If there’s one thing sellers want when you put a bid on a home, it’s a pre-approval letter from a lender. This one piece of paper lets the seller know that you are a serious buyer. Without that piece of paper, the seller is basically taking your word for it that you can get financing. So does not having that pre-approval mean you can’t bid on a home?
While you can bid on a home, there’s nothing saying that the seller will accept the bid. That pre-approval speaks volumes to sellers. But if you don’t have yours quite yet and you find the perfect home, there are things you can do to get the seller to accept your bid.
Start the Pre-Approval Process Right After an Offer
If you happen to find the perfect home before you have a pre-approval, do what you can with the bank as fast as you can. In other words, make sure you at least fill out a mortgage application and get your qualifying documents to the lender. You can even get a feel for what the loan officer thinks of your application.
While the loan officer isn’t the underwriter and he doesn’t have the final say, loan officers usually have a good feel for which loans will get approved. Basically, the more knowledge you have regarding your financial position, the better your chances of your offer being accepted. You can at least show the seller that you applied for the loan and have the process rolling. The seller may be willing to wait for that pre-approval letter before accepting another bidder’s offer.
Put Earnest Money Down
It’s not required to make an earnest money deposit, but it does show the seller the seriousness in your offer. The more money you offer as earnest money, the more the seller will see that you do want to buy the home.
Earnest money is a deposit you put down on the home in good faith. The escrow agent keeps the money in an account separate from the buyer or seller’s money. If the seller accepts your offer and signs the purchase contract, you are bound to that contract. If you back out of the sale and it’s not for a reason allowed/stated in the contract, the seller keeps your earnest money and is able to put the home back on the market.
If you don’t have a pre-approval yet, earnest money can be the next best thing because it shows the lender that you want the home and will do what it takes to get it.
Get Personal With the Seller
Finally, you should get personal with the seller. Get to know him/her. Ask questions about the house, its history, and the reason the sellers are moving. As you get to know one another, there might be something that makes the seller connect with you. They may see themselves in you when they were younger or have some other connection that makes them want you to have the home.
Sometimes selling a home is more about emotions than finances. If you can get to the seller in a personal way, they can see that this home means a lot to you. As long as they feel they can trust you, they make take your word on the financing, and accept your offer.
Of course, there’s no guarantee that a seller will accept your offer without a pre-approval letter, but it’s worth a try. While it’s best to get the pre-approval letter first, sometimes it just doesn’t happen that way. If it happens backward for you, work closely with the seller to help him/her see that you are a serious buyer.