Why Getting PreApproved Is So Important Today

Dated: 05/28/2018

Views: 2200

Have you been searching for a home in and around Knoxville, TN? How's that going for you? Let me guess....I bet you find a home on Zillow that's perfect for you. It has the right number of bedrooms, a master on the main level, a flat yard for the kids and a large two car garage and right around the corner from the elementary school you want your kids to go to. So you call an agent - hopefully the agent you hired (more on the the importance of that later) and find out that the house is pending. That's disappointing enough but even more so since it's the third time it's happened this week. 

Are you starting to feel like you're never going to find a house? Well I got some news for you. You're going about this all wrong. There's a process to this whole "house buying" thing and there's a lot more to it then searching real estate websites and contacting random agents to do your bidding for you. Down that road lies stress and frustration. Lucky for you I'm about to break down the right way. 

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The Right Way to Buy a Home

1. Get Pre-Approved for a Home Loan Before You Start Searching

You're probably wondering, "Why the heck would I do that? I don't even know if I'll find a house."

Well let me tell you why but first let's address the one thing - getting preapproved does not commit you to using the loan. Again, you in no way have to use the money when you get preapproved. When you go through this process you're simply doing a preliminary loan process. It's not a promise to even use that bank. In fact after using one source for preapproval you're more than welcome - and sometimes it's suggested - that you submit application to other lenders to find the best rates and loan terms. 

Check out this article at The Balance: Basics of Loan Preapproval 

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It's like having cash.

Okay - now let me tell you the #1 reason for getting preapproved before buying a home. Though this is the best course of action to take in any market, today in Knoxville's market, with housing inventory so low, this will put you a step ahead of so many buyers that are still dragging their feet because they're afraid to commit to a process.

Imagine this. You're selling a house and you need to sell it in less than thirty days. I don't know why. Think of a reason...let's say you got a dream job in Hawaii but you have to sell your house in this time in order to accept it. You have two buyers come to you in the first day with their offers. The first buyer offers you $5,000 over your asking price but they need to get their financing in order still. The second buyer offers you $5,000 less than asking price but have cash. Which are you going to choose? Be honest. The cash, right!? 

Well, that's what being preapproved is. It's telling a seller, "Yes, I have the money to make this offer and you can count on it because the bank says so."

In this market it's more important than ever to be prepared to close on a house when you find it. You don't know how many times I see buyers missing out on the right home because they made the wrong choice. 

If you wait til the last minute to get your loan after finding a house you'll lose out. Getting preapproved is a process in its self. By the time you get all of the paperwork submitted and signatures done it'll be at least two days and that's if you use a fast lender. We have some great lenders here in Knoxville. That's plenty of time for qualified buyers to step in and make a more enticing offer.

3 more reasons to get preapproved 

1. It let's you know if you can get a loan. Sounds pretty common sense but you'd be surprised how many times I've wasted a day or a weekend in my early days as an agent. Driving around east Tennessee showing houses to people who in the end can't find a lender to approve a mortgage to them.  So frustrating. 

2. You'll know how much home you can afford. Similarly to the wasted weekends, I've also talked with so many buyers who are browsing online for homes that are $200,000 to $300,000 only to find out they can only afford a $175,000 house. It doesn't hurt my feelings to learn this as long as you still want to buy but I bet it is a gut check to those buyers. 

3. Any Realtor worth his license is going to require you get preapproved before they spend their time showing you homes or negotiating an offer for you. Why? Because as licensed real estate agents we only get paid when we show results. We do not get paid hourly like lawyers and we don't get paid for every visit like doctors though we are held to the same standards of professionalism and ethics as these other two. We get paid when you buy (or sell depending). For this reason there is nothing more precious to an agent then their time. Our time has to be spent wisely and for that reason we must prioritize who we help. It's not personal, it's just smart business. As much as we'd love to help you - and usually will still try to do so without dropping the ball on our other clients - we simply need to know that you're committed to the process before committing to you. That's why so many agents ask if you want to speak to their lenders and if you're preapproved in the first five minutes of a conversation. Don't be that guy. Get preapproved first. 

One last piece of advice

Since you made it this far, let me give you one more bit of advice. In addition to getting preapproved, it is imperative that you hire an agent from the start. Let me guess again...you're thinking, "I don't need an agent to find me homes. I can do that on my own."

Well, of course you can. With technology today you can find just about all the same homes that we can. Here's the difference though. All of those sites are fed their information from our source and usually take one to two days to catch up. With that little piece of information, remember what I said earlier? Two days is plenty of time to miss out on the house of your dreams. 

Also, you need an agent to be able to write that offer as soon as you find the house. It's simple. You find the house, your agent makes an offer, you have a 90% higher chance of winning that house. Or you can wait to find an agent after you find the house, gamble on who and what that agent can do and have a 90% chance of missing out on that house. 

Here's the last reason you need to hire an agent and it starts when you find the house you want to buy. Yes, if you really wanted to you can search homes, visit homes and find the home without an agent. However, are you going to write an offer without one? Are you going to know how to make a strong offer? Is it simply based on the amount of money offered? No, it's not. Are you going to have the ability to negotiate; schedule the important dates of inspection, appraisal, final walk through and closing; are you going to be able to take advantage of every step and stage to take advantage of what arises to continue placing yourself in a better position all the way to closing? If you're a secret real estate pro like me you can. If not, you need to hire an agent. 

Start interviewing agents as soon as you have your financing in order or right before you do so. Better yet, come find me on Facebook and IM me or call me at the number on this page. 

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Holli McCray Home Marketing Group Support Team

Being the Greater Knoxville area’s top selling real estate team, we can fulfill all of your real estate needs at a high level. We have an expert staff that allows us to provide each of our clients ....

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