The Loan Pre-Qualification Letter and the Inspection Release

Ask any REALTOR!

2 of the most oft fretted documents by Home Buyers and Sellers are possibly the 2 least significant documents in the transaction (or should be).

Here’s my take on each one.

Here in Tennessee, our standard contract requires “Notification” to the Seller by the Buyer of the lender of choice as a way to communicate that the Buyer is, in fact, engaging a lender and diligently doing her part to complete the transaction.

These “notifications” come in many forms . . . from “Prequalification” to “Approval” to “Commitment” letters . . . and the sad reality (TRUTH) is that they are not guarantees that the Buyer’s financing will actually yield the required money for the closing.

Anything could happen to put the kibosh on the financing . . . Buyer could die or lose his job or buy a Corvette the week of closing . . . or . . . or . . . or

So . . . I take these letters to be just barely worth the paper they are written on . . . that they are not much more than a “Notification” to the Seller that the Buyer is playing by the rules . . . believing that the loan will fund the closing requires faith and often becomes a “God thing” at the last hour.

Don’t put so much emphasis on this silly letter while negotiating the deal on the front end.

The Home Inspection contingency release often presents the 2nd most stressful chapter in the book of a real estate transaction . . . and it shouldn’t be.

Unless you’re buying a brand, spanking new house, you should NOT expect the house you are buying to be PERFECT . . . It’s NOT going to be. 

BEFORE you write that offer, spend enough time in the house that you have a good sense of the overall condition . . . bring a friend who knows houses and ask their opinion . . . determine if this thing will need a LOT of work in your first year of ownership or not so much.

Negotiate your deal accordingly. If you think it will need tons of work, negotiate a lower price . . .

Then . . .

Have a professional home inspector do his thing.

When he provides his report, look ONLY for SURPRISES! What issues did HE find in his inspection that you had not already noticed and accounted for in your negotiation? are there any latent (hidden) significant defects (Structural or system issues) that you couldn’t have seen that would cost you significant money on the short term?

Ask the Seller to address ONLY those surprising items knowing that you have already taken the small stuff into account.

Don’t forget that the seller doesn’t have to agree to fix (or pay for) ANYTHING . . . and you don’t have to agree to move forward.


YOU liked the house enough to negotiate a deal and pay for an inspection, and the Seller enough wanted to sell the house that she agreed to the terms of the deal, so why trash it all with a silly inspection?

unless – of course – the inspection reveals significant previously evident defects that the Seller is not willing to address.

This whole Buying and/or selling a house thing is a process . . . It’s a conversation between 2 ready, willing, and able “parties” (Buyer and Seller)

Don’t let the petty intricacies of the deal spoil the brew.


Here at Pareto Realty, we are consistently encouraging our clients to SLOW DOWN and PAY ATTENTION throughout the process so as to avoid SURPRISES.

You are only at a disadvantage when taken by surprise, right?

Published by Barry Owen

Residential Real Estate sales Strategist Search - Analysis - Negotiation - CLOSED Inviter-Facilitator-Practicer of Open Space Technology Opening safe space for people & organizations to self-organize around issues & opportunities Invite-Listen-Love

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