Home Buying in San Diego>Question Details

Janet McCart…, Real Estate Pro in 92129

Do you show houses to buyers who are not pre-approved? if so, how many?

Asked by Janet McCarthy, 92129 Sun Mar 25, 2012

Realtors often get calls from buyers who have found a house and want to see it. Unfortunately, they aren't pre-qualified and the Realtor has no idea how serious the buyer is. Showing a house can be the start of the agent buyer relationship or it can be a big waste of time.

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28
Daniel Lehman’s answer
If I were a real estate agent, I would use the same conversation that I do now on behalf of my real estate agents when I am referring them a buyer. Something like

"There is a big difference between the top 20% agents, and the bottom 80% agents... The top 20% will always advise you in a way that is in your best interest, and not necessarily just to get you in a car looking at properties.

I have no doubt that you are qualified, however, best case scenario, what happens if you find your dream home, make an offer, get it accepted, and get into escrow? Then you are running around stressed out because you have to gather bank statements, tax returns, you didn't realize that the IRS takes a bit to validate, you didn't plan for the transfer of down payment funds, maybe there is ID theft on your credit and your fico is not what you thought..."

Forget about ability to buy. LOGISTICALLY speaking, it is best to have all of your ducks in a row, so that when your buyers DO make offers, all we as lenders have to do is update a pay stub, and ask for the opening escrow package. All of the other approvals and due diligence is done ahead of time.

All good agents that I work with know this, and the agents that don't will ultimately find out the hard way...

If you make the distinction between good agents and bad agents, and then tell them why you are one of the good ones, by advising them to do something that is in their best interest, they will respect you more, and see you differently than the 10 other agents that say "sure, lets go out this Saturday... I know its my kids birthday, but he will get over it..."

Also, if your client is going to leave you because you wanted him/her to jump through hoops that are in their best interest, they are not your client anyways. And, you don't want them, because they refer the same type of clients...

D
5 votes Thank Flag Link Mon Mar 26, 2012
BEST ANSWER
No, because in most cases I can’t submit an offer without a pre-approval letter. It also does little or no good to ask about credit history because many “details” are often omitted from the conversation. Then there’s also the issue of safety with the “just meet me alone at the house”. I think it’s best to have a potential client come into the office and sit down with them and discuss their needs. At this time you can gather information, do home searches together on the MLS system, develop a plan of action, get copies of their driver’s license and most importantly explain agency law and representation choices.
2 votes Thank Flag Link Tue Mar 27, 2012
I do get people who first meet me to ask to see properties in the first conversation, and I just say something like, "Wow, you're on top of it, go ahead and send me a copy of your pre-approval letter, and I'll contact the agent" Not confrontational, but shows an expectation, like it's the obvious step to be taken before seeing a property. Put the requirement on the listing agent and seller. I know if I were selling my home, I'd want only qualified buyers walking through-that's what open houses are for.

Another way I sometimes go about it is to ask what type of financing they're using. With so many FHA and VA loans being used these days, explain that not all properties qualify, and you need to be sure the property they're interested in does, and it's especially important to the seller and listing agent to know if they're going to take a home off of the market for a buyer. If they've got no clue, then, ask the usual questions, like how much they have for a down payment, to determine loan type. If they're vague, then refer them to a lender first. If they seem to have a handle on their finances, but haven't talked to a lender, and the property looks like it'll work, meeting them once can go a long way to establish rapport with a new client.

If a buyer is at the point of looking at homes, they should be at the point of writing offers. In fact, I use the phrase "seeing homes and writing offers" a lot when I first start talking with people, so they understand that it's one and the same. I pepper my conversations with what's required to write an offer as I talk with them and explain things during the initial search phase, so I'm sort of prepping them for it as they're looking online and asking questions. Then, when they're ready to look, they're ready to talk to lenders. It won't be a big surprise.

The way I look at it is, why would anyone expect me to take time out of my day to show properties, when they won't even take time out of ONE their days to talk to even one lender when it's THEIR purchase? A serious buyer will be ready to write an offer. If they're not ready, they're not ready to make visits.

It just depends on the caller.
2 votes Thank Flag Link Mon Mar 26, 2012
That is exactly what I say Cory! Too funny how similar our wording is. I also feel the same way about "qualified" buyers coming through a listing. That is what I would want as the listing agent and I want to give that same respect to the listing agent of any home I am showing. Good on you!
Flag Wed May 9, 2012
No way. Per-qualify/approval first, exclusive buyer agreement second, show homes third. Bye bye
2 votes Thank Flag Link Sun Mar 25, 2012
No! *

*Exceptions:

Mom & Dad
Brother or Sister
Relatives
Friends of Family Members
Sellers
any others, use your best judgement ....

How many? few ... if its going in the right direction, few ... then, before you go much more, or if they start showing signs of excitement in a property, get them approved immediately!

-- Rod --
The Powers Real Estate Team

Century 21 Award
858-444-2443
2 votes Thank Flag Link Sun Mar 25, 2012
NO ONE should show a property without having a buyer pre-approved. If your agent is showing you a property and you are not pre-approved, you should get a new agent. Agents not willing to guide you in the right direction are like waiters who say "everything" on the menu is good.

A) Sometimes YOU dont know that you qualify. If a doctor makes 200K per year, he is qualified right? But what if he has a side business showing a loss? What if he has unreimbursed employee expenses? There are MANY things a CPA can do that can limit your qualification.

B) If you dont get qualified before hand, what happens if you find your dream home and want to make an offer? You have to run around like a chicken with its head cut off looking for documents, etc. Getting EVERYTHING you can done before the process even begins will make a very smooth loan process should you get into escrow.

C) Most of the "my loan process was a nightmare" stories start with improper planning. How do you expect someone to plan for you without the necessary time/information to do so?

There are many benefits to getting pre-approved before the process. GOOD agents know this, and do not show property without a pre-approval. If your agent is driving you around without this is not advising you the way that they should.

Daniel Lehman
858-345-4725
2 votes Thank Flag Link Sun Mar 25, 2012
Its not fun to do a lot of necessary things that are in our best interest... A lender at an open house has no clue whether the guy saying he makes 150K per year knows anything about what his tax returns say...
Flag Mon Mar 26, 2012
Buyers usually stall on getting the pre-approval because it's no fun to dig up w2's and tax returns. It's fun to look at houses. That's why it's great to have a lender at an Open House.
Flag Mon Mar 26, 2012
No. Not even one. If a buyer won't make the pre-approval phone call then that tells me they aren't serious or can't get approved. Sounds harsh but this is a business, not a hobby.
2 votes Thank Flag Link Sun Mar 25, 2012
Absolutely correct.
Flag Sun Mar 25, 2012
Hi Janet,

My first broker taught me in 2003 to never put a buyer in my car unless they were pre-approved. For those of us whgo do not get paid by the hour, this does make some sense.

That said, I've evolved over the years on that position. My policy is that I will take any buyer out at least once. This provides us with an opportunity to meet, a chance to discuss your needs and game plan. From there, the buyer and i will mutually assess whether it's time to speak with a lender.

I would have missed out on meeting some great people over the years had I not opened up my policy. That said, I do have xome exceptions.
1 vote Thank Flag Link Fri Mar 30, 2012
I have a buyers sit down consultation first and have them meet with a lender to pre-qualify them first. It allows them learn the buying process and to see how much they actually do qualify for. More importantly to answer all questions they might have.
1 vote Thank Flag Link Mon Mar 26, 2012
Daniel is absolutely right. It's not just about our time, it's about knowing the loan can be funded. And, one of my biggest reasons for being sure my buyers are fully approved, not just pre-qualified, is that it costs THEM money out-of-pocket the first few days in escrow, for an inspection and appraisal. That can be a really big deal to most buyers.

I've had new buyers tell me they were in escrows that canceled because of ... something that could have been avoided with a proper pre-approval, or something an agent could have easily researched. There's no excuse for a buyer to lose money because of something we should have done.
1 vote Thank Flag Link Mon Mar 26, 2012
Your last sentence cannot be overstated.
Flag Mon Mar 26, 2012
Thanks Cory, have a great day!!
Flag Mon Mar 26, 2012
I require an experienced buyers lenders written pre-approval 1st b4 we set up an appt to view any realty and all submit offers. I had a potential buyer last winter that wanted to view 30 homes after he learned he was not pre-approved by a lender but would be in a few months if he did xyz. He he said he was in sales previously, and that he had never heard of not showing properties to a buyer w/o pre-q. Another agent submitted his offer AFTER another lender wrote a pre-approval to accompany his offer dox b4 he was actually pre-approved. Lender indicated that she thought that he would be approved by the time he COE. He indicated that he's in escrow currently.
Web Reference: http://www.coastal.biz
1 vote Thank Flag Link Mon Mar 26, 2012
I wish there were industry standards to protect us so that we didn't lose clients when we make realistic demands. The other agent got lucky, she/he could have been wasting there time. Who really knows if he is in escrow?
Flag Mon Mar 26, 2012
Janet,

Last year I had a "client". I showed him at least seven homes before I had his pre approval in my hands. He claimed to be pre approved and told me the price range he could purchase in.

Each time I asked him for documentation to confirm his pre approval, he kept saying he was going to email it to me.

Well, once I received his pre approval I learned he was not approved for the price range he had me showing him. Not even close! He ended up not buying anything, just wasting a lot of my time, gas
and money(on lunches).


Kawain Payne, Realtor
1 vote Thank Flag Link Sun Mar 25, 2012
Been there, done that. I asked the question mostly because I'm hoping buyers will read the answers, so that they see where agents are coming from. Very few buyers think about our time, gas, etc....
Flag Mon Mar 26, 2012
Unfortunately, being nice, accommodating and trusting doesn't always get the deal in this industry.
Flag Sun Mar 25, 2012
I ditto Rod & Sandy. Most out of blue calls are like Trulia leads.... It boils down to a self-respect thing.
Even some of the exceptions can get silly after awhile.

And get them pre-approved plus signed onto a buyer-broker agreement.

Showing homes is a commitment of my time. I love to do it, but not as a hobby or sport. A buyer needs to show up to the table with their own level of commitment as well.
1 vote Thank Flag Link Sun Mar 25, 2012
I always try to get them to fill out a Buyer's Questionaire that my old Broker taught us to use. It includes finances (and getting pre-approved). If they don't want to fill it out, that tells me they're not serious and just want to be driven around town to "look" at houses. Taking with people on the phone and asking them the right questions can really give you insight into how serious they are. I alway give them some names of lenders and ask that they call them. That way they can "interview" them and decide which one to use. If they don't have that pre-approval letter within a week, you know they're either not serious or just can't qualify.
1 vote Thank Flag Link Sun Mar 25, 2012
Where did you get your buyers questionaire? I like this idea.
Flag Mon Mar 26, 2012
Exactly right.
Flag Sun Mar 25, 2012
Hi Janet,
I rarely if ever show a property to a client if they haven't been prequalified. Getting a loan pre qual takes less than 1 day, and if a buyer is serious then I take time to explain to them the importance of being pre qualified these days.
It makes looking for the house that much more fun for both me and my client.
1 vote Thank Flag Link Sun Mar 25, 2012
get pre-qualified. what are you waiting for???
0 votes Thank Flag Link Fri Nov 8, 2013
Generally it is a good idea to be pre-approved so that you know how much money you have to spend on a new home. Also, if you happen to fall in love with a home, if you are already pre-approved your agent can prepare your offer and send it to the sellers quicker to increase your chances of getting the house. It also shows sellers that you are a serious buyer.

Jeff Jenkel
http://www.jenkelteam.com
CalBRE 00874000
0 votes Thank Flag Link Fri Nov 8, 2013
This is an old question but as I look back on the answers something important has not been mentioned. The world is a dangerous place, do you all really meet someone in a vacant property when you have no idea who they are? It’s not a guarantee but sure does make it safer if your favorite loan officer runs a credit check, gets a copy of their pay stubs, driver’s license, etc. before you meet them down some lonely alley. Forget the waste of time, effort and all of the other things mentioned before me, do it for your own safety. I am a lender, ain't scared of nothing but I wouldn't show anyone anything unless without due diligence.

So, any number higher than zero is wrong in my book.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Fri Nov 8, 2013
I will take them out one time. However, after that, if they do not get a pre-qualification, I know they are not serious and I won't waste my time.
0 votes Thank Flag Link Fri Nov 8, 2013
Serious buyers=Pre-approvals.
Serious Agents-Ask for Pre-approvals, prior to showing homes.
0 votes Thank Flag Link Fri Nov 8, 2013
It is not in the best interest of the buyers and the agents to show properties without being pre-approved. With new loan qualifications it is important that the buyer have realistic expectations on what he or she can afford. It would be pretty disappointing for a buyer to fall in love with a property that he or she thought they could afford only to find out that they are in a completely different bracket. Therefore, it would be best to get pre-qualified first so that the target showings are where the buyer needs to be.

Ambra Bisconti
Coldwell Banker
Beverly Hills.
0 votes Thank Flag Link Mon Mar 26, 2012
Sure, I don't turn down anybody to come and look. Getting approval can happen overnight. Sometimes people are not serious about buying and then they see that perfect house and get serious real quick!
0 votes Thank Flag Link Mon Mar 26, 2012
Dear Janet,

Absolutely Not.

I always meet my clients at the office first so that I can get to know them and understand their needs, I fill out a buyer questionaire and discuss and obtain financing/Pre-Qualification.
A good Pre-qual is necessary in order to make an offer on a property, so we need that before we go out looking together. I also use an exclusive buyer/broker agreement with my buyers.
In my opinion we owe a responsibility to the sellers and the listing agents, to bring only qualified buyers into their homes.
We also owe a professional responsibility not to waste the buyer's time looking at homes they also cannot afford
0 votes Thank Flag Link Mon Mar 26, 2012
My perfect client is pre-qualified, motivated, and really fun to work with. I don't mind showing a new client a home just so they know what's out there, as long as I see that they are working on getting pre-qualified. Many times clients want to know there is something they want to purchase before they do the paperwork.
0 votes Thank Flag Link Mon Mar 26, 2012
I will show them homes one time. If they do not get pre-approved then there is no sense going forward. If I am going to commit to helping them they have to help me by getting pre-approved so we can shop appropriately.
0 votes Thank Flag Link Mon Mar 26, 2012
I usually show one or two and require a pre-approval letter or proof of funds to preveiw more homes. If they dont have a pre-approval at that point, I have them talk to a lender that I am familiar with and get his ok and if they tell me they will buy within the next 3 months I will have them sign an exclusive buyer agency agreement for a year with me. I have to get a commitment from them or I will not show them any more homes.
0 votes Thank Flag Link Mon Mar 26, 2012
A year..really..u r crazy...
Flag Sun Jun 2, 2013
Depends on the motivation of the buyer...and if I have worked with them in the past.
0 votes Thank Flag Link Sun Mar 25, 2012
Motivation is everything in Real Estate. How do you determine the motivation?
Flag Mon Mar 26, 2012
I do, but usually only one home.
0 votes Thank Flag Link Sun Mar 25, 2012
I often show just one home, but I also pre-qualifiy over the phone. It's a hard call , because you don't want to waste your time, but you also don't want to miss an opportunity.
Flag Mon Mar 26, 2012
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