When I first started originating loans, I looked at a pre-approval letter the same way most mortgage loan officers probably do. The borrower applied, I reviewed their information, called the real estate agent with an update, issued the pre-approval letter, and waited for the buyer to find a house. It was a pretty straightforward process.
Once I began originating renovation loans, it didn’t take many purchase transactions for me to realize that approach wasn’t going to work.
Purchase contracts would arrive with important renovation language missing. Closing dates were sometimes unrealistically short. The financing type wasn’t always correct because the agents were trying to determine what to put on the contract themselves. On one memorable transaction, a buyer was shopping for homes that cost every penny they had been approved to spend, leaving absolutely nothing available for the renovations they intended to finance.
Every time a contract arrived that needed to be revised, I dreaded the phone call to the agent. Anyone who has been in that position knows how quickly an otherwise routine correction can create anxiety. The selling agent gets frustrated. The listing agent becomes concerned. The seller starts wondering whether something is wrong with the buyer’s financing.
Eventually, I realized the purchase agreement wasn’t the problem. I was.
I hadn’t given everyone the information they needed before the offer was written.
That realization completely changed the way I delivered my pre-approval letters. Instead of simply attaching a letter to an email, I began treating the delivery of that letter as an opportunity to set expectations for the transaction ahead. If you know me, you know setting the right expectations is a hill I am willing to die on. The pre-approval letter was still important, of course, but it became only one piece of a much larger conversation.
Include the Real Estate Agent From the Beginning
One of the first changes I made was simple: I began copying the selling agent on every pre-approval email rather than relying on the borrower to forward the letter.
Think about the role that agent is about to play. They will help the buyer identify properties, evaluate potential offers, negotiate with the seller, and prepare one of the most important documents in the transaction. Yet, as mortgage loan officers, we sometimes give the borrower important financing information and simply hope it makes its way to the agent accurately.
With renovation financing, there is too much opportunity for misunderstanding.
Including the selling agent in the pre-approval conversation gave me an opportunity to explain how the financing worked before they started showing properties or writing offers. It also allowed me to establish a relationship with the agent at the beginning of the process rather than waiting until something went wrong.
Make Sure Everyone Understands What the Buyer Can Actually Spend
One of the most important things I explained was that a renovation buyer isn’t necessarily approved for a specific purchase price. The financing has to accommodate a combination of the purchase price and renovation costs.
That difference can fundamentally change the home search.
Imagine a buyer who has been pre-approved for a certain maximum loan amount and wants to finance $50,000 in renovations. If the agent interprets the pre-approval as permission to shop for homes priced at the upper end of the buyer’s financing capacity, the buyer may fall in love with a property only to discover there isn’t enough room remaining to finance the improvements.
By that point, emotions are involved. The buyer has found the house, mentally remodeled the kitchen, imagined the new flooring, and begun picturing themselves living there. Telling them afterward that the numbers don’t work is much harder than helping them establish an appropriate search range from the beginning.
This is why renovation pre-approvals require more than a number on a letter. The mortgage loan officer needs to help both the buyer and the agent understand how the renovation budget fits into the overall financing strategy.
Set Realistic Expectations for the Closing Date
I also learned to address the closing date before an offer was written.
I typically recommended allowing 60 days for closing. That didn’t mean the loan couldn’t close sooner. In fact, my average closing time was about 42 business days. The additional time simply recognized that renovation loans have more moving parts than traditional purchase transactions.
There may be a contractor bid to finalize, renovation documents to review, a Consultant involved, a subject-to appraisal to complete, and additional underwriting requirements that don’t exist on a typical purchase loan. Giving everyone a little breathing room at the beginning of the transaction can create a much smoother experience later.
If the loan is ready early and everyone agrees to move the closing date forward, that’s wonderful. But missing a contractual closing deadline is a very different situation. In a competitive seller’s market, the consequences can be significant.
Setting a realistic timeline at pre-approval is far easier than explaining an extension request after the seller expected to close.
Give Agents the Contract Language They Need
For a while, I’m afraid I hoped agents would remember the appropriate renovation language when they wrote their purchase agreements. Eventually, I stopped hoping and simply gave it to them.
My pre-approval email included recommended language explaining that the purchase agreement should be contingent upon mortgage approval and the borrower’s acceptance of any additional repairs required by the agency or lender.
That simple step prevented countless follow-up calls and contract amendments.
I also made sure the agent understood the buyer’s financing terms. I reminded them of the borrower’s planned down payment and explained the maximum seller concessions available in case those became part of the negotiations. If additional forms would be required, such as an FHA Real Estate Certification, I identified those as well.
None of this information was particularly complicated. It was simply information the agent needed before writing the offer rather than after the contract had already been executed.
That timing makes all the difference.
Encourage Buyers to Call Before They Make an Offer
Another habit I developed wasn’t unique to renovation lending, but it was particularly useful with renovation buyers. I encouraged them to call me before submitting an offer so I could rerun the numbers for the specific property.
A buyer’s pre-approval is based on assumptions, and individual properties can change those assumptions considerably. Property taxes may be higher than expected. The home may be subject to homeowners association dues. Flood insurance may be required. Those expenses affect the monthly housing payment and, potentially, what the borrower can comfortably afford.
Some buyers called me many times during their home search. Sometimes we reran the numbers and everything worked beautifully. Other times, we discovered that the payment associated with a particular property was higher than they wanted to take on.
I’d much rather have that conversation before the offer is submitted than after the buyer is under contract.
Call the Listing Agent Before the Offer Is Accepted
One of the practices I found most valuable was personally calling the listing agent when my borrower decided to make an offer.
Not after the offer was accepted.
Before.
I would introduce myself, explain that I was the buyer’s lender, reassure the listing agent that the buyer was well-qualified, and spend a few minutes explaining how the renovation financing would work.
There was a practical reason for doing this. Many listing agents I encountered had never heard of renovation loans. If the first time they saw the financing was when an unfamiliar loan type appeared on the purchase agreement, there was a risk they would tell the seller, “this sounds complicated,” or suggest waiting for a different offer.
I didn’t want unfamiliarity with the financing to become the reason my borrower lost the house.
Those calls rarely required much time. I could explain the anticipated timeline, answer questions, and reassure the agent that although renovation financing includes some additional steps, it is an established form of mortgage financing and we would help everyone understand the process.
Many listing agents thanked me afterward.
The calls also created relationships. Even when my buyer’s offer wasn’t accepted, the listing agent often remembered that I had taken the time to communicate with them rather than expecting them to figure out an unfamiliar transaction on their own.
A few minutes of proactive communication can make a tremendous difference.
Tell Everyone What Happens When the Offer Is Accepted
The pre-approval email also gave me an opportunity to prepare the buyer and selling agent for the next step.
I told them exactly what I needed once an offer was accepted: the fully executed purchase contract, evidence of the earnest money deposit, and the title company’s contact information.
By identifying those items in advance, we didn’t lose valuable time figuring out what was missing after the buyer went under contract. Everyone already knew what to send, and we could begin moving the loan forward more quickly.
I also included a simple “Do’s and Don’ts” handout for the borrower. It reinforced conversations we’d already had about avoiding common mistakes during the mortgage process, such as changing jobs, opening new credit accounts, making large purchases or unexplained deposits, or moving money between accounts without first discussing the potential implications with their mortgage loan officer.
Again, none of this was revolutionary. The value came from delivering the information at the point when it could prevent a problem rather than after the problem occurred.
A Pre-Approval Should Prepare People, Not Just Pre-Approve Borrowers
Looking back, I don’t believe my success came from having unusually strong pre-approval letters or beautifully written emails. It came from recognizing that a renovation purchase involves a lot of people who need to understand what happens next.
The buyer needs to know how much room to leave for renovations. The selling agent needs to understand how to structure the offer and what timeline may be appropriate. The listing agent may need reassurance about unfamiliar financing. Once the offer is accepted, the mortgage loan officer needs the right documents quickly so the transaction can begin moving forward.
Everyone performs better when they know what to expect.
My pre-approval email gradually became less about approving someone for a mortgage and more about preparing everyone for a successful renovation transaction. It allowed me to answer questions before they became misunderstandings, establish realistic expectations before deadlines were written into contracts, and educate real estate agents before unfamiliar financing became an objection.
That is why I stopped thinking of the pre-approval letter as the end of the pre-approval process.
It was the beginning of the transaction.
For mortgage loan officers working with renovation buyers, that distinction is worth remembering. The questions you answer before an offer is written are often the problems you never have to solve after the contract is signed.
Continue Your Renovation Lending Education
Continue your renovation lending education by exploring additional articles in the blog series, including The Renovation Loan Process, Stop Selling Renovation Loans. Start Solving Real Estate Agents’ Biggest Problems., and Why Homebuyers Use Renovation Loans Rather Than Buying Move-In Ready Homes.
You can also listen to the renovatED for Lenders podcast for practical strategies, real-world experiences, and lessons designed to help mortgage professionals build, improve, and grow successful renovation lending businesses.
About Jennifer Goldsby
Jennifer Goldsby is a nationally recognized renovation lending consultant and founder of The Reno Gal®. For more than two decades, she has helped mortgage lenders build successful renovation lending platforms through consulting, education, and operational strategy. Jennifer is also the host of the renovatED for Lenders podcast, where she shares practical guidance, real-world experiences, and proven strategies to help mortgage professionals expand their expertise and grow their renovation lending business.