What Sellers Need To Know About Mortgages

Home sellers who receive an abundance of offers might be tempted to grab the 
highest price and call it a deal. But that might not be the smartest way to 
choose the best offer of the bunch.

 A better approach is to consider a variety of factors, including the buyer's 
ability to pay cash or obtain a home loan.  One of the first things too address is how strong the buyers are financially and how confident we feel that they're able to close.

An all-cash offer always merits consideration because a failure to obtain 
financing is "the most prominent reason" why transactions fail to close, Berg 
says. In some cases, the buyer is unable to qualify for a mortgage. In others, 
the appraiser's opinion of the property's value falls short of the purchase 
price, causing the lender to quash the financing due to a so-called low 
appraisal. With a cash offer, no lender is involved, so both risks are 
eliminated.

A cash offer isn't a guarantee, however. And there's another downside for the 
seller: Most cash offers come from investors looking to "fix and flip" houses 
they buy at a discount.

If you, as the seller do not get an all cash offer, then that means you will get a financed offer.  With financed offers, you have to take into consideration the pre-qualification letter. 

Prequals are written by lenders to inform sellers that would-be buyers are 
qualified to obtain financing. Not all prequals are equal, so
sellers -- or their agents -- need to do some legwork to assess which prequals 
are credible.

My advice to a seller would be to take a look at the qualifications of the 
individual who wrote that letter.

While loan officers shouldn't disclose the buyer's personal information to 
the seller's agent, that agent can call the loan officer and engage in a 
conversation about the buyer's strengths.  One question might be 
whether the buyer could be characterized as "qualified," "well-qualified" or 
"barely qualified."

Naturally, there's a bit of self-interest in all advice of this type. Real 
estate pros say some agents push for cash offers to improve their chances of a 
commission and some loan officers tout a buyer's financial prowess to increase 
their odds of a paycheck. Either way, sellers should have the final say and the 
opportunity to choose the offer they prefer.
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