A good friend of mine recently asked me a simple question:
What should a listing agent ask the buyer’s lender before recommending an offer to the seller?
It was a great question—and one I have been asked several times over the years.
When a listing agent receives a pre-approval letter, it usually looks official. It has a logo, a loan amount, a borrower’s name, and enough legal language to make you wonder whether you just agreed to arbitration, organ donation, and possible decapitation.
But not all pre-approval letters are created equal.
“A pre-approval letter can look fancy, but some are much stronger than others.”
Some lenders, including me, only issue a pre-approval letter after a full review of the buyer’s income, assets, credit, debts, and funds to close.
Others may issue one after a quick phone call, a basic online application, or a five-minute conversation.
I have even spoken with loan officers who issued a pre-approval letter before pulling the buyer’s credit.
This is why I created a simple two-page guide for listing agents.
Get the Free Listing Agent Guide
The guide includes:
- Four questions to ask the buyer’s lender
- Green flags that indicate a strong pre-approval
- Yellow flags that deserve more follow-up
- Red flags that may signal the buyer has not been fully reviewed
Complete the short form and download the guide instantly.
Why a Pre-Approval Letter May Not Tell the Full Story
A pre-approval letter may look polished, but the real question is:
What work was completed before the lender issued it?
A strong pre-approval should be backed by actual documentation and a complete review.
“A good loan officer should have every document, the income should be calculated, the assets should be verified, and the file should be ready to submit to underwriting.”
The lender should understand the buyer’s employment, credit, down payment, closing funds, and overall loan structure.
The file should also be run through automated underwriting using accurate information from the borrower’s documents.
Automated underwriting is important because it evaluates whether the loan meets the applicable mortgage guidelines. But an approval is only meaningful when the numbers entered into the system match the borrower’s actual financial records.
“Automated underwriting is important, but it is only meaningful when the information entered into the system matches the borrower’s actual documents.”
A lender can enter estimated income or unverified assets and receive an automated approval. If the paperwork later tells a different story, that approval may not hold up.
A Real Example of What Can Go Wrong
I recently took over a loan where the buyer lost $2,000 in earnest money because the file had not been properly reviewed.
The original lender had spoken with the buyer about a year earlier. When the buyer started shopping again, the lender issued a new pre-approval letter without reviewing the buyer’s updated employment and income.
After the buyer went under contract, the lender finally collected the new documentation and discovered that the borrower’s income structure had changed.
The buyer no longer qualified for the loan as originally structured.
By the time the problem was discovered, the earnest money had become nonrefundable.
We were eventually able to restructure the financing and find another path forward, but the buyer still lost $2,000.
That situation could have been avoided.
“A pre-approval letter is only as strong as the work behind it. Otherwise, it is just a very official-looking piece of paper with a logo and a lot of confidence.”
What Should a Listing Agent Listen For?
The goal is not to demand the buyer’s private financial information.
The goal is to determine whether the lender has actually completed the work.
A lender should be able to confirm whether:
- The buyer’s documents have been reviewed
- Automated underwriting has been completed
- Funds to close have been verified
- Any major financing concerns remain
- The proposed closing timeline is realistic
A confident answer sounds very different from: “We should be fine.”
That phrase does not automatically mean the loan is in trouble, but it often suggests the file may not have been fully vetted.
A stronger lender knows the buyer’s story, understands the loan, and can clearly explain why they believe the transaction will close.
Download the Guide
The full guide gives listing agents a simple framework they can use whenever they receive a financed offer.
It is designed to help agents quickly identify:
- Whether the buyer has been fully reviewed
- Whether the lender gives clear, credible answers
- Whether more follow-up is needed before accepting the offer
- What the lender may be like to work with during the transaction
Complete the short form and download it instantly.
These questions cannot guarantee that every loan will close. But they can help a listing agent make a more informed recommendation—and avoid relying on a pre-approval letter that is mostly branding, legal language, and positive thinking.
Written by Anthony VanDyke, Utah Mortgage Broker — NMLS #247102 — President at Houzd Mortgage in Draper, Utah.
A mortgage broker since 2006, Anthony has helped thousands of Utah families build a stronger financial future, one home at a time. He believes a mortgage isn’t just a loan — it’s a long-term financial strategy that can shape a family’s wealth and peace of mind.
👉 See what you qualify for with Anthony’s Purchase Qualifier Tool.