Agents, are you setting proper Pre-Qualification expectations with your buyers???? Sadly, many agents do not seem to be doing so. Before you refer a buyer to a loan officer, please do everyone a favor and set the proper expectations at that time. That is an excellent time to begin to start the education process with your buyer.
Please do not lead the buyer to believe that a Pre-Qualification can be done in 5-10 minutes over the phone and they will instantly get their letter. It only makes us look like the bad guy. A 5-10 minute Pre-Qualification today is pretty pure fiction much like Stephen King. Well technically, a Loan Officer can take the basic information in a little more than that time if they are not busy with something else. Unless you are dealing with a loan officer who has no other business, that is generally not going to be the case. Some may even issue a letter after that phone conversation. Those are the ones that you need to run from. Unless you luck out that everything really is OK, you are just wasting everyone's time on a letter that is not worth the paper its printed on.
At the beginning of the process is the most critical time to begin to set proper expectations. Most everyone now wants the instant gratification. Patience is a virtue than many seem to have lost.
Prepare the buyer upfront that a proper Pre-Qualification does require the review of their financial information. They do need to have certain documentation ready for the Loan Officer when they make contact. Without it, there is not much that we can do if we treat this like a true profession. It doesn't matter if the house just hit the market. It doesn't matter if it has 100 offers already and you want to be number 101. A proper Pre-Qualification takes time to review the information. A Pre-Qualification letter will no be issued until I am satisfied that the borrower does in fact seem to be a viable candidate for a mortgage approval.
Here is what I will not do:
- I will not issue a Pre-Qualification letter without reviewing a buyer's most recent pay stub.
- I will not issue a Pre-Qualification letter without reviewing a buyer's last 2 years of W-2's and/or 1099's.
- I will not issue a Pre-Qualification letter without reviewing a buyer's last 2 years of Federal Income Tax returns.
- I will not issue a Pre-Qualification letter without reviewing a buyer's most recent bank statement showing sufficient funds to close.
Here is what I will do:
- I will review the borrrowers credit report for any potential issues
- I will issue a Pre-Qualification letter once I have reviewed a buyer's most recent pay stub.
- I will issue a Pre-Qualification letter once I have reviewed a buyer's last 2 years of W-2's and/or 1099's.
- I will issue a Pre-Qualification letter once I have reviewed a buyer's last 2 years of Federal Income Tax returns.
- I will issue a Pre-Qualification letter once I have reviewed a buyer's most recent bank statement showing sufficient funds to close.
The $1,000,000 question now is which of the above options do you prefer for your buyer's Pre-Qualification letter? Do you want #1 with the quick conversation one where you later find out the buyer his a side business loosing $20,000 a year and they no longer qualify for the sales price you just got under contract? Or, do you want #2 with the letter with the lower sales price where the loan officer saw the loss upfront and factor that into their qualifying? If you chose #1, you must really enjoy driving people around for free. At least a taxi driver gets paid. For those opting for #2, you really do value your time and are a professional in the business that demands a higher standard.
Every true professional in this business now has a website for a borrower to submit an online application. I always urge buyers to apply online. It saves time for everyone and ensures more accuracy with the data being given. There is not much more annoying than talking to a buyer who is on a cell phone with bad reception and having them try to give you their information as they cut in and out. I know that you have experience this when just trying to get phone number or email address from someone. Now, think of that as a long conversation where you are trying to get more information that just those two things. Whispering while at work is another favorite. An application taken over the phone can often have misspellings since even the most common of words seem to now have many speling variations.
Obtaining a mortgage in today's market requires patience. If everyone sets proper expectations for the borrowers upfront, then it makes it much easier on all parties.