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WHY PREQUALIFY?

I speak with clients a lot show really underestimate the importance of having some 3rd party verification of funds. This goes for "cash buyers" as well as buyers who need financing.

Having that piece of paper can mean the difference between getting the property you want or missing that once-in-a-lifetime opportunity. Here are some of the reasons:

1) You know how much home you can afford.
No doubts, no ifs, no questions. If you have a proofs of funds letter, preapproval or prequalification letter there is no question you can afford a specific property.

2) Better negotiating power.
You may know, but what's most important is that the seller or agent knows. Too often people who are confident that they have excellent credit or enough money in the bank run into some obstacle that is unforeseen. Also, there is a HUGE difference in negotiating power when you present a seller or seller's agent with a document proving your situation rather than getting them to accept heresay.

3) A more aggressive buyer's agent means a better deal.
If the agent representing you in the transaction has some proof of your position, he can more aggressively negotiate on your behalf and either get you a better deal or help you to beat out competitive offers with solid proof of financing.

4) Quick response time.
If you put in an offer on a standard purchase agreement contingent upon financing and the seller receives another offer with certified funds, (even though it might be for less money!), the seller will likely go with the cash-in-hand sure-thing.
5) A snowball's chance on bank owned properties and short sales.
If you are buying REO, Foreclosure or Short sale properties, the bank will not even consider an offer without proof of financing. Period. (Some lenders will even make you prove it by undergoing their approval process even if you won't be getting a loan from them!) So if you don't have the piece of paper, they will not even accept your offer.

The bottom line? GET THE PIECE OF PAPER.
It gives any buyer authority and can be the key in helping you to get the property you want at the best price possible.