Why financing pre-approval is important.

I was lucky enough recently to have received multiple offers on a single listing.  This used to be normal but these days there are more properties than buyers, so multiple simulatanious offers can be rare.  When an agent is faced with this, he or she has a duty to the owner to make sure the offers are valid and complete before presenting them to the owner for consideration.  One item that usually warrants exploration is financing.  Unless the buyer indicates that they will be paying cash for the property, the agent is wise to inquire as to where in the financing process the applicant is.  But even then, you may not get the full or accurate picture, leading to frustration on everyone's part.

Today I received a call from the agent of the buyer of the property I mentioned above.   The lender is going to need to delay the process as the buyer isn't 'as qualified as previously believed'.  So the contract has to be cancelled.  'No problem though', the agent explains to me.  'We are still within the contractual limit for this so there won't be any problem cancelling the contract'.  He is right but I must say it really sucks!  I specifically asked him, at the time the offer was made, if his client was preapproved.  He replied 'yes'.  But as it turns out, they were only pre-qulaified, not pre-approved.  Big difference. A pre-approved offer says to me 'I want the house and I have proof I can buy it'.  A pre-qualified offer says to me ' I want to buy the house and I MIGHT be able to buy it but i can't be sure yet.'   Obviously, any seller would rather have a sure thing so it is important information to know when presenting offers to a seller.  In this case, the seller certainly would have chosen the sure thing, but since he didn't have that information, ended up chosing a 'wanna-be' instead of an actual, qualified buyer.  

Back to the drawing board for round two!