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So, where I live there is in a major seller's market. Houses are sold within days of listing, which makes things like getting loan approval for houses a bit of an issue. I know I can get a blank letter for, lets say 100,000 round, but I'm looking into houses that are 75,000 to 80,000. I've been warned by people who don't have a great deal of financial domain knowledge that if I make an offer with the letter for 100,000, the buyer will know I am able to afford their asking price and thus won't typically be willing to lower their price much if at all. It effectively takes away a bargaining chip I have when trying to negotiate the price of the house.

I'm not sure I believe this statement. I would think that a buyer wouldn't just be magically allowed to know how much I can afford when I make an offer, they should only know how much I am offering. I was hoping someone could weigh in;

Does an offer to purchase a house at a give price disclose the full amount that a bank has approved the borrower for? If it matters, I'm looking in Wichita, Ks.

  • Rremember, sellers are very aware of the difference between "able to afford", "thinks my place is worth that much", and "is seriously interested if the price is right but is not in a rush and may find something better/cheaper/both tomorrow." – keshlam Jul 20 '15 at 20:53
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I will preface saying that I only have personal experience to go on (purchased home in KS earlier this year, and have purchased/sold a home in AR).

You do not give the seller the document stating the amount you have been approved for. Your real estate agent (I recommend having one if you don't) will want to see it to make sure you will actually be able to purchase a house though. But the contract that is sent to the Seller states the total purchase price you are willing to pay and how much of that will be financed. Link to blank KS real estate contract shows what would be listed. Looks like it is from 2012 - it is similar to the one I had back in March, but not exactly the same format.

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The seller has a legitimate desire to know of your preapproval. I have two current anecdotes on this issue.

As a realtor helping a client buy a home, I worked closely with buyer's bank, and got a pre-approval for the amount we were offering. When there was a counteroffer, and we were going to raise the price, the bank upped the numbers on the pre-approval letter.

I have a property of my own I am trying to sell. I had a negotiated price, P&S, but no pre-approval from the buyer. The buyer of his home couldn't get a mortgage, and so far, the deal has fallen through.

I agree with you, you don't want to signal you can afford more, nor show any emotion about how great that house is. That's just giving the seller a bargaining chip.

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