A prequalification is a basic screening for a potential borrower. If you have mortgage, chances are you have went through this process yourself. It however is not a mortgage application. It can help rule out some people who want to buy your home but cannot because of their credit, income, or debt.
It is a good first step but not a fail safe. There is an old adage “buyers are lairs” that for the most part holds true. No offence, but many borrows tend to not give a full disclosure. Maybe they are ashamed, trying to hide something, don’t think it is important, unaware of something, or whatever. But it seems like often times there is something.
What prequalified means is a mortgage broker has reviewed a borrowers credit report for any red flags. They also have and run their stated income against the current debt listed on their report. Then come up with a prospective loan program, rate, and payment to come up with a loan ceiling.
As an agent for the seller, I would you not sign an agreement without one. It is no guarantee, but it is a good start and gauge for a borrowers ability to close the loan. If you are considering a cash deal, I would advise you obtain a verification of funds. Either way nothing stinks worse than waiting to the last minute to find out the buyer is having issues closing.