Qualify your customers....

By
Real Estate Agent with Real Living Real Estate Solutions

 

Why does the prospect of qualifying a buyer sound so uncomfortable?  Over the past 5 years, our involvement with regards to qualifying has been discouraged by lenders because they had programs that were so diverse that only a mortgage professional should get involved... So looking back...that didn't turn out so well? At least not so well for the 2 million folks marching toward foreclosure... As more money flowed into the secondary mortgage market, it wasn't about qualifying at all... It was about getting the deal done...  Everyone is partially to blame, the buyer's, the seller's, the agents, and the mortgage brokers.   I am generally very optimistic, and I can't speak for anyone else, but this was my first trip to the woodshed and the result took me by surprise. 

Knowing what I know now, I need to discuss with my customers how they plan on paying for their new home.   The 29% and 43% is a good start followed by credit scores and what is the definition of provable income... Extenuating circumstance needs to become the exception not the rule, and understanding the customer finances isn't just the mortgage broker's job. So now as the pendulum swings back to the right, it's not enough for your customer to say they can afford it... you actually have to prove it... The overall problem is that good times perpetuate bad habits... Letting someone else qualify your customer is one of them. 

 I'm reminded of a story my mother and father-in-law tell: 50 years ago, a real estate agent helped them buy a 3 family home because he showed them how they could afford the home based on my father-in- laws income... to this day, they remember the real estate agents name but neither could tell you the name of the banker?  If you're in it for the long run, nothing is more important than being remembered...especially when you make a difference!

Tuesdays with Tony

 

Comments (4)

Michael (Mike) Elliott
Nottingham Real Estate Group - Hamilton, NJ
I let my trusted lender do all the financial stuff. i dont wish to know about alimony, child support, their past stuff.
Apr 02, 2008 12:57 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

One of my agents remarked once.  Let Lenn talk to them.  She'll know how much money their Greatgrandfather made before he gets tot he corner.

I know my buyer's finances.  It's part of my job.  I don't remember real estate school telling us "don't ask about financing".  They did, however, teach basic qualifying.  That might be a clue to agents that you need to know if your buyers are qualified. 

For listing agent, they also need to know if buyers for their listings are qualified.  I wouldn't look at an offer to buy without a financial sheet.

 

Apr 02, 2008 01:03 AM
Pam Joffe
Solaris Realty - Tampa, FL
Qualifing the customer is so important especially with the market becoming tighter and tighter. We don't won't to show customers homes that they can't afford.
Apr 02, 2008 02:27 AM
Douglas Garbe
Real Living Real Estate Solutions - Orlando, FL
Real Living Real Estate Solutions

Tony- it is refreshing to see such candor in admitting our role in the crisis that is playing itself out.  I myself have been both shocked and amused by the number of anti-Realtor websites that have sprung up (Evil Realtors Suck, Rate your Agents, and my favorite RealTurds). 

It boils down to this:  a lot of people have lost faith in our service.  People are now going to auctions so that they do not have to deal with Realtors at all.

When I now talk to potential clients I can feel the tension.  The unspoken message seems to be, 'you are probably going to try and put me in a house I can't afford.' 

That, as a green Realtor, is not my goal.  I actually want to help both the environment and my customers.  I have a fairly plausible way to combat the negativity.  For the most part, once my website and my blogs have been visited by them....and I have established some 'street cred.'....then we are back to pleasantries.

I think the story you shared about your mother and your father in law is brilliant!  The solution to the problem we are facing is in that story: The agent they dealt with treated them with respect and helped them manage their money to the best of their abilities. 

And he educated them.  That is what people remember (which is why you remember his name, I bet).

Awesome post.

Apr 02, 2008 04:46 AM