The October LANDTHINK Pulse revealed that 34.3% of respondents explore financing options before they begin searching for land. That’s right, potential buyers are doing things in the right order to help ensure a more successful land buying journey. Land is usually bought with cash and a loan, with the buyer paying a decent amount of cash down and financing the remaining balance. Once owning land has piqued their interest, many aren’t quite sure what they should do to get the ball rolling. Searching land for sale is a fun, exciting venture, but it’s easy for buyers to get caught up scouring online land listings and procrastinate the boring paperwork for later. But unless you’re paying cash, obtaining pre-approval for a land loan is a critical first step toward the goal of land ownership.
Although many people use the terms pre-approval and pre-qualification interchangeably, there’s a big difference between the two. Pre-qualification is generally a quick process that involves obtaining an overall picture of your finances from a lender. Pre-approval requires documentation such as tax returns, bank statements, and current assets and debts, and includes a more thorough investigation into your financial background. Buyers should also lay out their plans for the land to the lender. Only one — pre-approval — puts you one step ahead of the land buying competition.
There is, however, a good reason real estate agents emphasize the importance of getting pre-approved before beginning your search for land. A pre-approval is beneficial in many ways and will save you time, money, and frustration. Professional land agents make sure they spend their time wisely, and they’re eager to work with a buyer who has their finances in order. Taking the necessary step to obtain pre-approval shows sincerity on the buyer’s part, and proves they are credible and able to act fast when an agent finds the piece of land they want to purchase.
Obtaining pre-approval also strengthens your offer to the seller and the seller’s real estate agent. If a landowner is eager to sell, they may be more willing to accept a lower offer from someone they’ve been assured is financially capable of following through on the purchase.
Courtesy of LandThink: Pulse