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We are looking for a house and will get a pre-approval in the next couple of weeks....

By Bruce Miller

Real Estate Agent with Friendly Appraisals

September 30, 2007 03:08 AM

This AM, I heard a line that made me say "HUH?"........Here is what the guy said, >>I now have buyers representation and we are supposed to look at a house this coming friday, at some point the next couple weeks we'll also get pre-approval.<< Am I the only who thinks this is backwards?

I can understand someone saying "we want to buy a house, lets go look!"

What I do not understand, is why someone would say that AFTER they have an agent who is supposed to be helping them.

Driving someone around looking at houses is NOT helping them!

When an agent has a buyer to represent(HELP), they should(At least):

LISTEN to what your client's needs are and find out what their motivation is.
EDUCATE THEM on how the process works in the Real World.
SATISFY the clients needs.

When you listen to the clients needs & motivation you can begin to help them. It also prevents EVERYONE from waisting their time, money and energy.

When you educate them, you are now serving them.....isn't that what we are supposed to do?

By doing 1 and 2 you are helping the potential buyer and are now satisfying their needs. Remember, sometimes a buyer does not know for sure what their needs are.......once they are educated, they WILL know!

Yes, I realize this is or should be Real Estate 101-First Paragraph of the first Chapter, but apparently, someone missed it!

Comments(12)

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Andrew Trevino

ADT Real Estate - Wilkes Barre, PA

Wilkes-Barre Homes For Sale

Bruce,

You're right on target with this post. I see it and hear it all the time and I still don't get how a Realtor could allow this to happen. Then again, I know that there are a lot of Realtors out there not doing much, so maybe grasping at straws is better than doing nothing at all.

Sep 30, 2007 03:20 AM

Roy Kotz

NPDodge - Papillion, NE

The next step though is getting the buyer to listen to you. Or, if they won't do you just walk away?

Sep 30, 2007 03:20 AM

Jason Schweiger

Modus Mortgage - Auburn, WA

Loan Originator: Modus Mortgage

It is backwards unless he is savvy and knows he will get approved. I personally have never gotten pre-approved because I know I qualify.

Sep 30, 2007 03:22 AM

John MacArthur

Century 21 Redwood - Washington, DC

Licensed Maryland/DC Realtor, Metro DC Homes

Bruce - This may sound foreign or backwards to newer agents. Those that have joined our ranks in the past few years or so, seemed to meet folks and send them off to speak with their "lender". When the buyers came back with their letter in hand, agents took them out and furtively searched for a home they could get under contract before someone else made an offer.

The introduction of designer products by lenders may have confused agents. The wide range of interest rates being charged on various products my have confused agents. I don't know the reason, but agents stopped pre-qualifying their buyers themselves. They just passed the buck. I have a sneaking suspicion that there was a little greed and sloth combined.

Any client of mine that let me know that they could only view homes on Friday could make that statement. I promise you, they would only be seeing homes that meet their financial criteria. I do the homework. I know what products are still available. I make sure my estimates are on the conservative side. When the time comes, I introduce them to at least three lenders. It is their decision. I sit down with them and the lender. I make sure they understand the process. I am not sitting there hoping to discover what they can afford. I already know that, the letter they receive is a formality.

If you qualify your clients, you will have more control over the process and you will find less dependence on others will free you up to work at your own pace.

Sep 30, 2007 03:35 AM

Michelle Miller

Virtual Properties Realty - Woodstock, GA

I agree Bruce! Pre-approval is imperative, especially with the changes made to financial contingency within the Georgia Association of Realtors contracts early this year. This being said - Buyers need to have a lender/loan secured (pre-approval) prior to looking so (1) they will know what price range to focus and (2) they won't have to stress about a lender/loan and financial contingencies after they find a home.

I have had MANY Buyer's over the years who didn't think they needed to speak with lender before looking who ended up heartbroken when the found their "dream home" and didn't qualify for the loan. These were people who made above average salaries, but their debt ratio or other factors kept them from affording that 1 million dollar home. Needless to say I eventually learned my lesson and insist on buyers obtaining pre-approval prior to looking unless it will be a cash sale. And in that case I require they provide "proof of funds" so I can send it along with any offers.

It is my job to look out for my clients best interest. Am I doing that if I let them fall in love with a home that is beyond their means?

Sep 30, 2007 05:01 AM

Bruce Miller

Friendly Appraisals - Acworth, GA

Andrew thanks, I was surprised! But I guess I should not have been.....so many agents will go show houses and "Hope" for the best.....

Roy Everyone is different, but I personally, am not going to show people houses if they cannot buy one.

Jason & John I respect you both, but if you make an offer on one of my listings WITHOUT proof of funds attached, my seller will be advised to counter it with a request for proof that the buyer is qualified. QUESTION: Do you accept offers from buyers without proof of funds?

Even if you are paying CA$H, I will get excited, my seller will get excited, then we will ask for a letter from your bank saying that you do actually have the CASH.

John My friend, you are elite! I WISH I was as knowledgeable as you, but I am NOT and I have ALOT to learn! (I am trying though)

However, I am not so new that I am going to spend countless hours previewing, or searching for homes, and then drive all over town, unless I am fairly certain that the buyers can actually buy.

IF I have qualified buyers, I will bust my tail and do whatever I can to help them get what THEY want.

Sep 30, 2007 05:26 AM

Bruce Miller

Friendly Appraisals - Acworth, GA

Michelle, That is exactly my point! Here in GA, we are not allowed to write an offer(on a GAR Form) to a seller unless the buyer is "Qualified"

Sep 30, 2007 05:30 AM

Jason Schweiger

Modus Mortgage - Auburn, WA

Loan Originator: Modus Mortgage

Qualified and getting the loan are two different things. I have several clients that were fully "approved" and the lenders shut their doors before we could close.

There is never a guarantee. We can only do our best and hope everything works out.

Sep 30, 2007 01:43 PM

Bruce Miller

Friendly Appraisals - Acworth, GA

Jason, was the lender Greenpoint? I was in my Realtor® class the day they shut their doors, loans in the process of closing, got cancelled.......no money to fund them! Man I am sorry for you AND your buyers.....

Oct 01, 2007 08:22 AM

Sharon "Toni" Brown

Exit Realty United - South Ozone Park, NY

South Ozone Park - New York City Real Estate

I know you said WHAT? Bruce I don't now what to say to this post that hasn't been said. I just hope that the new agents who need to see this find it. I am not into wasting my time or the buyers. You have to have double coverage these days.

Oct 06, 2007 10:39 AM

Christopher Ohlsen

Credit Werx, LLC. - Malone, NY

This is a great post and a great conversation that follows. I like it because theres a question as to whether a prospect should first go to a lender or a realtor. Of course if the prospect goes to the realtor first the realtor will have an opportunity to make a referral to his/her lender partner. But the fact is a Realtor really should not be driving people around showing them houses if they do not know whether or not the person is qualified for the services that the Realtor is already rendering. Regardless of where the prospect goes first, I don't think that anyone can question that unless it is a cash deal the buyer needs to interact with a lender before any real services other than maybe a referral can or should be rendered.

Oct 24, 2007 02:12 AM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Unless you have a pre-approval letter from your lender and a check book ready to write a earnest money check, then you don't get in to my car! I go through close to an hour consultation with each buyer that wants to be represented by me and if they are not willing to do that, then I assume they are not ready to buy and move on. I do lose a few clients that way, but I usually hear that they were problem clients and I'm glad I didn't have them.

In real estate school they don't teach real estate 101 anymore, if they ever did? Too many agents are glorified Taxi drivers.