Question for mortgage experts/those with extensive mortgage experience

[wagsk1]

Yes it did but that was never going to influence what I feel I would offer for a home. Realistic buyers are in short supply here in Jersey right now. Also keep in mind the number on my preapproval was based on my budget, not just a particular home. I worked with a few agents.

[StartingOver10]

In a multiple offer situation when the pre-approval amount is the offer price and the amount is less than actual market value as determined by comps - the buyer is out of luck. The seller just rejects the offer in favor of an offer that has a buyer that has the capacity to purchase.

This happens even if the pre-approval amount is not that much lower than the market or list price - the mortgage person thinks they are saving the buyer money and all they are showing is that the buyer can't afford the purchase and if any little bump in the road happens during the underwriting process the buyer won't be approved and the seller will have wasted 30 days.

You are much better off going in as a strong buyer. You don't have to show an ability $100k above purchase, but show that the purchase price is well within your purchasing ability.  The ulitmate price you pay as a buyer is what you negotiate and you can negotiate a better price as a strong buyer.  Looking like you are stretching to your max is the sign of a weak buyer and puts you in a very bad negotiating position to start.

[Anonymous]

My pre-approval ddn't have an amount in it at all. I saved a copy of the block of text from the letter as an image with the intention of posting it, but I don't see anyway to upload an image from my computer to share.

[StartingOver10]

So how do you negotiate without knowing an amount? How does the seller know you can afford their home? I am not talking about private financial details, I am talking about a letter that says you are approved for a purchase up to $X.

[Anonymous]

No idea honestly. I'm about to close on Friday though, so I guess it worked out. lol

[Revelate]

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@StartingOver10 wrote:

In a multiple offer situation when the pre-approval amount is the offer price and the amount is less than actual market value as determined by comps - the buyer is out of luck. The seller just rejects the offer in favor of an offer that has a buyer that has the capacity to purchase.

This happens even if the pre-approval amount is not that much lower than the market or list price - the mortgage person thinks they are saving the buyer money and all they are showing is that the buyer can't afford the purchase and if any little bump in the road happens during the underwriting process the buyer won't be approved and the seller will have wasted 30 days.

You are much better off going in as a strong buyer. You don't have to show an ability $100k above purchase, but show that the purchase price is well within your purchasing ability.  The ulitmate price you pay as a buyer is what you negotiate and you can negotiate a better price as a strong buyer.  Looking like you are stretching to your max is the sign of a weak buyer and puts you in a very bad negotiating position to start.

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Thanks S10 as always!

Your insight is fantastically appreciated; this was sort of what I was thinking but it's awesome having someone of your experience able to share the specifics.

[Anonymous]

@Revelate - " I think everyone is hip to the game that most people just put their offer as the pre-approval... otherwise counters would never be feasible and those are well documented on the net."

This is exactly what I and my realtor have done. I am expecting a counter offer, and if I decide to, will increase my offer based on what I and my realtor know I am approved for.