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Offer price versus approved price?

 Our Realtor told us something that I am not certain is correct. She said to submit our offer with our full approval for loan, even if our offer is less than the full amount? Let's say that we are approved for $150K. If we put an offer on a house for $135K, why would I want the seller/bank (it is a shortsale) to know that we are approved for $15K more. Is this the thinking in real estate now?
  • February 27 2012 - US
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Answers (6)

A pre-approval letter for the exact amount of the offer is what I suggest to my buyers.  As you have guessed, if the seller knows that you are qualified for more than the offer there is a good chance they will see it as an opportunity to counter at a higher amount.  You may end up getting several letters from lender during negotiations.

  • February 28 2012
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Here is the way we look at it... regardless if this a short-sale or not, as a buyers agent, we would not want the seller to know how much our buyer can spend on a house.  It's like showing your hand in poker - if the seller knows how much you can spend, he may try to weasle that much more out of you.
  • February 28 2012
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Profile picture for CrystalsSecondHome
I have started to search for homes that exclude the words "3rd party" or "third party" from my searches.  It seems to eliminate the back and forth/nickel and dime mentality some of the short-sellers think is a normal experience.
  • February 28 2012
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Because you are able to pay a certain amount, does not mean you are willing to pay a certain amount.

Many lenders will draw up an approval letter stating they are approved for the offer price.  However, a seller might take that to mean you are buying at the top end of your range, and may think you are actually less able to afford the home and actually go through with the purchase.
  • February 27 2012
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If you have the time and ability to have your loan officer draw up a new pre-approval letter then by all means have a new letter done. If it is not possible or time consuming then I would not worry about it. In my opinion, most of the time the difference in what you are willing to pay (your offer) and what what you are approved for are not big factors in a short sale. The selling bank has a certain number that they will sell the property for. If your offer makes sense then they should accept it.
  • February 27 2012
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There are several ways to look at this. If the property is listed for $150K and you want to buy for $135K but are willing to pay $140K, $142K, etc, then an approval letter for $135K tells the seller you cant go over $135K. If you are only willing to pay $135K then get an approval letter for $135K and submit your offer. 
  • February 27 2012
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