When I’m contacted by a new customer about seeing property, there are two questions I always ask:
“Are you currently working with an agent”?
and
“Have you spoken with a mortgage lender”?
If the answer to the first is ‘yes’, I respectfully direct them to contact said agent. I have no desire to interfere with the relationship established between the buyer and one of my peers.
If the answer to the second question is ‘no’, then it’s time for a little educating. And this has been the case for as long as I’ve been a real estate agent. (Yikes. That’s 24 years now. Someone around here’s getting old!)
The thing is, most buyers really want to look at houses. And that’s obviously a key to finding your home. Duh. But, while going into houses and mentally decorating and placing your furniture in house after house can be fun, if you haven’t lined up your financing, you’re doing things bass-ackwards. Really. I promise.
I get resistance from some buyers when I ask them about the loan thing. And when I demur showing them properties until they have spoken with a reputable lender, it seems they think it’s some kind of gimmick or scheme on my part. Like I get paid extra if I show houses to buyers with approval letters in hand.
I don’t get paid extra. And it’s not a scheme. It’s pragmatic. And pragmatic for both the buyer and for me.
Let’s face it, jumping to show houses to a buyer who may be unable to afford them is unfair to the sellers – they shouldn’t vacate their homes for an hour so that eager but unqualified lookers check out the place – and unfair to the buyer who may fall in love with a house that’s out of reach and, not for nothing, is a waste of my time.
Harsh? Maybe. True? On all counts.
The truth is, there’s no downside to getting approved – yes, approved (not just ‘pre-qualified’) for a loan at the beginning of the process. It doesn’t cost more to do so than when you’re ready to make an offer. Approvals are generally good for some time, perhaps with a just a fresh credit check done if enough time has elapsed. Ask your lender about the details of their approvals.
Perhaps more importantly,with North Carolina now being a ‘due diligence’ state in regards to our Offer to Purchase, it’s imperative that buyers have their loan nailed down at the time an offer is made. No more loan shopping if one place turns you down while the seller waits on the sidelines, their house essentially off the market. You can read about the due diligence thing in this post.
It’s understandable that buyers, particularly first time buyers, are squeamish about talking to a lender. It’s akin to stepping on a scale if you’ve been avoiding doing so and the holidays just ended and your daughter is a great baker and your husband is a fantastic cook and it was too cold to get out and exercise and …. ahem… excuse me. That hit a bit close to home.
Back to borrowers. Have no fear. A good lender will tell you where you stand. If that happens to be in a place $20K less than you thought, better to find out now. If it happens to be in a place $30K more than you thought – mazel tov! And if you’re told that this isn’t the time for you to buy, that same good lender can give you a roadmap for how to get where you want to be.
So, I used a lot of words to answer the question posed in the title of this post but it boils down to two words: The loan.
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The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.
And remember, real estate agents aren’t bad. We’re just drawn that way.
