them give them more negotiating power and you know, when they’re making that offer to the seller.
Bryan Vogt: And it does. I mean, and really, real estate, most sellers get this and really, for the most part, I think buyers too. Show me the money. I mean, it really comes down to that.
Joanna T.: Right.
Bryan Vogt: Show me the money. You know, that famous line in … what, can’t remember what movie that was.
Joanna T.: It was Jerry Maguire.
Bryan Vogt: Jerry Maguire, very good. That was a great movie. But I mean, you know, it really is. It’s show me the money, and then let’s talk about if there’s negotiations, whatever. I mean, the market’s been going pretty hot. There’s not near as much negotiations as before. But still, either way, whatever you have, when you have that money as a buyer and also the seller, it makes the process go so much smoother.
And again, I can’t stress enough that we get to work with a lot of lenders for various reasons, whatever, and what Joanna is talking about, and we’re talking 30 minutes or two hours, is phenomenal. So I just want to give kudos to you guys, because even though it’s a short period of time, for some other lenders it could be, quite frankly, business owners and things like that, it could be three, four, or five days. You’re talking about potentially hours or maybe 24 hours at the worst. Of course, they have to give you the information. That’s kind of a given.
Joanna T.: Right.
Bryan Vogt: But don’t you find that’s even easier now? I mean people have everything on their phones, right?
Joanna T.: They do. And you know, technology is a wonderful tool. We ourselves have a wonderful phone app that we share with our clients and with our referral partners as well, where clients can actually upload their documentation directly to our loan system.
Bryan Vogt: Wow.
Joanna T.: From the ease of their phones. So you know, technology has come a long way, and it really helps simplify that process for the buyers.
Bryan Vogt: Right, and then that’s it. Things are becoming more and more simple and whatever, and I love your attitude too, Joanna, because if you’re buying, and again, if you’re selling your home, you’re going to be a potential buyer buying something down the road. If you’re not working with a lender, I was just talking to a lender who shall go nameless, and I just said, “Well how’s the process?” And they said, “Oh my God, it just drags out and all the information we need.” Look, if you’ve got that type of lender talking to you, talk to Joanna. I mean, you’ve got the wrong lender. It doesn’t need to take that long. It’s a very simple process where people who have the experience that can do, can do the job.
Joanna T.: I was going to say, you know, with that in mind, as long as everybody has the proper expectations going forward, yes, there’s a lot of documentation. The process can be, you know, a little cumbersome at times, but when you go in with the expectation of what’s needed, it goes a lot smoother, so that definitely is helpful.
Bryan Vogt: Right. There is a little bit more, but in the end, especially with technology, I think it kind of evens it out, meaning is how fast you can get it.
Joanna T.: It will.
Bryan Vogt: Hey, you know what? Our time is running out. I’ve got to run here. Thank you so much, Joanna Theismann with Delmar Financial for joining us today. Hey, get ready for the tip of the week in the next segment. Your host,

Bryan Vogt with Ready Set Sold.

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