Real estate agents must start by prequalifying the buyer when working with real estate buyers. Otherwise, you may spend valuable time on a client who cannot buy a home. At the same time, you set unrealistic expectations for the buyer. In fact, half of the transactions that agents begin will ultimately fall through, mainly because the realtor wasn’t careful enough in prequalifying the buyer. Here’s how to prequalify buyers correctly to make the best use of all your time.
Steps for Prequalifying Buyers
Prequalification should always happen before you show any real estate for sale. When you are learning how to become a real estate agent, you can study and practice asking better questions during this job phase. In fact, if you take the Roadmap to Success online real estate course for working with real estate buyers, you will learn what questions to ask. For now, remember that you need to ask questions that help you accomplish the following tasks.
1) Assess Their Motivation
You need to find out if the buyer is motivated to purchase a home. If they aren’t, they will likely abandon the transaction before completion. After all, buying a home is a 60-90 day process that requires them to be patient and take care of many tasks along the way. If they do not have a good rationale for sticking with it, they won’t.
Ask questions to find out how strongly they feel buying a home is something they are committed to doing. Examples of good questions include:
- Why are you moving at this time?
- Do you rent your current home or own it?
- If you rent, when does your lease expire?
- How long have you been searching for a home?
- Is there a specific time you need to be in your new home?
- How quickly do you need and want to buy?
Of course, asking questions is all about getting the buyer to talk. The next step is listening to them carefully. Pay attention to the words they use and their tone of voice, expressions, and body language. Ask yourself, are they ready and eager to begin the homebuying process? Or will they use your house buying service and never actually commit to a purchase?
2) Determine Their Expectations
When working with real estate buyers, you must be sure the client has realistic expectations of the home purchase process. If they don’t, you need to know if they are willing and able to adjust their expectations. Determine what they expect from a buyers’ agent during your prequalification interview with them. Ask questions such as:
- How do you feel when you think of buying a house?
- What expectations do you have of me as your realtor?
- What three qualities should the real estate agents you consider working with have?
- Are you working with another buyers’ agent now?
When you know what the buyer expects of you, you know if you can and want to supply it to them. If what they expect meshes with what you can and are willing to give them, you may work well together.
3) Evaluate Their Ability
When you first finish your initial real estate school, you may imagine that working with real estate buyers means every client who comes to you can buy a home. However, many people who contact real estate agents cannot buy the home they want, or in some cases, any home at all. During your first conversations with people who come to you as buyers, you can begin to evaluate their ability to buy a home.
Ask them questions about their financial abilities and goals, such as:
- Are you looking for a home in a specific price range?
- What do you plan to offer as a down payment?
- How much do you have in your budget for mortgage payments each month?
- How much extra do you have in your monthly budget to take care of repairs and maintenance?
- How much can you contribute to closing costs?
- What housing expenses do you currently include in your budget?
- Do you see this home purchase as an investment?
- Do you expect any changes in your employment in the next year?
- Are you qualified for special homebuyer programs?
- Have you already talked to a lender?
Again, watch and listen as the buyer answers these questions. Because this is such a large purchase for most buyers, they may be nervous. That’s natural. However, if they express deep concerns, now is the time to notice them. Either you can help them overcome their fears, or you will need to determine if there are real problems behind their worry.
4) Get Mortgage Preapproval
The next step in working with real estate buyers is to actually send them to a lender to get a mortgage preapproval. Doing this saves time, only showing them homes they can afford. You prepare them to act quickly if the right home becomes available. Finally, they will be more acceptable to sellers if they are already preapproved.
5) Find Out If They Have the Authority to Buy
The final step in prequalifying buyers is to ensure that they actually have the authority to buy a home. You need to know if any other people will participate in the home purchase. Ask them:
- Will you be buying the home with someone else?
- Who will be a part of your household in the new house?
- Will you consult with someone else before the purchase?
- Will you be the only one to make decisions during the homebuying process?
If the person has the authority to buy a home, you can move on to the next step in the prequalification process.
Does It Make Sense to Represent This Buyer?
Just because someone comes to you asking for your help doesn’t mean you must work with them. Working with real estate buyers is a difficult job, and it is even more challenging if you have no reason or motivation to work with them. Before you commit to being their agent, find out if they will be a client you can enter into a mutually beneficial relationship with at this time. Evaluate the possibility of being their realtor by asking yourself the following questions.
- Are they motivated to buy?
- Do they have severe financial problems?
- Can they adjust their expectations?
- Do they show consideration for your time?
- Are they loyal?
- Do they demand that you do unlawful things?
- Do you have a conflict of interest in representing them?
You streamline the process when you prequalify buyers before you offer them a house buying service. What’s more, you avoid wasting time and resources on buyers who can’t afford to buy. You can learn how to prequalify correctly to save yourself the trouble, help clients more, and build a successful real estate business through real estate training courses and other real estate training.