Though the real estate market is cooling it is still low on inventory of available homes for sale and this means that we are still in a seller's market. This means that a seller has a bit more leverage in the negotiation process when selling their home. This can also mean that it is still possible to enter into a bidding war with another interested buyer even if it is just one other buyer.

Bidding wars can be stressful and become costly. The main focus of a bidding war is to outbid the other buyer to try and win offer approval from the home seller and become the next owner of the home. Even if you are willing to make an offer above the list price it is still possible for a buyer to end up losing in a bidding war.

But there is one simple move you can make to help give you an edge in a bidding war and that is seeking preapproval for a mortgage.

Often a seller will tend to give favor to a cash buyer over one that needs to mortgage the purchase of a home. This is because cash transactions are very unlikely to fall through because the buyer is not at the mercy of the lending bank giving final approval. This is why getting a preapproval and having a preapproval letter ready to go with your offer can be so important in a bidding war.

A pre-approval letter included in your purchase offer communicates to sellers that you are serious and you have gone through every step possible up to this point to secure funding for the home. If you come into a bidding war against other buyers planning on mortgaging the home without preapproval this gives you a leg up in the competition.

How to obtain a preapproval letter

The process of obtaining preapproval for a mortgage loan is very similar to shopping for a mortgage. The best way to shop for a mortgage is to use a mortgage broker that will do all the shopping for you. Once you have looked over all the possible mortgages you could qualify for you discuss what the best option would be and go through extra steps to provide personal financial documentation and information to that lender to obtain a pre-approval.

Once a lender has reviewed all of the documented financial details they can issue an official document stating the loan amount that you are pre-approved for. You can then take this letter with you and have it ready when you make an offer on a home. It is just a little bit extra above talking with lenders to obtain this letter and it can be extremely helpful in your purchase process.

For more information on purchasing a home in Palm Springs and the surrounding Coachella Valley please contact us anytime.