We all have to start somewhere as home-buyers. Many buyers typically like to start by casually window shopping, or sticking their toes in the water before jumping in.
Pre-COVID, open houses were perfect opportunities for prospective buyers to start window shopping. Since the pandemic, open houses have been paused, and all home-showings are private appointment only accompanied by a real estate agent in efforts to reduce exposure. Additionally, there has been a pre-requisite for buyers to have a pre-approval or qualification to purchase before the in-person property tour is approved. Simply put, sellers want bonafide buyers entering their property and agents want to invest their time with bonafide buyers for private appointment home tours.
Open houses will return in the future. Pandemic and COVID aside, there are more reasons to get pre-approved before touring homes. Let's go through some of them:
Verify Your Budget
Once you know the maximum budget you are approved for, now you can eliminate all properties outside of your price range and save yourself time to tour homes in the price range that you are qualified to purchase.
If you’re working with an agent, then after you’ve established your budget, your agent can reverse engineer your property search to show you which neighborhoods you have the most opportunity to find a home in your price range. Not all listing prices are reflective of market value or the final sales price. Knowing this ahead of time and knowing which neighborhoods have properties selling in your budget will save you time and energy in looking at properties that are likely to sell above your price range.
Investment of Time
Agents will invest their time to help you and tour homes with you, but you will have to reciprocate your time into the process. Agents are not to be seen as just a door opener, but more as an advocate for you. We invest our time into providing our services in efforts to help you towards your goal of achieving homeownership. Getting pre-approved is your investment into the process, establishes you as a qualified buyer, and allows you to tour homes with a purpose.
Private Residence, Not a Museum
A home for sale is still a private residence. Yes, the owners/sellers want to maximize the exposure of their property. The more people that see the home, the more offers they can get. That is… the more qualified buyers that see the home, the more offers they will get. Prospective buyers who are looking to “just see a home” will have more opportunities when open houses come back.
Pre-requisite to Writing an Offer
Here is why touring homes without a pre-approval or qualification is just window shopping. The pre-approval is a prerequisite to writing an offer, so without a pre-approval, there is no forward movement if you like a property.
Many properties in the Bay Area sell within 1–2 weeks. National data in March 2021 showed that 56% of homes accepted an offer within two weeks, and 44% of homes accepted an offer within one week. If you’re waiting to find the right home before getting pre-approved, then you will often be too late and miss out on the home you like.
Buyers who are winning in the Bay Area real estate market are getting fully underwritten loan approvals before finding the right home. This positions them as stronger buyers because this shows the seller that the buyers' loan is fully approved and will have the utmost confidence closing without issue. For prospective buyers writing cash offers, proof of funds will be provided with your offer to show qualification.