I've been speaking with new agents lately and I realized that even the most basic information can help with working with buyers and time management.
I've met with buyers over the years who have proclaimed that they "know they're okay" when I asked if they've been pre-approved. If you're an experienced agent, you may, instinctively, know if a buyer is "okay" or not but, if you're a newer agent, some buyers can be intimidating when they respond this way while you're not 100% sure how to react. Don't be afraid you'll lose the client by giving advice. If the buyer is real they'll appreciate and follow your lead. If the buyer refuses then they may not be worth your time. In case a buyer insists on looking at homes before they'll provide their information to a lender, I've provided a list of reasons that will help you to convince them why they should.
- The buyer will know before taking time (theirs and yours) looking at homes if anything negative comes up on their credit (there could even be a mistake) and have time to address the problem prior to beginning the home buying process. If they say they've checked their own credit then continue on...
- The buyer will have some idea of the rate (which can change from day to day) and approximately how much the payments will be at different price points. The advertised rate may not be the rate they qualify for.
- The buyer will know which type of loan program they qualify for and how much down payment they will need.
The buyer will know the maximum amount of house they can buy and can decide what their preferred maximum purchase price will be as the first step.
- Sellers feel more confident to negotiate if they can see proof that the buyer is ABLE before they make a decision. The seller having less concerns may result in better price and terms for the buyer.
- If they are competing with other buyers for a property, they may be out of the running if they're not armed with a pre-approval letter to submit with the offer while competing buyers are.
KNOW WHERE THE MONEY IS COMING FROM. I've learned by trial and error not to put a buyer in my car without having proof that the buyer is ready, willing and able. Not only does the buyer need to know their financial situation; you, as their agent, need to know what their negotiating power is so that you don't show them homes that they cannot buy. Gas and wear and tear on your vehicle is expensive and you will never get your time back. Some buyers may just not realize how you and your business may be affected by lack of preparation. Don't forget for one second that this is your livelihood.
If your buyers convince you to wing it then you may be looking at many hours of wasted time and a possible emotional loss for the buyer. When a buyer tries to lead, remind yourself who the professional is. Preparation is mandatory in this business so if you direct your buyers in the very beginning, your time can be used as effectively as possible.