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I agree with FLgirl727, but I don't see how it would work. For example, pre-approval letter states $amount, and for every single offer I made I asked my lender to revise that amount, so I would prefer not to disclose my approved amount before I am ready to make an offer.
Realtors I used before always asked me if I was pre-approved, but never asked me to show it on paper. So, buyers with realtors doesn't mean anything.
Maybe it's just the way it's done in Florida, but when I contacted the real estate agent about seeing houses, they asked for the name of my lender and verified the information. Real estate agents spend a lot of time (and money with the gas prices) driving around with buyers. If they do that for someone with zero chance of qualifying for a home... it's just bad business sense.
Once upon a time, agents used to sit down with clients and help them figure out how much they could afford to spend on a house. If the people had no hope of ever buying, the agent would not drive them around showing them properties. Nor would the agent show them properties that they could never hope to afford.
I don't understand why they no longer do that. With the cost of gasoline, I would think they would not want to spend days playing free chauffeur to people that can't buy.
Not to mention how annoying it is to the home seller.
Once upon a time, agents used to sit down with clients and help them figure out how much they could afford to spend on a house. If the people had no hope of ever buying, the agent would not drive them around showing them properties. Nor would the agent show them properties that they could never hope to afford.
We still do that but we send them to a lender we trust. There are way to many rules, regulations, laws, credit issues for us lowly RE agents to determine what someone can afford.
It's best to let a professional lender do their job.
There are some pros and cons to getting the pre-qualification, but the folks who say they are not worth a lot are right.
What I have found much more valuable is to learn as much as possible about the buyers through a Google search. For example, when an accepted offer was written up on our home and the lender was disclosed, I was able to find out that the buyers were taking out a huge loan compared to the total assets in their very small credit union. This was worrisome until I later learned that the father of one of the buyers sat on the board of the credit union and the loan would likely be approved more rapidly than normal. I was also able to find out other information, such as what the buyers did for a living, how much they sold their home for, etc., etc. Unfortunately, this transaction failed for other reasons.
If you do insist on a letter, be sure you get all of it, including any conditions set by the lender. My experience has been that buyers and real estate agents love to send you only the first page of the letter, which outlines just the figures and the down payment. What you want to get is all the pages because the others may contain some pretty rigorous conditions that might cause you to disqualify the buyer, i.e., the bank will grant the loan if the buyer pays back a business loan that he may have taken out with the same institution.
On the down side, the letter may not give you nearly enough insight into the buyers' financial condition. For example, the letter from our next buyers did not disclose to us that they were getting a home equity loan from the same institution to finance part of the down payment. So some of their cash down was not really their own cash. They also didn't disclose that they already had a large mortgage on their storm-affected home, which they were not selling to buy ours. We believe these undisclosed items contributed mightily to our buyers taking a month longer than expected to get their mortgage commitment, even though they were said to have a close business relationship with the lender.
In short, get a letter (the entire letter) and then do your own homework on the buyers.
Selling a Home is a 'pain,' which typically includes the need to 'kiss a lot of frogs ... in order to find a prince' (...the 'frogs' don't like it much either!) Therefore, unless you are in a really strong seller's market, it doesn't make good sense to further require that the 'frogs' have all had recent baths and wear cute little hats.
Even though Pre-Qual letter are easy to get, they mean little and there are many reasons people don't get them ... many of which have nothing to do with the ability to buy a home. (Referrals, Out-of-town lookers, Cash buyers, 'Strong enough to not bother, etc). Sure, some people out there may have a 'home shopping hobby' ... and burglars have been known to 'case houses' by posing as buyers. However, your real issue is your own convenience -- and that's how a Pre-Qual requirement will come off.
A much better approach is to have a frank discussion with your Realtor about their own process of weeding out the 'tire kickers'-- You can request additional qualifiers if you are really paranoid, but, why prolong the 'frog kissing' process?'
When I bought last year, nearly every house I looked at, the seller required a pre-approval letter (not pre-qualification letter) plus proof of funds, as part of the initial offer. (Cash offers merely required proof of funds).
The proof of funds felt invasive, but it was a seller's market with bidding wars, buyers waiving appraisal/inspection contingencies, etc.
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