Seller asking to see pre-qualification letter

Seller asking to see pre-qualification letter

Newington, CT · Member since 2016 · 9 posts · 2 votes

I just finished the first round of a direct mail campaign. This will be my first property and I targeted towns/properties that I plan on buying as an owner-occupant. 

I was able to generate a few hot leads that I'm currently working on. I mentioned in my mailer that I'm already pre-qualified. One of the sellers I spoke with asked to see a copy of my pre-qualification letter before he shows me the property. I believe I've developed a good rapport with the seller and he admitted that he has never done a deal off-market before so he wants to be cautious. I assured him I would be transparent and act in good faith throughout the process, but I'm reluctant to disclose the full amount I'm pre-qualified for before we move towards any potential negotiations because I believe that would jeopardize my ability to negotiate a great deal as opposed to a good deal. 

I have a pre-qualification letter from a previous offer and my initial thought was to white out the specific numbers/loan type, then scan it and send it to the seller. However, the seller also mentioned a ball park price that he would entertain for an offer, my other idea was to request a second pre-qualification letter based on the ball park price he mentioned. 

Does anyone have any thoughts or suggestions on how to best handle this?

Thanks in advance. 

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San Antonio, TX · Member since 2017 · 81 posts · 31 votes
9y

I like your idea of requesting the second letter at his price.  Shows you have the funds to talk seriously without overplaying your hand.

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  • Lake Havasu City, AZ · Member since 2017 · 58 posts · 23 votes
    9y

    "I assured him I would be transparent and act in good faith throughout the process"

    I see what you are wanting to do, but I think you answered your own question. Submitting a Pre-qualification letter with redacted information would seem super shady to me personally if I was the seller in your scenario. There is a chance that the seller may just be looking for a  newbie buyer that is a sucker and will overpay. Show him the real letter and negotiate the price, move on if he asks to much.

  • San Antonio, TX · Member since 2017 · 81 posts · 31 votes
    9y

    I like your idea of requesting the second letter at his price.  Shows you have the funds to talk seriously without overplaying your hand.

  • Real Estate Agent · Westford, MA · Member since 2016 · 92 posts · 52 votes
    9y
    Your lender will be able to send you a modified letter for the correct price range of this property. A redacted prequal letter wouldn't give a seller warm fuzzy feelings.
  • Investor / Vendor · San Diego, CA · Member since 2016 · 1k+ posts · 949 votes
    9y

    @Dan Giungi

    Your lender should easily be able to give you a modified pre-qual letter and if they can't, consider some local credit unions.

    Absolutely do NOT send any materials redacted/whited-out because it looks super sketch and this is a business of relationships and trust, doing things like that is how you kill deals. It's like the threads on here where people ask about area codes for people to call, always use a local area code because people get immediately suspicious at 'weird' area codes when they see it on direct mail.

    You want to do everything you can to ease the seller's mind. Also, is the seller even in distress? If not, it's much harder to get a deal. You need to always make sure you know the motivation behind why the seller is letting go of the property to get a good deal. 

    Usually to get a good deal you emphasize speed (cash offer but in your case this doesn't work), and avoiding lots of traffic to the home (open houses, nosey neighbors). 

  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y
    Originally posted by @Dan Giungi:

    I just finished the first round of a direct mail campaign. This will be my first property and I targeted towns/properties that I plan on buying as an owner-occupant. 

    I was able to generate a few hot leads that I'm currently working on. I mentioned in my mailer that I'm already pre-qualified. One of the sellers I spoke with asked to see a copy of my pre-qualification letter before he shows me the property. I believe I've developed a good rapport with the seller and he admitted that he has never done a deal off-market before so he wants to be cautious. I assured him I would be transparent and act in good faith throughout the process, but I'm reluctant to disclose the full amount I'm pre-qualified for before we move towards any potential negotiations because I believe that would jeopardize my ability to negotiate a great deal as opposed to a good deal. 

    I have a pre-qualification letter from a previous offer and my initial thought was to white out the specific numbers/loan type, then scan it and send it to the seller. However, the seller also mentioned a ball park price that he would entertain for an offer, my other idea was to request a second pre-qualification letter based on the ball park price he mentioned. 

    Does anyone have any thoughts or suggestions on how to best handle this?

    Thanks in advance. 

     In the Bay Area, and California in general actually, it is common practice to ask the lender for a property-specific letter that's exactly at what you want to offer, for exactly the reasons you identify. I built that into my app, actually. :P I don't know your market, however. 

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    9y

    I have always thought this was a silly idea.  Just because you qualify for a $300k mtg doesn't mean you'll pay $300k for a $100k property.  Many cash buyers show $500k available for a $100k purchase.  As a seller I w'd rather have a buyer who "easily" qualifies as opposed to  a buyer who "barely" qualifies, I

  • Patrick LiskaPro Member
    Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
    9y

    I agree with @Mike Hottinga, show them the real letter, this will show that you are more than qualified to buy the place, and if you can't negotiate the sell price that is beneficial, walk away, but leave it on a good note asking if you can keep in touch with them, then ask if they know of anyone else that may want to sell.

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