Why Are We Looking At Homes Over Our Budget?

By
Real Estate Agent
https://activerain.com/droplet/45M7

Why are you showing us homes that are WAY over our budget?

 
This is a question my buyers DO NOT say and I don't think any buyer should have to ask their Realtor.  When I say over budget, I'm not talking a few thousand or even ten thousand.  Those can be bargaining amounts depending on the condition of the home and current market.  When you start going $25-50k over a buyers budget there's something wrong.
 
This is something I see happen locally and nationally (think TV shows) to home buyers.  I watched a show yesterday where a Realtor showed a couple a condo that was $75k over their max budget!  They fell in love and wanted it. I'll admit, I didn't watch the end of the show (I was too aggravated) so I don't know the outcome.  However, if they did purchase that home, I hope that couple is very financially responsible with the rest of their purchases...
 
Why do some Realtors do this?  The only thing I can think of is more money.  Yes, the more a buyer pays for a home the more I earn... but at what cost?  I would be devastated if I found out my client spent more than their means allowed and was facing foreclosure because I lead them to that house.  How can my business grow if it's jeopardizing my clients future.  Their future is my future.
 
We ask buyers to obtain a loan pre-approval for two main reasons:
  1. The loan process is started and we know they will actually be able to buy the home we help them find.
  2. To know what price range of homes we can show them.
I rarely start my buyers searches AT that maximum loan amount.  I encourage them to sit with their lender and figure out what their mortgage payment would be at that max amount.  I then have them factor in all other expenses they have in life: food, utilities, kids extra activities, date nights, etc.  Can they live with that payment?  OR will they be working themselves to death in order to make those payments?  I call it finding their Magic Number.
 
Where do you start your home buyers searches at?  Their maximum pre-approval amount? Your minimum desired sale amount?  Or someplace in between?
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Topic:
Real Estate Best Practices
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buyers
budgets
loan preapproval

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Rainer
35,327
Rob Z
Keller Williams Buffalo Northtowns - Buffalo, NY
Let me Help You

I wouldn't want to waste their time as well as mine looking at homes they can't afford. And you're absolutely right about the Foreclosure, I don't want that guilt on my hands!

Oct 26, 2013 03:51 AM #1
Rainer
200,952
Sarah Lynn Jaskowski
Williamsville, NY
House. Home. Today.

I wish more agents thought like us :)

Oct 27, 2013 04:37 AM #2
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Rainer
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Sarah Lynn Jaskowski

House. Home. Today.
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