There’s nothing stopping you from making a private offer to buy a property, even if you don’t yet have a pre-approval in place. You might choose to make an offer if you’re waiting to hear back from a lender or mortgage broker about a home loan application, or if you’ve come across the perfect property for your needs and want to get your foot in the door as soon as possible.
If you’re confident you can get finance together to afford the purchase price, you can make a formal offer in writing to buy a property without pre-approval. However, a vendor or real estate agent isn’t obliged to accept your offer if they don’t believe you’re serious about the purchase, or if they have doubts you can back up your offer with cash. This is where having a pre-approval in your back pocket can be handy, as it show’s you’re a serious buyer.
Also, even if a vendor accepts your offer, the sale isn’t final until the contracts are exchanged and signed. For this to happen, you’ll need to have finance available to back up your offer. If you can’t organise a mortgage in a speedy fashion, another buyer could come in and ‘gazump’ you, especially if they have their pre-approval ready to go.
Keep in mind that even with a pre-approval available, you can still miss out on buying a property. For example, if the lender’s valuation of the property comes up short, you may need to renegotiate parts of your pre-approval, offer a bigger deposit, or get a guarantor to secure the property. The more obstacles and delays between pre-approval and full unconditional approval, the more likely another buyer could snap up the property from under you.
