Recently I listed a property for a client in the Tampa, FL Market.
Yes, I am still living in the Florida Keys, however, I have a real estate team in the Tampa, FL, and Key West Markets now.
I often find it shocking how easy it is for Realtors to kill deals for their clients and for themselves. I thought I’d bring value this week by educating you on the most popular way Realtors are blowing it this year.
For those of you planning to buy in 2021 or ever again this applies to you. If you ever plan to sell any real estate of your own in the future this topic also applies to you.
Granted, if I was to discuss every way Realtors, Buyers and Sellers kill deals this would turn into an 80-hour audiobook instead of a podcast.
Tons of buyers are shopping before being sure they are fully qualified for a mortgage. Clearly, if you are using 100% cash then this won’t apply to you.
This week I have had several instances of this happening.
I believe every Realtor should know this already but since this week proves they don’t I’ll share with you what I mean about this. It’s always a bad idea to show houses to people who have not proven they are approved to buy such a house, here is why.
- The Buyers fall in love with a house and later find out that their lender can’t get them approved for the mortgage due to credit or income issues. Make no mistake, buyers will fight Realtors tooth and nail on this because everyone is eager to go house shopping but your time is being wasted if there is no preapproval.
- Lenders sometimes give preapprovals that are useless. What do I mean? I mean that the lender hands out a boilerplate approval letter (the same as they give to everyone) without first checking the buyer’s credit and verifying their income. I’m not sure if they do this simply because they are lazy, or maybe they think the buyer is more likely to be loyal to them if they “think” they are approved quickly.
- When a buyer goes under contract on a home, the next step is usually to get a home inspection and termite inspection (the latter is more common in the south). Next, an appraisal is ordered which means by knowing the buyer has forked over around $700 to $1,000 to have these services performed. There are no takebacks or refunds if they later find out they can’t qualify for a mortgage on the house. If it’s a commercial property the bill is significantly higher.
Before you go shopping for any real estate, be clear on how you intend on paying for it. There’s nothing worse for a seller to take their home off the market only to find out a month later that the buyer is not qualified to buy it. Lost market time can crush a seller’s equity and even destroy another deal they might be working on if they needed to sell in order to close on the next purchase.
If you are raising private money, you should have more than one financial friend to work within the event the first investor or two flake out.
Consider closing on the concept with several financial friends. By closing on the concept bring them up to speed on the particulars of your deal, how you intend to proceed, and then simply probe for their buy-in.
Lastly, always offer a seller the option to accept payments for their equity. Notice how I said that, instead of saying “seller financing” which terrifies most sellers, dumb it down to say payments for their equity. This is because technically, the seller is NOT loaning you money, therefore they are NOT financing you. Instead, they are simply accepting payments for their equity.