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When money speaks, sellers listen. In a competitive real estate market, qualified buyers with the financial ability to complete a purchase are invaluable to sellers.
Under the laws of supply and demand, too few buyers means heavier than normal competition among sellers to attract those buyers. Conversely, buyers can increase their value to sellers through careful financial planning and positioning. The more financially qualified the buyers, the stronger their bargaining position with sellers.
What can buyers do to improve their financial picture? First, they can conduct a thorough assessment of their situation by creating a detailed, accurate financial statement. This includes an itemization of all assets, i.e. cash, IRAs, stocks & bonds, mutual funds, personal possessions, autos, etc. Next, a complete list of outstanding debts is created, including creditors' names and addresses, amounts owed, monthly payments, remaining terms and account numbers.
The next step, called a prequalification interview, involves meeting with the loan officer of a mortgage company. By providing complete information on income, employment, financial position and credit history, it is possible to obtain a conditional loan commitment before ever beginning the home search.
The loan officer will explain details of various mortgage plans available, finding the best loan route for buyers to take. A maximum loan amount can also be determined, giving buyers advance knowledge of the price home they can purchase.
Most importantly, advance loan approval allows buyers to look for a home, confident in their ability to make a purchase from a position of strength. Sellers also benefit from this preplanning, since qualified buyers can provide assurance of their ability to complete the sale. With the possibility of loan rejection out of the picture, everyone is a winner.