Getting some of your properties ready for the spring buying season? If you’re preparing some of your real estate holding for a sale, it’s time to start getting those units inspected and ready to show your prospective buyers. It’s also time to let your real estate agent know what you want to sell and get an get a preapproval letteraccurate list price that will attract buyers and get highest price for your property.

You want to be in the position of reviewing offers as soon as able. But once you do get an offer, one of the first things you want to see is an approval letter from a bank, otherwise, unless the buyer is paying cash, the offer isn’t worth any more than the paper it’s printed on. What should you look for in an approval letter?

First, at this stage, there is no “approval” letter in the eyes of the lender until a property has been picked out. Lenders have a ton of disclosures to complete and protocol to meet and don’t consider a loan application to be an “official” application until certain items are identified, and a property address is one of those. That said, at minimum your offer should have a preapproval letter accompany the sales contract.

A preapproval letter documents the items reviewed by the lender. Of course, a credit report is a crucial one and if the letter doesn’t state credit has been reviewed you may want to dig a little deeper. When lenders preapprove an application without a property, they will typically enter a “dummy address” such as 123 Main Street to complete required fields needed to submit for an automated approval. The automated approval considers the credit score along with other factors such as income, assets and occupancy. If the loan has been submitted for a preapproval, the letter should state so.

Don’t expect to see a credit score or a maximum loan amount the buyers can obtain. Instead, you might see wording to the effect of, “The borrowers are preapproved for the amount requested for your property” or some such wording. If there are any questions about the letter, have your real estate agent call the lender directly and get anything that needs to be answered, answered. Don’t accept an offer without such a letter. You’ll regret it.