Qualify a Buyer

Let's Keep Things Simple!

First some good news. When you qualify a buyer as a for sale by owner, you don't have to do it very often.

The reason is that the potential buyer(s) have to meet certain criteria.

The only people that you have to concern yourself with when it comes to buyer qualifications, is the following:

* They either are about to write an offer to purchase on your property or already have.

* There is no 2nd reason!

If someone shows no interest, shows lots of interest or anywhere in-between, it doesn't make any difference. If they aren't going to put an offer in on your property, you don't have to go through the qualify a buyer steps.

You are Probably NOT a Mortgage Lender

If your career does not involve writing up mortgages for people, your qualifying questions to qualify a buyer are going to be a lot different.

If you are blunt and start asking personal questions to a buyer that informs you that they are going to write up an offer on your house, you may just turn them off and things could actually get ugly.

Questions not to ask.

* How much do you make a year?

* How much do you have in credit card debt?

* How much do you owe on your car?

* Have you ever been bankrupt?

Yes, if answered truthfully, those are important things to know. As a for sale by owner though, questions of this nature are to rough, gruff and can be downright intimidating.

The buyer might not disclose the information you needed anyway.

A Kinder, Gentler Approach

To qualify a buyer, lets' try a softer approach, OK?

You don't just fire these questions at the buyer in rapid fire. Ask a question, wait for the answer.

Next you either make a comment about the answer or volunteer some information about yourself.

Here are some questions you may want to ask when you qualify a buyer that can reveal a lot of information, but not scare the potential buyer.

* Where are you working now?

* What do you do there?

* How long have you been there?

These questions, can reveal a lot of information.

Let's break some of the information down.

You: Where are you working now John?

John: At MNLOP Aircraft Parts and Service.

You: Boy, that's a big company. I'd get lost if I ever got past the front entrance.

You: What do you do there, John?

John: I'm the manager of overseas accounts.

You: With the amount of business MNLOP Aircraft Parts and Service does throughout the world, I imagine it keeps you pretty busy.

John: Oh yeah. I have to do a fair bit of overtime to keep everything on track. I really enjoy it though.

You: Yep, as long as you like what you are doing, a bit of overtime can be almost enjoyable.

You: So, how long have you been with MNLOP Aircraft Parts and Service now?

John: Let's see, it will be 18 years this June.

You: Wow! I don't know if I could ever stay at the same job for 10 years, let alone 18!

If you receive answers like the ones above when you qualify a buyer, you can probably stop the questions. Asking further questions, in this case will probably not accomplish much.

Keep in mind that even though everything sounds good, that doesn't mean it's solid.

John could have a pile of debt, have a gambling addiction or have huge alimony and child support payments to make.

The answers above revealed the following.

* The buyer has steady work at a solid company.

* The buyer has an upper management job that probably pays well.

* The buyer has a long history of stability.

Answers that Ring Warning Bells

Don't be to quick to draw conclusions when you qualify a buyer, if you don't like the answers. There may be other factors involved such as;

* The buyer's rich uncle just died and left a bundle to the buyer.

* The buyer's parents are buying their kid a house.

* The buyer just beat the odds and won the lottery.

Anyway, you get the picture.

Here are some answers that may mean trouble when you qualify a buyer.

Q. Where are you working now Tim?

A. At MNLOP Aircraft Parts and Service.

Q. What do you do there?

A. I bring John the overseas manager coffee and run errands for him.

Q. Oh, and how long have you been there?

A. I just started last week. I was out of work for 3 months until I found this job.

These answers tell you that the buyer is in a lower paying job and has very shaky work stability. Not the kind of history that mortgage lenders are excited about.

People that may have a hard time obtaining a mortgage may or may not include the following:

* Just changed careers and have been employed in their new career for less than a year.

* Have a history of unemployment.

* Commission sales people. (This depends on how long and their history of income).

* People who have their own business but have 3 years or less in that business.

* Buyers that have a bankruptcy on file.

* Folks with lousy credit.

Questions You Don't Need to Ask

You can also go to far when you qualify a buyer in your questioning without it being necessary. Some examples would be as follows:

* How much down payment are you investing? You will find that out when you receive the offer.

* When did you want to take possession? You will find out when you receive the offer.

* How much do you owe on your car? To blunt and personal. Let the lender ask those tough questions.

* How much do you owe on credit cards? Again, to personal and blunt.

The buyer may tell you they have a pre-approval when in fact they don't.

This may be because they are just stringing you along or because they aren't quite sure what a pre-approval is and what it means.

Whether the buyer says they are pre-approved or not ask this next question.

* What mortgage lender will you be using?

- The buyer should have a quick answer to this question. Watch their body language to see if they hesitate or shift their look away from yours.

Help the Buyer and Yourself

If you read my section about mortgage brokers, you know I'm a big fan. Sending the buyer to a mortgage broker, might just save the contract if the buyer isn't gold.

Here is one way to approach the buyer.

You: Mary and John, would you mind if I shared something with you that might save you some money and time?

Buyer: Sure, go ahead.

You: Would you use (name their mortgage lender) even if the interest rate was higher and your monthly payment were higher than another lender?

Buyer: What do you mean?

You: Well Mary and John, if you aren't familiar with mortgage brokers, in the vast majority of time, they can shop you lower interest rates and fit in mortgage packages to suit you and your lifestyle that perhaps your present mortgage lender can't offer. Would that be of help to you?

Buyer: Well, we aren't opposed to saving money.

You: Here is the name and number of ........ They won't cost you a cent and you could save thousands of dollars.

When you qualify a buyer, why would you want to bother with this step?

I'm glad you ask. If the buyer is at all shaky on the financing, a good mortgage lender is much more likely to put the mortgage together. This means you win and the buyer wins.

Here is something you may or not know:

Sometimes a particular mortgage lender may be in a time period where they are lending less mortgages out except for "golden" mortgages.

If your buyer is not one of the "golden" clients, they may get turned down and nullify your contract.

The mortgage broker however, not only shops for lower rates, but also to fit the buyer with the mortgage company.

Win! Win! Win! Everyone is now happy.

In a Nutshell

Just for a quick review, lets take a quick look at the highlights when you qualify a buyer.

* Only ask financial questions if you have received an offer or the offer is going to be written.

* Don't get to personal by asking about the buyers credit history or debts.

* Do ask (in a friendly matter-of-fact way) questions concerning employment and employment history.

* Do ask if the buyer has been pre-approved.

* Do bring up the use of a mortgage broker. (Optional)

You see, when you want to qualify a buyer, you don't need to get all "in their face". Just be natural, find out some basics and let the professionals handle the rest.

ONE MORE TIME Keep the time for finding a mortgage short. Except under rare conditions when selling a residential property, 5 business days is the maximum.

If you see 15 days or 30 days to find suitable financing, DO NOT ACCEPT.

Either change the time frame or refuse the offer.

On the note of the financing clause, "Finding suitable financing on or before such and such a date" is another warning signal.

The financing clause should state clearly the amount of money to be mortgaged. This will give you a sense of how solid the offer is concerning financing.

An offer with 50% down payment is much more secure than someone that can barely squeak out 5% down payment.

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