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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 a buyer you want to qualify, is the following:
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 so you can qualify him or her, you may just turn them off and things could actually get ugly. Questions not to ask when you qualify a potential purchaser.
The buyer might not disclose the information you needed anyway. 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.
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 some very important information, to help you qualify this buyer. They are:
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;
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:
You can also go to far when you qualify a buyer in your questioning without it being necessary. Some examples would be as follows:
Here is a question when you qualify a buyer that is time sensitive. Wait until you reach a certain point in the selling process then fire away.
- Whether the answer is yes or no, make sure that the mortgage clause time is short. My suggestion is no more than 5 business days. 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.
- 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. 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 independent mortgage broker, 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 tries to fit the buyer, with the mortgage company. Win! Win! Win! Everyone is now happy. You should always have purchase contracts on hand when selling for sale by owner. When I was a Realtor, ® I never left home without them. :) I have done the research for you, to obtain these forms from several different countries. The forms are:
Just go on over to, For Sale by Owner Contract Forms. Just for a quick review, lets take a quick look at the highlights, when you qualify a buyer.
One thing you might want to supply potential buyers, is some example payment sheets using various down payments, interest rates and amortization periods. This is especially helpful when you qualify a buyer that is, buying their first home. You could either ask your favorite mortgage lender, or mortgage broker for some, or make your own. You could use one of the many free mortgage calculators you can find online, such as the following; 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 want information about time frames to allow for various clauses, go to Don't be Handcuffed by Time Frames! If you see 30 days to find suitable financing, I'd suggest you don't 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. For more information go to How to Write Real Estate Clauses. or Real Estate Contracts. What do I suggest you do in this case? Have the clause changed to specific times and amounts. An offer with 50% down payment, is much more secure, than someone that can barely squeak out 5% down payment. Disclaimer Privacy Policy Contact Me |
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