Whether you stick to the pre-qualified amount like glue or trust your clients to come up with the needed money after they find their dream home, choosing your approach depends on the buyer.
By Darryl Davis, CSP
Pre-qualifying buyers before showing a property has been a long-standing habit of real estate professionals. More often than not, the seller wants to screen out people who can’t afford their home, which can be frustrating for the buyer who may come up just a little shy of funds on paper.
TIP: Investopedia goes into the differences between “pre-qualified” and “pre-approved” in their article here.
So how DO you dance around the pre-qualification questions to get the information you need without the buyer feeling embarrassed or harassed, especially if they are wealthy?
There are two schools of thought on the matter: you either choose to work only with people who have been pre-qualified, or you don’t even pay attention to that piece of paper and focus on finding the home the buyer really loves.
The “Homes First, Money Second” Approach
We interviewed a top real estate agent named Robert Slack a while ago, who is a broker down in Florida. He was forced to start over when he was 66 and started his real estate company when he was in his late 60s. He’s been in business approximately 6 years, and already has over 500 agents!
He made the decision to approach his appointments by focusing on finding the buyer a house, and not worrying about whether or not a buyer was pre-qualified for a certain amount. He believes (and I agree) that if somebody is really committed to buying a house, they will find one they love. And when they find that house, regardless of what their mortgage-broker pre-qualifies them for, they will work miracles and come up with the money. They find a way to make it work.
Be warned, though. It doesn’t always work out that way. Sometimes you take some buyers out, and then they weren’t as committed as you thought they were. They just wanted to look, and they wasted everyone’s time.
I read a book recently about the qualities of successful people, particularly the multi-billionaires. They all have this philosophy — they don’t say no. It’s their belief that when you say no to things, it kills off future possibilities. It prevents the creation of more yesses. Saying yes to taking these buyers out, regardless of their pre-qualifications, creates the possibilities that they might be able to say yes to that house that’s a little over their price range, and the possibility of creating miracles to make it work.
My mentor, Mac Levitt, also said the same thing. “If you have a buyer that is really and truly committed to buying a house, they will find the money somehow.” In my years with him, more often than not, they did! I can’t count how often we would have a buyer tell us, “I only have $30,000 to work with,” but then we show them something and it turns out they need $40,000, they would find that extra $10,000 one way or another.
The “Money First, Homes Second” Approach
The alternative is to sit down with a buyer before you take them out to show them homes and have a coaching session with them.
In this coaching session, you have the opportunity to talk about the process of getting pre-qualified and why it’s important that they do so before you take them out to look at homes. They can get a letter from their mortgage-lender, and once you know what they are pre-qualified or pre-approved for, you find homes within that price range.
The Takeaway
Whichever approach you choose to use, each has their advantages and disadvantages, and your approach is often chosen on a client-by-client basis. At the end of the day, it’s about serving the clients and keeping their best interests at heart, whether it’s minding their budget or minding their wants.
Check out this other related blog article: How To Coach Buyers When They Want To Buy More Than They Can Afford.
What’s Next?
Are you ready to start taking things to the Next Level®? It’s time to find a comfortable balance between “staying in your lane” and “off-roading” when it comes to pre-qualifying clients and showing homes.
We’re here to help! Join us for our weekly free webinars designed to help agents get real-world solutions to building listing inventory, growing their businesses, handling objections, and so much more! Learn more at www.DarrylSpeaks.com/Online-Training.
About Your Author Darryl Davis, CSP, Speaker, Coach, Author
Darryl has been spoken to, trained, and coached more than 100,000 real estate professionals around the globe. He is a bestselling author for McGraw-Hill Publishing, and his book, How to Become a Power Agent in Real Estate tops Amazon’s charts for most sold book to real estate agents. His real estate training system The Power Program®, proven to help agents double their production over their previous year.
