Agent2Agent in Orlando>Question Details

Mike Luzzo,  in Orlando, FL

Agents do you show homes to buyers without a lender prequalification?

Asked by Mike Luzzo, Orlando, FL Tue Nov 2, 2010

Simple question:

Simple answer YES or NO

Except on the NO side: WHY?

Thank you for contacting us, we appreciate the opportunity to serve you.
Mike Luzzo
Top Value Group
...your HOME to the Top Values in Real Estate


Need More Information? Please visit us @ http://www.myshortsaleorlando.com/

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Answers

22
No, a pre-qualification/approval carries a lot of weight when making offers--and one never knows when the must have property will be stumbled upon--therefore why not be prepared.
2 votes Thank Flag Link Tue Nov 2, 2010
Yes, selectively is a perfect response. Business is too difficult these days to blow off a potential client because of financing.

I take a lot of time to speak to the potential buyer to get a grasp on what they are looking for - their acumen and experience in the real estate game and their past experience.

It is amazing what you can learn from listening - and clients you can pick up by having faith they will be qualified.

Trust - but verify..... Probably a good idea regarding qualifications.

Usually after a long conversation - I will take out 50% of the folks that are not formally qualified. The balance of the prospects - I will explain how important it is to meet with a banker - and try to make it THEIR IDEA to wait.

Good question! Can't wait to follow the other responses.

Gerry Dunn
Associate Broker
MD-VA-DC
2 votes Thank Flag Link Tue Nov 2, 2010
I can hardly believe this. I read fifteen answer to this question and not one of them was the one I would give. Why not tell Mr.Notprequalified that if he is willing to put up a fourteen per cent deposit on the house that we choose and not have a financial contingency clause in the contract, we can make it work. If that seems to severe, let's talk to a lender.
I don't sell houses any more but when I did, that worked for me. It worked really well when some naive agent brought in an offer on my listing with a buyer that had not been pre qualified. You can not have no financial contingency with a FHA contract . You can with conventional financing. Try this. When that fourteen per cent deposit is forfeited, the broker gets half in Orlando. So my answer is yes under these circumstances.
1 vote Thank Flag Link Sun May 1, 2011
So Donna,

You are telling me that if I called you this morning and wanted t look at 10 - $1 million plus homes - you would make the appointments and I can meet you at Starbucks and you would drive me around for the day?

Mike
1 vote Thank Flag Link Sat Dec 4, 2010
Do I feel that the selling agent has the perogative NOT to show me the property if they ask if I am qualified and I say no?

If an agent doesn't want to show a property because of a buyer not being prequalified that is certainly their prerogative (whether you're a buying or selling agent). I'm just saying, I believe a prospective buyer wouldn't have a hard time finding another agent that would be happy facilitate a showing if you don't want to. There is a difference between not qualifying and not being prequalified. I'm curious if clients are generally on board with turning away the latter, provided there isn't some sort of red flag suggesting the former?
1 vote Thank Flag Link Wed Nov 3, 2010
No. Pre-qual'ing is the most credible way a buyer can show their agent that they are worth the agent's investment in them.
1 vote Thank Flag Link Wed Nov 3, 2010
Mike,

The short answer is "no." Why? Well, there are plenty of agents willing to forgo $200 for a chance at a buyers commission.

The long answer is "maybe." If the $200 was reimbursed, if I closed on a property, I'd consider it.

The other thing to consider is say I'm not actively in the market but drive by a property for sale that looks interesting. I may altogether skip the buyers broker and go directly to the sellers to see a property if I'm on the hook for a pre-approval or a $200 fee to have someone set up a showing for me. I just don't think it makes good business sense to turn away a potential customer, unless you have reason to believe or sense that you might put in a lot of work and get stiffed for it.
1 vote Thank Flag Link Wed Nov 3, 2010
Sorry, your answer is too short. A minimum of 25 characters is needed.
Second attempt...Yes - selectively
1 vote Thank Flag Link Tue Nov 2, 2010
Yes. And I show my own listings, without the potential buyer having to email me a pre approval prior to the appointment and I hold open houses and allow people in who do not have a pre approval with them, and I don't require that sellers agent email me their clients pre approval prior to making a showing appointment.
0 votes Thank Flag Link Tue Jan 8, 2013
No.

The Reason: best Business Practices. We want a buyer that is prepared to make offers it is in their best interest and ours.
0 votes Thank Flag Link Tue Jan 8, 2013
Yes, if I have time. They may purchase a home in the future if not right now.
0 votes Thank Flag Link Tue May 3, 2011
Generally NO! There are exceptions to this rule but even when we have an exception the first thing we do in the first meeting is to obtain bank records if it’s all cash or fill out the pre-qualification paperwork. Everyone’s time is valuable and I don’t want to waste the client’s time or mine with buyers or sellers who cannot or will not perform. I like Rons comment about having the ablity to put down a 14% deposit I see the large deposit as a good test to determine whom to show.
0 votes Thank Flag Link Tue May 3, 2011
Gas is expensive, ask for pre-qual. If Buyer does not bring it on first visit I give them a pass but also give them several reputable Lenders business cards or emails to contact. Second visit on my terms
0 votes Thank Flag Link Mon May 2, 2011
Hi Mike,

I wish it would be a simpler yes or no answer but is rarely the case in our industry...:)

My answer is it just depends but in general most of my clients are pre-approved.
0 votes Thank Flag Link Sun May 1, 2011
Not a complete stranger. A past client refered me to her co-worker and spouse. During the showings for about a week, we were in the process of getting the pre-approval, turns out they didn't qualify for a loan until they sold another property they have. With that said, when they are ready they'll call me, and continue to refer clients to me.
0 votes Thank Flag Link Sat Dec 4, 2010
We show regardless, but we advise that hopes are high if you do not know your limits :)
0 votes Thank Flag Link Thu Nov 4, 2010
DB,
YOU say:

I may altogether skip the buyers broker and go directly to the sellers to see a property if I'm on the hook for a pre-approval or a $200 fee to have someone set up a showing for me. I just don't think it makes good business sense to turn away a potential customer, unless you have reason to believe or sense that you might put in a lot of work and get stiffed for it.

Do feel that the selling agent has the perogative NOT to show you the property if they ask if you are qualified and you say no?

Thank you for contacting us, we appreciate the opportunity to serve you.
Mike Luzzo
Top Value Group
...your HOME to the Top Values in Real Estate


Need More Information? Please visit us @ http://www.myshortsaleorlando.com/
0 votes Thank Flag Link Wed Nov 3, 2010
DB,

Fraud aside lets address the simplicity of the action.

SCENARIO 1 – EVRYDAY PURCHASES

As a consumer of any product; groceries, clothing, dinning out the presumed is in the hands of the purchaser, correct? You have knowledge as a purchaser that you have the MEANS to transact the purchase by way of cash, credit card etc. Would you agree? However, the course of action is applied by you the consumer alone. You do not employ the consultation of another person to accompany you to the place where you are going to purchase that item (s) being groceries, clothing, dinining etc. Hence only you and you alone are the deciding factor and you do not need to have knowledge of an outside financial party to make a decision, correct.

SCENARIO 2 - AUTO

Now take it up a notch: You want to purchase a new car. A $20,000 car. You don't have $20,000 in cash, but you still have the intention of purchasing the car. So you go to the showroom. You employ the services of a sales person who facilitates your process of picking out and test driving a car. You look, take a test drive and say to the sales person, "I would like to buy the car" the sales person says fine we need your $20,000. You say I don't have it so I need to apply for a loan. Correct. If your loan is approved you drive away with your new car if not you drive home in your old car. The sales person time that has now been deemed 'wasted' is a fact. But understand the sales person is an employee of the dealership; they go to their place of employment to work there every day. The sales person gets a 'draw' against commission.

SCENARIO 3 – HOME

Now let’s go purchase a home. You want to purchase a home. A $200,000 car. You don't have $200,000 in cash, but you still have the intention of purchasing the home. You employ the services of a realtor who facilitates your process of setting up a search of homes based on your criteria, scheduling appointments, picking you up, driving you around to the homes etc. You look at a half a dozen or so homes (or are looking for 150 days) find the home and say to the realtor, "I would like to buy the home" the realtor says fine we need your $200,000. You say I don't have it so I need to apply for a loan. Correct? If your loan is approved you go to closing if not, you go back to your current abode. The realtors time has now been deemed 'wasted' is a fact. But understand the realtor is not employee of the brokerage; they are an independent contractor.. The realtor receives no compensation for work provided as in the sales person’s world gets no 'draw' against commission. Hence, that is the reason a realtor wants to know, that they are not wasting their time and has a viable customer who has the ability to perform on said contract.

In conclusion, let me ask: in lieu of no lender pre-qualification if the realtor asked you to sign a non binding buyer brokerage agreement and collect a fee for $200 for performance of work. Would you be ok with that?


Thank you for contacting us, we appreciate the opportunity to serve you.
Mike Luzzo
Top Value Group
...your HOME to the Top Values in Real Estate


Need More Information? Please visit us @ http://www.myshortsaleorlando.com/
0 votes Thank Flag Link Wed Nov 3, 2010
@Florida - I certainly understand where you're coming from and I'm not sure what the best solution would be. But your response prompted 2 thoughts. 1) If I am a person intent on committing some sort of fraudlent transaction, how difficult would it be to forge a prequalification letter? Based on what my lender provides (one of the largest FSB's) it would be pretty easy. Do agents typically verify the information contained in a prequalification letter (my guess is most agents would say they do, but seldom do they really do this....maybe I'm way off)? 2) Maybe it's wrong, but I don't feel like I need to provide information on my capability to buy because there are plenty of buyers agents willing to assist me without that information and there are plenty of sellers willing to show me their property without the information as well. Unless you're in a market where you can afford to turn leads away, I just don't think I'd do it. I think Gerry's response is probably the most realistic approach.
@Mike - Thanks, it's nice to have that information quantified a little. Trouble with the 90 days is that if you have a 90 day prequalification letter and say your lender needs 30 days to close, that gives you 60 days to find a place you like. I've been looking for 150 days and not found what I'm looking for. Maybe I'm an atypical buyer?
0 votes Thank Flag Link Wed Nov 3, 2010
Duluth, your concerns are well taken. Over the years I have heard that sentiment voiced by many a buyer. So, I decided to take action and explore it further. Unless someone on this board can tell us something differnet I discovered (2006) that a candidate whose credit is checked, your overall FICO score may be hit a maximum (and usually less) than 12 points in a derogatory sense.

However, after further review, that 12 points diminishes quickly if the borrower continues to pay their financial obligations on time. due to the fact, there is usually a 90 day period between checking your credit and actual closing. Hence the 12 points becomes moot. Furthermore, if buyer pursues a mortgage product thru the same source in which credit was checked, that 'hit on the credit' is taken into consideration.

Bottom line, arrest your fears and enjoy your shopping.


Thank you for contacting us, we appreciate the opportunity to serve you.
Mike Luzzo
Top Value Group
...your HOME to the Top Values in Real Estate


Need More Information? Please visit us @ http://www.myshortsaleorlando.com/
0 votes Thank Flag Link Tue Nov 2, 2010
Duluth, I do share the same position you do about the 'pre-qualification' situation. As I've read other posts on Trulia, those specificly concerning fraudulent actions taken primarily by out of USA people, I have to be concerned about how a real estate agent can be assured a buyer is for real. The presentation of the 'pre-qualification' is confirmation that your have been reasonably vetted. Could you offer a recomendation about what you would be comfortable presenting to a real estate professional the confirm who you are and your capability to buy?

For me, presenting this data to the bank officer, one time is risky enough. I have no level of comfort what would happen to my identification when surrendered to a real estate agent and their broker. What's the solution?
0 votes Thank Flag Link Tue Nov 2, 2010
Just throwing my $0.02 in from a buyers perspective. I began looking this summer and got prequalified by my lender. After a few months of not finding what I am looking for, the prequalification expired. After contacting my lender about getting a new prequalification letter, they cautioned that they would have to pull my credit again which could have negative implications on my credit score. I've decided to not get prequalified again until spring, when there's a little more supply. I think buyers are being a little more cautious with their credit and chances are, I'm not looking at your property until spring if you're requiring a prequalification to see it.
0 votes Thank Flag Link Tue Nov 2, 2010
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