When I am submitting an offer for a buyer, on a property that is not my listing, I always make sure that the preapproval letter covers only the amount of the purchase. If the price goes up I call and get another pre approval letter. If another agent submits an offer on one of my listings and the preapproval is for more than the offer price I always make sure my seller knows that. How do you all feel about this?

My last buyer had 4 preapproval letters, each for a different amount. The first offer was accepted, so there was no need to show the others.

Agents here do that also, but I'm not really sure I understand why. I wouldn't let the amount on the letter influence what I would be willing to sell my property for. If the letter said the prospective buyer could only get X amount, and it wasn't what I wanted for the property, I'd still turn it down.

Besides, since this practice has gotten pretty common, don't you think the seller's agents and the sellers know what they're doing??

What we are doing, is to not reveal up front our clients financial ability to pay more. Anything else in my mind is irresponsible representation by an agent.

I do get lender letter for the amount or close to the amount of the contract sale price. If they price goes up I do provide an updated letter. In the cover letter I do mention my clients are financially standing (credit is good or excellent). Few lender do put FICO score that helps also.

Pikes Peak that was well said. That was my point but all the time I receive offers that they are offering 30000 less than their pre approval. That just amazes me. Of course I tell my seller that dont mean they will go that high but they are approved for it.

I can say as a past client in an EBA that I was approved for way more than I was willing to spend. I would not expect a buyer to think I should go higher based on my "ability to pay" instead of my "perceived value". But, not being an agent now (hope by end of year) I could see not showing full approval amount so seller doesn't think they should counter just because a buyer is able to borrow more.

I always only have the amount reflected in the offer to be written in the letter. No reason to plant an idea in a sellers head that we could do more. I think you are just asking for trouble when the amount is higher.

All my letters come electronically now anyway. It takes about 2 seconds to get another letter with the new amount put in to the body of the message.

DRM7 good luck and let us know when you get licensed.

Just want to give some food for thought. As tough as the MI market is I recently saw a deal where two offers came in on a property. 1 offer accompanied by a preapproval higher than they were offering, one was on the mark. The seller felt that the on the mark buyer couldn't go higher so there was no point in countering and rejected that offer. But countered the other offer and the buyer accepted right away. The seller did not counter to what the buyer was approved for but to what they felt they was a fair value and apparently the buyer as well. Since part of the buyers agents job is to get a buyer the house they want I question who actually better served their client.

Oo-er. Quote: buyer agent's job is to get the buyer the house Unquote.
It is? Since when?
A buyer agent's job is to get the best possible deal for their buyer client, to not harm the buyer's negotiating position, to look after the buyer's best interests.
If you were involved with someone claiming to be a Buyer Agent, they had no right whatsoever to include a pre-approval letter with an offer. Maybe you had the right to ask for one but, at most, the Buyer Agent was required to respond with no more than a statement that he/she would check with the buyer client to see if they'd consider a signback.
The so-called buyer agent you were dealing with was wide of the mark. Indeed, I'm willing to suggest that the failing was yours. The buyer might well have been prepared to go higher than the competing offer, but you simply decided that it wasn't possible.

"The seller felt that the on the mark buyer couldn't go higher so there was no point in countering and rejected that offer."
Obviously the listing agent did not advise and represent their seller correctly and might have cost the seller money by not asking both buyers to submit their "best & final" offer.

Duncan,
you stated far more correctly what my intended thought was as to the BA's duties. Which adds up (albeit simplistically) to helping the buyer get the home they want. But, you are mistaken in believing I was involved in the situation I just happen to be an aquaintence of the seller. In our area few sellers will even look at an offer without some form of pre-approval.

The seller was informed that no matter what the pre-approval said the buyer might be able to go higher. The seller felt that the second buyer wasn't playing games and decided to go ahead.
Anyway its just food for thought.

Or maybe some agents in Michigan are tired of hearing that there are other offers on the table when there aren't. That game is being played far too much in Michigan markets. And anybody from Michigan knows the market isn't that good to warrant multiple offers too often.

A buyer's agent is to get the best deal for their client. I believe it would violate an agent's responsibility to the buyer to disclose that his or her client could afford anymore than the price of the offer.

budva,
Thanks for that tasty SPAM