Pre-Qualification vs. Pre-Approval in a Seller’s Market: What’s the Difference?

Are you thinking of buying a house in Northern California? You’ll need to act fast to ensure you’re ready both mentally and financially before you start house-hunting in earnest. Currently, the Northern California housing market is white-hot, undoubtedly spurred by the area’s incredible outdoor amenities and vibrant communities. For this reason, home prices have risen by more than 17% since March 2020.    

Right now, most of Northern California is a seller’s market, with the average home staying on the market for a median of just eight days. That’s the shortest period ever recorded by the California Association of Realtors. Additionally, more than 2/3rds of homes listed are selling over the asking price. These prices make the market even more competitive, raising the standard of offers and making it more challenging for sub-par bids to compete.

In this piece we’ll outline the differences of Pre-Qualification vs. Pre-Approval, what it takes to get each and why its so important to have both in a sellers market.

Pre-Qualification vs. Pre-Approval

What's Causing the Seller's Market?

There are a variety of reasons why the housing market in this area is so hot right now. Record low mortgage rates, plus low supply, is having a huge impact. Plus, the impact of COVID-19 on homebuyers is causing more people to look for more space.  

If you’re hoping to buy a home in this market, don’t get discouraged. There are clear, actionable steps that ensure you’re ready to make an offer immediately when the right house comes along. Getting pre-qualified and pre-approved are essential steps in the process. 

Today, we’ll explain the difference between Pre-Qualification vs. Pre-Approval and show how each phase helps homebuyers prepare for a successful house-hunting process.

“While intense homebuying interest is the engine that continues to drive housing demand, a shortage of homes for sales is the rocket fuel pushing prices higher across the state. A lack of homes for sale is creating unprecedented market competition, leading to a record share of homes selling above asking price in March,” said C.A.R. President Dave Walsh in ManageCasa

Pre-Qualification vs. Pre-Approval

When you first decide that you’re ready to purchase a home, your initial step should be determining how much home you can afford. Most first-time homebuyers need to be walked through this process by a bank or a mortgage lender. From there your lender will talk about Pre-Qualification vs. Pre-Approval, and what you’ll actually need to make an offer on a house.

First, you’ll tackle Pre-qualification.

Getting Pre-Qualified

During the pre-qualification process, the prospective homebuyer will sit down with a lender – or several. Using data prospective homebuyers provide, each Lender will estimate how large a mortgage that borrower would receive from their institution. Typically, the data supplied to the Lender includes the homebuyer’s annual income and information on any debts and assets they may have. 

The pre-qualification process can be done over the phone, online, or in-person since it just requires a rough financial picture. There is no expectation that the Lender verifies any of the homebuyer’s financial information at this point. After the pre-qualification process, the homebuyer should have a good idea of what price of the home they could afford, based on their income, credit, and down payment.

Requirements for Pre-Approval

While anyone can get pre-qualified for a mortgage, only people who are serious about finding a home take the next step into pre-approval. 

During this process, a lender verifies all the information that you provided in the pre-qualification phase. The homebuyer will need to fill out an official mortgage application and provide documentation like W-2 slips, bank statements, or tax returns to verify their assets, credits, and debts. The Lender will also do an official credit check. 

After processing this information, the homebuyer will be issued a pre-approval letter by the Lender. This pre-approval is a conditional commitment that tells the homebuyers and any real estate agents or sellers how much money they have been tentatively approved to borrow. It also will list an interest rate. This information will remain valid for 90 to 180 days, although many agents consider it outdated after the initial 90 days.

What's the Difference Between Pre-Qualification vs.Pre-Approval?


  • The Lender will estimate how large a mortgage that borrower would receive.
  • Typically can be done in less than an hour.
  • You will not receive a locked-in interest rate.


  • The Lender will tell you exactly how much of a home mortgage you’ll be offered.
  • The Lender will provide an actual interest rate for your proposed mortgage.

Typically takes anywhere from a few days to several weeks, depending on the complexity of your financial situation.

How a Seller's Market Affects Both Pre-Qualification vs. Pre-Approval

Both the pre-qualification process and the pre-approval process are integral to buying a home, especially in a hot housing market as we see now. Many real estate agents will not work with a buyer who has not been pre-qualified at the very least. 

The pre-approval document not only proves you have put in the work to secure conditional approval from a mortgage lender. It also makes any offer you place more competitive, and in a seller’s market like today, most sellers are receiving multiple offers.

Need Help? Speak With a DoorTru Agent for More Resources

Going through these processes is necessary if you want to ensure a successful house hunt, but you’re not alone. Want to learn more about the home buying process, including pre-qualification or pre-approval? Today, get in touch with one of our agents, who can share more resources on the home buying process with you.