What to Do Before Talking to a Real Estate Agent

If you’re like many home shoppers, you likely want to do anything possible to make sure you get the home you want -- especially if you’re in a competitive market. There are plenty of tips to follow, but one many prospective buyers overlook is getting pre-approved before talking to a real estate agent.

Getting pre-approved won’t just help increase your chances of winning the home or make the process easier for you as you go through the home buying journey, but if you plan on involving an agent they will almost certainly require that you get pre-approved before they even start showing you homes. It’s often the first step an agent will ask you to take if you are serious about buying. If you’ve already done it before you pick up the phone to call the agent, you’re one step ahead of the game.

According to the Zillow Group Consumer Housing Trends Report 2017, 92 percent of buyers who finance their home with a mortgage get pre-approved first. Buyers who use an agent are more likely to obtain pre-approval than those who don’t work with an agent (83 percent, compared with 67 percent), indicating that pre-approval is either a prerequisite to securing an agent or highly recommended by their agent.

Know What You Can Afford

Getting pre-approved early serves many purposes, but one particularly important aspect is that it helps you understand how much you can actually afford as you begin your home search.

“What you see online and what you see in open houses might be great but what if that doesn’t match up with what you can afford?” said Brendon Densmore, a real estate expert. “You want to iron everything out in advance. You want to make sure you have your financial ducks in a row and the best way to do that is through the preapproval process.”

This process can also let you know if you have any issues with your credit, as a lender will pull your credit report, check your finances and verify your income and assets.

“You have to make sure there are no issues with your credit. There may be something on your credit report you don’t know about and these things can affect your score and therefore, your ability to get a mortgage,” Densmore said. “If you don’t do it and all of a sudden you get into the process and want to make an offer on a house and you find out you can’t, you just waste your time and your brokers time.”

Times Have Changed

While getting pre-approved before making an offer wasn’t always a pre-requisite, times have certainly changed.

“Back in the 80s, you’d make an offer, it got accepted and then you’d go get pre-approved for a loan. But those days are over,” said Densmore. “You cannot make an offer in this day and age without a pre-approval letter behind it. You’re just not going to be taken seriously by a seller.”

While the process of buying a home was once much simpler, advancements in technology have made listings available from your fingertips and you’re forced to move faster to keep up with your surrounding markets and stay competitive with other buyers.

And because you can find your dream home so quickly, the transactions move just as fast. If you aren’t approved for a mortgage when you make an offer, there’s a chance the loan won’t go through and that will leave the seller waiting in limbo.

“People don’t want to waste anyone else’s time,” Densmore said. “The world moves faster, and there’s no reason you can’t get pre-approved now in advance.”

Stay Competitive

Depending on which market you’re looking to buy in, being pre-approved can mean winning the house or not even being considered. In some particularly “hot” markets, homes can receive multiple offers and without having a pre-approval letter to go along with your offer, it’s going to be much harder to be competitive.

“In a competitive market, you need to be pre-approved when you make an offer, or your offer will be rejected,” Densmore said.

If you make an offer without being pre-approved, you can essentially kill your chances before you ever get the chance to compete.

To get pre-approved, you need to have all your paperwork organized, including documentation of your income, debt and credit history and a list of your assets. While it takes a bit of planning, it’ll save you time later and let you get things moving faster once you find your dream home. And remember, these layers of verification will have to be done at some point in the process anyways so it’s worth it to get them done ahead of time and leverage your pre-approval to your advantage.

Densmore advises buyers, if they want to get really serious and start looking at homes and making offers, to get pre-approved. Once you’ve been pre-approved, take some time to shop around for a lender to make sure you’re getting the best home loan to suit your needs.

Ready to get pre-qualified? Find a local lender on Zillow who can help.