So many first-time homebuyers think they should find a home before they get pre-approved for a mortgage. However, it’s common for Realtors to ask for pre-approval letters before showing a home. While some agents might still show the home, others won’t without pre-approval letters.

Before we get into the reasons why real estate agents want pre-approval letters first, it’s important to understand that a pre-approval isn’t the same as a pre-qualification. If you’re pre-qualified, it means you haven’t gone through anything with the mortgage company to get pre-approved yet.

Pre-approval letters basically show that as long as your income can be verified and a few other qualifications are in line, you’ll get approved for the mortgage. Often, a pre-qualification letter means very little because nothing has been verified or even considered yet.

Top 5 Reasons Realtors Want Pre-Approval Letters

1. Safety

Realtors put themselves at risk by meeting strangers in empty homes regularly. While it’s not necessarily considered a dangerous profession, some Realtors have been injured or even killed while performing their regular tasks.

Pre-approval letters helps to protect the Realtor because it means a lender has done some work to vet the buyer. They have the buyer’s social security number and personal information, which means they are probably pretty serious about buying a home.

For Realtors, one of the top safety tips making the published lists is getting a pre-approval letter. It ensures they are dealing with a serious homebuyer and not someone trying to hurt or scam them in some way.

2. Saves the Realtor Time

Realtors are very busy, especially the good ones. They don’t have time to waste with buyers unable to get approved for the home financing. Pre-approval letters may not guarantee a buyer will be approved, but it does provide as close to a guarantee as you can get outside of an all-cash buyer.

It will also keep you from wasting time looking for homes you cannot afford. Maybe you cannot get financing, but you thought you could. If you get a pre-approval letter, you’ll be on the road to ensuring you can actually make an offer on a home when you find one you like.

3. Make Home Shopping Easier

When a real estate agent has a pre-approval letter, they know what you can and cannot afford. They can search for homes within your range and find the best options for you. Without this letter, they could waste time showing you homes you cannot even afford.

This is a benefit for both you as the buyer and for the Realtor. You won’t fall in love with a home you cannot afford and your agent won’t show you homes you cannot afford.

4. Makes Your Offer Stronger

With a hot seller’s market, it’s nearly impossible to get your offer accepted without a pre-approval letter or an all-cash offer. You need this letter to make your offer stronger and to even make the final cut during a bidding war.

Without a pre-approval letter, sellers have no idea if you’ll get approved and they don’t want to waste any time. This letter gives you the necessary leverage to show the seller you can afford the home and you’re a safer bet than someone without a pre-approval letter.

Some sellers might even require a pre-approval letter just to see the property. If this is the case, you will need this letter or you might struggle to find homes you can even look at, let alone make an offer on.

5. Offers Proof of Ability to Gain Financing

Realtors don’t know you and don’t have any idea if you can obtain financing for a home you want to look at. With a pre-approval letter, you are giving them proof you can obtain financing for a home. About 90% of serious buyers will get a pre-approval letter without any issue.

If you’re a serious buyer, this shouldn’t be an issue at all. You will need to know you can get financing, anyway, and there are plenty of benefits for buyers getting a pre-approval letter.

The best thing any buyer can do before shopping for a home, or even a Realtor, is getting a pre-approval letter. This letter gives you negotiating power, along with the ability to shop within your price range. As a buyer, you gain plenty of benefits from a pre-approval letter.

It’s also important to understand why your Realtor wants you to get this letter. They want to know they are safe working with you and they are not wasting their time. Pre-approval letters makes you a better candidate to buy a home and just makes sense as the first step in the home buying process.