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:
- The loan process is started and we know they will actually be able to buy the home we help them find.
- 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?