Not all 'buyers' are able to buy
To prove their worthiness, sometimes prospective buyers will show a prequalification letter, Wiren says. "And that means nothing."
That's because in a prequalification, lenders usually don't verify buyers' information. A preapproval, on the other hand, involves third-party verification.
"'Prequalified,' that means they've talked with a lender and said, 'I have good credit and I make X number of dollars a year,'" Wiren says. Based on that, the lender responds that the buyer can reasonably expect to borrow a certain amount -- if those self-supplied facts are accurate and there aren't any negatives, he says. Most lenders don't research those details until the buyer applies for a loan, he adds.
What the agent wishes you knew: Serious (and smart) buyers are "preapproved." That means they've already applied for the loan, the bank has verified their financial information and (if the numbers remain the same until closing) it promises to loan a specific amount at a specific interest rate.
Still, after an offer, smart agents will call the lender and verify that the prospective buyer is preapproved for the necessary amount, Wiren says. At the same time, that agent will verify that the lender would have no problem closing in the expected time period -- usually 30 to 45 days.