Do I need to be pre-approved?

Question

Is pre-approval needed to view off market properties from a realtor?- I know there's other financing options

I've been driving around trying to find distressed properties, looking at listings with potential, and some other methods trying to find my first investment property. However it seems the owners never pick up the phone, or call back, real estate agents won't show me off market listings unless i'm pre-approved. Any recommendations or maybe some videos to watch/learn from?

Doug Smith · Answer

Hi Emmanuel. I'm right down the road from you in Tampa. The answer to your question is "it depends". Each seller and listing agent are going to require different things. Personally, I wouldn't be driving around without knowing how you'll structure the capital stack. I would get pre-approved regardless of whether they require it to look at a property or not.

Kyle Sosnowski · Answer

Awesome Ryan, thank you again. One last question if you don't mind. Just to clarify, I can pretty much connect and get pre-approved with any bank of my choosing correct? (If that be a big bank and or local bank/credit union) Do they all provide a service to help you get pre-approved?

Ryan Muska · Answer

Glad I could provide value! A mortgage professional can, in theory, take less than an hour to preapprove you. But oftentimes it takes a day or two because not all borrowers are clear-cut. What I mean by this is that a mortgage professional is going to have to take into account all of the following: Citizenship status, income, employment history, address history, credit score, debts, and assets. This information is going to need to be verified by documentation (Valid U.S. ID, bank statements, W2, paystubs, etc.). This info is typically what the professional is going to need to see, but different programs require different information to be gathered. Once they verify all the information about you, they can preapprove you for a certain amount (this process is often humbling and it is good to have the professional explain exactly what they are doing when looking at your info so that you can leave the situation more educated). After you have the preapproval, time to go shopping!

Adrian Lammersdorf-Scioll · Answer

You definitely want to get that pre approval, not just to go see properties, but to know what you can even afford. It's pretty much a waste of time to go look at a property, and then find out you don't qualify for it later. If you're paying cash you can just show your bank statement, and that would suffice as well. DSCR loans if you want to buy a rental property usually require 20-30% depending on how much the property makes already. FHA loans are doing 0% down now, but still require some payments out of pocket and your w-2 or business income to qualify for the payments. I have a few wholesalers I am connected with in the area that will send you off market properties without a pre approval. If you're interested, let me know and I would be happy to connect you. One of them even has a hard money lender in house that will give you 70% of the ARV in cash.

Ryan Muska · Answer

Yes, they can all help you. Big banks (Wells Fargo, Bank of America, Chase, etc.) are less likely to treat you like a human and more likely to treat you as a commodity, but yes they can help you.Credit unions will take an eternity and a half to get you started, but yes they can help you. Mortgage brokers are they best.Let me know if you want to connect.

Kyle Sosnowski · Answer

Ryan, that was an awesome reply, which personally helped me as well, I appreciate that. Would you please tell me, what does the pre-approval process normally consist of. I would assume most lenders are going to need the typical credit, income, and personal info to learn more about you. But just out of curiosity, what is all that I would expect to bring to a lender to get "pre-approved" on the spot (if it does take a simple conversation, or does this process take some time?) Thank you!

Jorge Vazquez · Answer

Pre-approval isn't universally required to view off-market properties from a realtor. However, having one shows you're a serious buyer and can afford the property. Some realtors or sellers might request it for assurance, while others might be more flexible. Always best to check with the specific realtor or seller!

Ryan Muska · Answer

As @Doug Smith had mentioned, it very much depends. If you are trying to purchase a home for all cash, then you won't need a preapproval. If this is the case, just explain it to the realtor/seller that you are intending on buying the property this way. If you are planning on purchasing a home with a mortgage, then oftentimes realtors will not show you a home unless you are a verified buyer; A.K.A. preapproved. Lots of buyers think they can afford what they are looking for, but often times they are misguided because of things they didn't realize were taken into account when applying for a mortgage. I'm not saying this is you, but this is why realtors don't like showing homes to buyers who are not preapproved. If they are not guaranteed that you are verified to be able to afford the purchase you are trying to make and they put hours/days/months into helping you just to end up getting denied on the financing, that would be a great waste of time and money for both parties. You don't have to get preapproved, but for realtors and sellers to take you seriously (unless you are a cash buyer willing to show funds) you should get preapproved.