Getting approved before shopping

I know, I know... the way it "usually" works is that you shop for a house and then find out if you can get a loan on the one you want. Traditionally, buyers may feel as though getting pre-approved is putting the cart before the horse- how do you know how much house to get approved for if you don’t know which house you want yet, right?

However, at the very least, you should be pre-qualified and get some sort of idea on how much house you can afford. Many buyer’s agents will tell you that looking at houses and then finding out you can’t afford them can be very disappointing. If you have to set your sights lower, you will find very little that suits your style because you have had a taste of a higher echelon of homes.

Many buyer’s agents are encouraging their clients to go so far as to get pre-approved. Although this may seem extreme, I recently had an uncomfortable situation with a young couple who wanted to buy one of my listings.

Their agent went so far as to tell me they were approved for the loan but when the Offer to Purchase was written, it was more like the-check-is-in-the-mail. Only days later, the bank did not approve the couple and now, I believe the agent was not only misrepresenting the situation, but we have been held up during a time period where we could have sold the house to other clients.

When the buyers don’t get the loan, it is one of the rare cases where the sellers have rights to walk away from the contract without penalty.