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One of the most important rules of sales, in general, is to not spin your wheels on a dead-end deal — and real estate is no exception to this rule. There is a set amount of hours in a week, and misusing them on a bad deal only gives you less time to work on getting and closing good ones.
Taking a few extra steps in the beginning with a new buyer can help set up both parties for success. Here are three ways to qualify buyers and dodge dead-end deals.
1. Pre-approve
There never is a reason to omit or skip this infamous first question: Are you buying with cash or with a mortgage?
If the answer is cash, get the proof of funds upfront, and you are good to go. It is always best to have paperwork to back up the words of your client — it also saves needing this step when the time to write an offer arrives.
If a mortgage is the chosen path, it’s best to get them over to a trusted mortgage professional. If they have already spoken to a mortgage professional, be sure to obtain a copy of the pre-approval letter.
Then chat with the loan officer to be sure the client has been thoroughly checked and qualified. You will want them to be sure the client has the needed credit, job history and sufficient funds to close.
Mortgage red flags are best discovered before a client has started to look into specific homes.
2. Identify all decision makers
This oft-forgotten step is very important in making the deal flow smoothly. Is there a friend, significant other or family member who will be making the move with your buyer? Is there a down payment gift coming from someone who might have a say on the property being purchased?
There might even be someone who is not moving or financially invested in the transaction but whose opinion carries great value to your client.
These are the questions you need answers to upfront. You don’t want to be in a situation where your buyer falls in love with a property, and you are unable to put their offer in until a third party approves, especially if you aren’t aware the third party exists.
This only creates more problems in hot markets with limited inventory that require decisions be made fast before the property is under deposit.
Take time to ask your buyer outright if there is anyone else involved in the decision-making process or anyone whose opinion would keep them from moving forward with an offer on a property.
3. Investigate any reason to not buy today
Is there anything stopping your buyer from buying a home today?
Ask about their current living situation:
- Do they have a lease?
- Is it month-to-month?
- Are they living rent-free with family or a friend?
Getting this out in the open can help identify their current living situation and how it will affect their decision-making process.
The timing of a lease might dictate the timing of closing on their new home. Are there penalties for breaking the lease? Is the landlord willing to work with the buyer to make the home purchase work?
Discussing these options and formulating a plan on how to handle the circumstances will help the process go smoother later.
A buyer might be hesitant to jump into a mortgage payment if they currently have a low rent or if they are living for free with a friend or relative. Are they ready to start investing in themselves by owning their own home with a new monthly obligation? This is a conversation you can meet head on and talk about before your home showings begin.
Being sure a homebuyer is qualified and ready to purchase will keep you from wasting time and spinning your wheels. We all get paid at closings, not for fruitless appointments.
Michael Maynard is CEO of Branford, Connecticut-based New Neighbors Inc. Follow him on Facebook and Instagram.
