Real Estate Question Corner…
Q. We entered into a contract with someone who wanted to buy our home.  The agent representing the buyer presented us with a “pre qualification” letter from a lender.  Today we discovered the buyer was rejected for financing.  How can this happen?

A. You allowed the term “pre qualification” to lull you into a false sense of security.  The loan amounts referenced in pre-qualification letters are conditional on verification of income, employment, funds on deposit, credit report, and more.  A lender can issue a pre-qualification letter after just a simple 10-minute phone interview with a prospective purchaser.

As a seller, your best vehicle for peace of mind would be a pre-approval letter accompanying the offer to purchase.  A pre-approval letter is a firm commitment to lend money and is issued only after verification of the crucial financial items mentioned above.