Underwriting Approval | Why Sellers Want Approved Buyers

Mortgage lender Tom Parke discusses the importance of screening prospective homebuyers and explains why sellers benefit from buyers whose mortgage applications have undergone underwriting review.

Why Home Sellers Want Buyers With Underwriting Approval

When a seller is looking to sell a home, the most important thing that they should be concerned about is that the buyer they choose to sell the home to actually has the ability to buy the home.

You only want to sell a home once. When it comes to a contract, you want to be sure that the buyer can purchase this home.

Oftentimes, another lender might not have been as thorough with a buyer’s preapproval.

• They might not have gotten that buyer screened by an underwriter
• Perhaps they have not asked for all of the required documentation
• Or maybe they have not spoken to the buyer in six months, and there has been a job change.

That buyer may no longer be approved, but everybody thinks the buyer is approved.

Underwriting Approval: The Importance of Screening Buyers

Part of the service that we provide is that home sellers would like to partner with a real estate agent who has a lending partner that would be willing to screen the buyers with an underwriter’s approval.

When home sellers are partnering with a real estate agent to sell a home, it is a great idea that the real estate agent is partnered with a lending partner that will approve and screen the buyers by an underwriter.

You want the buyers to be approved by an underwriter upfront so that you have a guaranteed lending commitment.  That way, you know when you are selling the home to the buyers, an underwriter has given the blessing that the buyers have the ability to buy this home.

We have seen it in the past where a buyer shows up with a preapproval letter in hand and the seller decides to sell this home to the buyer, only to find out later:

• The buyer who is going to purchase the home has since left their W-2 job and has switched to a 1099 job where they are an independent contractor.
• They moved from a salaried job to an hourly job.
• The buyers moved from a salaried job to a job that is highly commissioned.
• Have a lot of bonus income, but they do not have a two-year history.
• They have switched to something where they no longer have the required reserves and assets that are needed.

My point is that loan officers will screen a buyer and look at their income, assets, debt, and credit. Humans are prone to mistakes.

You’d like to work with, ideally, a real estate agent who has a lending partner that will get your buyers approved by an underwriter. That way, you know that the buyer has the ability to purchase the home they are buying from you, the home seller.

Whether or not they use my company to do the loan is not what is important here. We can just be the safety net.  If we can earn the business, if we are offering something more beneficial, then great!

The primary role that I serve and the service that my team provides to the real estate agent is screening buyers to guarantee that the home sellers and the buyers you are selling the home to have the ability to perform.

Important Note: Mortgage underwriting approval can provide sellers with greater confidence in a buyer’s financial qualifications, but it does not guarantee final loan approval or a successful closing. Loan approval may remain subject to additional conditions, including property appraisal, title review, and verification of the buyer’s financial circumstances.

Loan Approval Denied

Kathleen Daniels understands the importance of underwriting approval. She has worked full-time in real estate since January 2003 and learned early in her career that not all mortgage preapproval letters reflect a thorough review of a buyer’s financial qualifications.

No one wants to sell a house twice!

That experience led her to work with a trusted mortgage lender who could help evaluate prospective buyers’ financing qualifications. When submitting offers on a probate home for sale, a buyer who has undergone underwriting review may provide the estate with greater confidence in the buyer’s ability to complete the purchase.

The Tom Parke Team

As discussed in the accompanying video, the Tom Parke Team offered a buyer-screening service involving underwriting review, without requiring buyers to obtain their mortgage through the team. Buyers and sellers should confirm the current availability and terms of any such service directly with the lender.

The Priceless Benefits

• Home sellers: Greater confidence that prospective buyers have undergone a thorough financial review before an offer is accepted.
• Homebuyers: An opportunity to identify potential financing problems before spending money on appraisals and inspections or making plans based on an anticipated purchase.
• Everyone involved: A better-informed transaction with less risk of financing-related surprises.

Underwriting review does not guarantee final loan approval or closing, but it can help identify potential problems earlier in the transaction.

About the Tom Parke Mortgage Team

At the time of this interview, the Tom Parke Mortgage Team was affiliated with Mason-McDuffie Mortgage Corporation and specialized in residential mortgage financing, including home purchases, refinancing, and renovation loans.

Tom Parke shares his experience with mortgage underwriting and buyer qualification to help home sellers better understand the importance of evaluating a buyer’s financing before accepting an offer.

For additional information, visit the Tom Parke Team website or contact Tom at 415-828-5004.