The next question is how do you get your client to understand the difference and the importance of actually obtaining a pre-approval that requires documents to be submitted and a commitment from a lender that includes a rate and amount the client is qualified for based on actual numbers and credit bureau?
One place to start is by clarifying that they have submitted documents and have had a bureau report pulled with a definitive outcome. The other is to explain that if they don't do this they could be disappointed if they find the house of their dreams and end up being turned down after a closer official look at their current financial status including T4's, employment letters, income verification, credit bureau and more.
Not to mention the time you as their realtor have taken to show them properties that might not be a reality for that client. Having to refocus your client after a disappointment can be a tough sell.
One of the ways Harmony Mortgage Group suggests and also works with clients is to educate the client on the language differences and what it means in terms of working with actual numbers and being qualified in a formal manner than in just a tentative way provided they can produce the documents required at a later date and meet the lenders income / credit ratio.
As a realtor the Approved Client over the Pre-qualified or Pre-approved client is a client that is ready to buy and has a formal committal from their lending institution and ultimately they are the most cost effective client for realtors to work with.
A typical conversation between a realtor and buyer is like this:
Realtor: Do you have financing in place?
Buyer: Yes I have been pre approved for $XXXXX
Realtor: Great, lets go look at some properties.
A Preferred Conversation between a realtor and buyer:
Realtor: Have you obtained financing?
Buyer: Yes I have been pre approved for $XXXX
Realtor: Great! Do you know if you have a formal pre- approval or a pre- qualification?
Buyer: I'm not sure, what is the difference?
Realtor: Let me explain........
Harmony Mortgage Group works with realtors so that their clients are not disappointed when they find out that their pre-qualification or rate hold doesn’t hold the merit they felt it did while house hunting. It is a way to avoid messy real estate transactions that end up either falling through or running into complications. It is our job to work with your clients as partners in this process and help them understand their lending parameters and for you as their realtor to work with them in confidence based on real numbers. The best part is that we can get them several lending options that work with their lifestyle and needs. It's not just about fitting into mortgage lending parameters, it is also about the mortgage fitting the buyers needs. Not all mortgages are created equally and knowing how to sift through the language and world of finance is our job. Helping your clients achieve home ownership with the best lending option available to them creates long term repeat clients for you as their realtor and for Harmony Mortgage Group as their brokers. It's a partnership that works long term and creates sustainability for the future.
If a client has been formally pre-approved it is important to find out if the lender is acting on the best interest of the client. The only way to really know if the client has been given the best rate is to let them know that a mortgage broker is independent of the banks or one specific lending institution and can shop many institutions on their behalf to make sure they are getting the best rate. One phone call can let you know if your client has the best rate out there or if a mortgage broker can set them up with a lender who can beat the rate they have been give. It is simple peace of mind!
