Prequalification is an essential task for any REALTOR. In fact, when you are working with real estate tenants, you need to take the same thoughtful, prepared approach to pre-qualifying your potential customers as you would when you work with buyers and sellers. Here’s the best way to handle prequalification and why this step is vital in leasing.
Your time and effort are valuable. If you waste them trying to help someone who cannot qualify to lease a home, you can’t put that time and effort into helping someone who can. Beyond that, spending time with unqualified tenants may take away your good life balance, causing you to miss time with friends and family or become exhausted.
In addition, when you pre-qualify tenants, you get the information you need to know whether you should decide to work with them. After all, real estate agents are not required to work with every tenant who asks for their help. You choose, as long as you aren’t discriminating against anyone unfairly. You can learn more about how to avoid discrimination when working with real estate tenants by taking online courses, such as Roadmap to Success: Tenants.
How to Pre-Qualify Tenants
Pre-qualifying takes time, and real estate agents must be focused and attentive during this type of discussion with tenants. Since learning real estate skills is an ongoing process, get the basics down and refine them with each new customer. This task has two components: asking questions and covering the most critical topics.
Asking questions correctly can help you decide whether to work with a specific tenant. As you prepare for the meeting, write a list of questions you will need to ask to get all the essential information. After the meeting with a tenant, make notes on other questions you want to ask. Eventually, you will have your system down to a science.
It’s always best to ask open-ended questions when you can. This keeps them talking more often than using questions that can be answered with a single word or phrase. However, during the pre-qualifying phase, there may be some questions you want them to respond to with exact data.
Cover Important Topics
What are the most important topics to cover during a prequalification meeting? Here’s a brief list to get you started.
- How they discovered the property
- Their current rental or home ownership situation
- The amount of time they expect to spend in the new rental home
- Why they’re moving
- When they want to move
- Whether they want to sign a 1-year lease
- Whether they ever broke a lease
- What they know about rental requirements
- What type of employment they have or expect to have after moving
- Whether they have pets
- How many cars they will need to park
- Whether their current landlord will give them a reference
- Whether their landlord knows they’re moving
- If they have a criminal record
- Whether they have filed bankruptcy in the last seven years
- Has a landlord filed an eviction against them or won a judgment in the last seven years?
- Can they pay the lease application fee?
- What bank accounts do they have
- Whether they have the funds to make deposits and required rental payments
When you finish with the questions, you will have a clearer picture of the tenant’s situation and ability to lease. Before you conclude the real estate meeting, encourage them to ask any questions of you that they want to know.
Is the Tenant Qualified to Lease?
After you’ve gained as much information as possible, you’ll need to decide whether working with tenants like this is a good idea. Here are a few factors you can glean from the answers you just heard from the tenants.
- Are they motivated to lease?
If they aren’t excited to lease or don’t have any discernable reason to lease, they may waste a lot of your time and never rent a home.
- What do they expect from you?
It’s important to know what the tenant expects of you. Then, if their expectations are unrealistic, you can discuss whether they are willing to adjust their expectations. If not, it may be more trouble than it’s worth for both of you.
- Do they have the ability to lease?
When tenants don’t have the financial ability to lease a home, it can be heartbreaking for everyone concerned. At the same time, it wastes your resources. Instead, if you see they don’t have the ability, you can give them ideas for how to qualify later.
- Do they have the authority to lease?
Suppose someone does not have the authority to lease a rental home? In that case, you will not be able to close the transaction. Therefore, you need to be sure that the person can legally decide to lease.
Pre-qualifying is a critical task when you are working with real estate tenants. Learn how to do it properly, and you can best use your time and resources. Along the way, you can use your real estate training by connecting tenants and landlords successfully.