What You Should Know About The Buyer’s Approval Letter

Buyer's approval letterWhen someone places their home on the market, they do so because they intend on selling it. They aren’t doing it because they want to show off their properties and just list them. Granted, there are times when deals will fall through because the buyer’s financing has hit a few snags. There are countless reasons behind a deal going wrong. It is the inexperienced (and sometimes desperate) agent who will show any house to anyone, simply because they are trying to make a sale. These are agents that you should make a point to avoid when you’re representing a seller.

How Can I Avoid a Weak Buyer?

Avoiding a weak buyer is a lot simpler than you may think. When a realtor submits an offer, you should always ask a slew of questions. Here are just a few examples:

  • Ask the realtor how long they have been working with the homebuyer. If they’ve met them before submitting the offer, then you can deduce that the realtor knows nothing about the buyer or their finances.
  • Call the loan officer listed on the approval letter and ask these questions:
    • Have you checked the homebuyers income to debt ratio?
    • Are the homebuyer’s self-employed? If so, do you have tax returns that can verify this?
    • Has the buyer filled out the application completely?
    • What does the buyer’s credit look like?
    • Can the buyer cover the down payment and closing cost fees?
    • Does the buyer have a stable form of income?

There isn’t a law that requires a lender to answer these questions, but they usually, do. You don’t have to go on worrying about being be told that the information cannot be disclosed. Sometimes the buyer will ask that the seller covers closing costs and sometimes their agent will say something like, “My buyer doesn’t have enough funds to cover the closing costs, so they really need the seller to give them 3% of the sale price on the property.”

This tactic has been played time and time before. If the lender is nervous or tries to give you some excuse as to why they do not have the tax returns, then you can safely assume that the buyer isn’t truly a buyer since they aren’t really ready to make that commitment. Alarmingly enough, there have been many instances where the loan officer hasn’t done anything more than just have a conversation with the “buyer.”

Many agents complain about prospective deals falling through because of a financial problem. Face it, it’s going to happen. You cannot predict every disaster in the real estate business, but you can get rid of many setbacks simply by doing your job as a realtor. Every person who is selling their home should ask the listing agent about the approval letter before they even think about signing on that dotted line to sell off their home.

Leave a Reply

Your email address will not be published. Required fields are marked *