Realities About Loan Preapprovals

There has been a radio ad running on ESPN Radio where one person is telling the other how much smoother their effort to buy a home has been since they received a pre-approval from XYZ Mortgage (not the actual name, and my apologies if there really is an XYZ Mortgage out there.)

In the ad, the pre-approval is positioned as a unique benefit of this company. And maybe that’s the case outside the Phoenix real estate market. But here, any lender who can’t provide you with a quick pre-approval is next to worthless because any offer that comes in without a pre-approval isn’t going to be considered except by the most desperate of sellers and most inexperienced of listing agents.

Granted, the AAR contract boilerplate gives a buyer the option of not providing a pre-qual with the offer but, really … if you were a seller, why would you even think about signing a purchase contract when you don’t know whether the buyer has even spoken to a lender, much less actually be able to get a loan? Once a seller signs a purchase contract he or she has virtually zero outs – the home comes off the market, and then you’re at the mercy of the buyer for the bulk of the transaction.

I get marketing … take a feature and sell it as a benefit. But I’m hard pressed to see where a necessity necessarily is a benefit. Yet that’s what is on the radio and that’s what is in my Inbox nearly every day.

There are many, many, many lenders out there. If the best your lender can do is fill out a one-page form in a timely fashion, aim higher.

Photo credit: seekingthomas via Flickr Creative Commons

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at