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Aptlynamed, Other/Just Looking in Jerome, AZ

Should sellers require pre-approval or proof of funds in order to show the property?

Asked by Aptlynamed, Jerome, AZ Wed Aug 22, 2007

Should the home seller require that prospective buyers have pre-approval letters or proof of funds prior to touring a home? Most agents in my area don't require this for showings. As a result, there have been many visitors who aren't serious about buying. Should I make a letter a requirement or would that be too restrictive?

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18
Aptly,
I think it's too restrictive. After all, the agents showing your home don't want to spend any time with unqualified buyers either. Sometimes, as a REALTOR, you're going with your gut with customers (but, keep in mind, we have specially honed guts strictly for this purpose)--especially with the occasional walk-in. We try our best for our seller AND ourselves. I can't wait to hear some other opinions, though. Great question! Thanks!
4 votes Thank Flag Link Wed Aug 22, 2007
Thank you for your responses. Based on the feedback here, I won't make a letter a requirement. I do find it odd that some buyers aren't lining up their ducks prior to touring houses. Getting pre-approval was the first thing I did before I looked at homes.
3 votes Thank Flag Link Wed Aug 22, 2007
I'm going to disagree with the majority here and I think it might depend on regional custom.

In Manhattan: unless, I have some proof that the potential buyer has the financials to provide the 20% down payment most often required- at the very least a financial statement - then I won't show them any property that isn't already scheduled for an open house. Many of the listing agents I interact with will want some financials.

My broker recommends that a buyer be pre-qualified prior to showing any property and I agree. My time is valuable and I don't want to invade the homeowner's privacy and inconvenience them by bringing someone who can't afford the property or is "just looking". Plus, Manhattan typically doesn't use Realtor lock boxes and scheduling an appointment to see the property is common.

In the same vein, I also qualify a potential seller as to their motivation in selling their residence.

If the seller is unrepresented by a Realtor or real estate agent AND they don't require proof of funds, they'll likely be inconvenienced by the "lookers". At least my husband was when he tried selling his own condo. He would race home to show the property and get offers to "rent" by the lookers, rather than serious buyers.
2 votes Thank Flag Link Wed Aug 22, 2007
I agree with your decision, aptlynamed. You will have more showings and that could lead to an earlier buyer. There are a variety of reasons this may benefit you:
1. Some buyers insist on putting the cart before the horse, that is just the way the are, and we can't always make them go about homebuying in the most efficient, sensible, and orderly fashion.

2. Even serious buyers started out as casual lookers. The casual looker that meanders through today could be a serious buyer in a month or two.

3. Relatives really do look on behalf of their family members. I have sold several homes because family or friends previewed for the busy buyer. There is an old story about a lady who opened every drawer, closet and cupboard in an open house she was visiting, the agent, anxious to move on to the next prospect who had just pulled up, pointedly asked the lady "Is there something I can help you with?' The lady, not peering up from the twentieth drawer that she had opened, responded "No, I'm just looking for my sister"

The agent walked over to the lady and the drawer pointed to the drawer and replied " Well, you won't find her in there!"
2 votes Thank Flag Link Wed Aug 22, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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I agree with the others that it is restrictive. You may turn a buyer away that would have looked. With the way the market is for sellers, you want every opportunity to get buyers in the house. Definately make it a requirement for a purchase agreement. Good luck with the sell of your home!
Web Reference: http://carriecrowell.com
2 votes Thank Flag Link Wed Aug 22, 2007
I second Bridgette's advice here. I think you will possibly lose out on your best buyer by doing this.

Agents got out of the habit of strongly prequalifying customers in the days that anyone with a pulse and an FICO of 480 could get a loan. Agents knew that most people would get a loan somewhere and got lax in this area.

As lending restrictions tighten, agents will adapt and start qualifiying customers again. You do risk that some unqualified buyers may waste your time. But, the greater risk is that you will shut out your best buyer since your request would be viewed as restrictive.

Definitely, never sign a contract without adequate proof of the capacity to fulfill the contract and go to closing.

Good Luck
2 votes Thank Flag Link Wed Aug 22, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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That would be extremely restrictive and you may turn away legitimate buyers. In order for it to work, your listing agent would not be able to use a lockbox - they would have to list the property in the MLS as "appointment only". My experience is that "appointment only" homes tend to sit on the market for an extended period of time.

The alternative to that, which I rarely see, is to use CBS (Call Before Showing) codes on the lockbox, if your system permits that. This allows the agent to access the lockbox, but they must enter an additional code which they can only obtain from the listing agent. Again, this tends to slow the process now and increases days on market.

In the high-end luxury market, I have seen some listing agents conduct a little more "due diligence" before allowing a prospect to see the home.

-Aaron Wheeler, President, Oakville Properties & Oakville Capital
2 votes Thank Flag Link Wed Aug 22, 2007
Aptlynamed,
I agree with Antonio that there is probably a price-point where only qualified buyers can be shown property.

I did review your profile and other questions so this thought may help you - One of the key factors that sellers control in the sale of their home is what we term "accessibility". Generally speaking, the more restrictive the home, the fewer Realtors will be able to show it.

In most cases the marketing efforts of the Realtor to both the public, and to other Realtors, peak 7 - 21 days after your home "hits the market".

I counsel my sellers to plan in advance for this "golden period" when a new listing, properly marketed, will attract a lot of attention. I will even suggest that the sellers leave town for the first two weekends so the Realtors can have as much freedom as possible to bring their buyers to the home. The greater the ease in showing, the more exposure your property will receive.

Good luck!
Keith
1 vote Thank Flag Link Fri Aug 24, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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It depends on the price range and the area. I believe that at certain price ranges, that approach is simple a very prudent one, you do not want to have to show the house to a prospective buyer that does not qualify. I am talking here about properties above a couple of million dollars and up for the bay area.
On the other hand below a million and half or so, it might risk turning the buyer down, on this type of market and with so much competition, turning off a potential good buyer for your seller might not be the best approach
1 vote Thank Flag Link Wed Aug 22, 2007
It appears as if you have received good information that has helped you make a decision on your request. While it may seem that a serious buyer would have already been pre-qualified and have the letter to prove it.. many haven't for a number of reasons. It doesn't make them less serious or less qualified. On the other hand having a pre- approval letter doesn't make them ready to buy either.
One thing you can be sure of is that most agents are not going to waste time and gas on a buyer who hasn't proved to the agent they want to buy
1 vote Thank Flag Link Wed Aug 22, 2007
Kaye Thomas, Real Estate Pro in 90266
MVP'08
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I agree that the buyers should get their ducks in a row before going out and looking at properties. However I, if I was in a situation as a buyer, wouldn't want a seller, whose house I want to look at but might not even consider, to see my financials. I believe that most of your visitors are serious, but there are different levels of seriousness. Some might just be exploring the notion of buying, some might be looking for three months from now to gauge what price of house they might want. Then again, they might see yours and decide not to wait the three months!

Good luck!

Chris Tesch
RE/MAX Bryan-College Station
Web Reference: http://www.ChrisTesch.com
1 vote Thank Flag Link Wed Aug 22, 2007
A fully written pre-approval with verifications of income, and down payment, is the first step to a home purchase.
Why would anyone waste their time showing property to an unqualified buyer? As a seller I would insist that agents only show my home to those that are qualified to purchase it.
0 votes Thank Flag Link Sat Oct 8, 2011
This is already expected in my area. It's difficult to get a showing for a buyer who has not taken this vital first step in the home buying process.
0 votes Thank Flag Link Fri Feb 18, 2011
I just found this string after a Google search so I thought I'd give a little buyers perspective.

I have a long commute and plan to relocate closer to work within 12-18 months. I am serious about moving but it is unlikely that I will do it sooner than that. I am only looking at homes on the web well within my price range. I have never been refused for a mortgage and I have no intention of prequalifing at this time (hassle and pride).

I just found a house I'm very interested in looking at. The web listing does not say anything about pre-approval required, however the listing broker now tells me that is a requirement, along with being a "ready, willing, and able buyer" Well, I have owned a home for 20 years and it's worth more than the asking price for this listing so I would say I qualify as "able". As for the "ready", when I bought my last house I was extremely motivated to get settled as we had sold our previous house and had a new baby on the way. Still it took us seven months to find the right house so I'm curious as to what that term "ready" means.

Also, the fact that these stipulations are being made AFTER my initial inquiry leads me to suspect more is going on, perhaps subtle, or not so subtle discrimination.

Bottom line: I will not be working with anyone from that realtors office in the future. Also several of my former coworkers are also relocating to this area. I will not be recommending this broker to them.
0 votes Thank Flag Link Wed Feb 16, 2011
I think that would depend on the price of the property. There is no right answer on this but I do think it would apply mostly to higher end homes.
Web Reference: http://GetPrequalified.com
0 votes Thank Flag Link Sat Nov 10, 2007
I do counsel the buyers that if they should consult with a bank in order to find out just how much home they should really be looking at, and explain that if they see something they want to make an offer on, they will have to submit the offer with a prequalification letter coming within a day or two. Otherwise we have intense negotiations only to find out they can't afford it. I have not sold any homes over a million, and have been told by agents in the Hamptons that they don't ask for any proof of funds.

I've had homeowners tell me they ONLY want prequalified buyers and I explain to them that everyone starts someplace and not every prospective buyer carries around a letter with them on their first trip out. I tell them that I screen my buyers, and I trust the agents I work with to do the same.
0 votes Thank Flag Link Wed Aug 22, 2007
This is a great question.

I agree with all that has been said as you may offend and can even loose a potential buyer for the house.

As financing becomes more restrictive I believe we are seeing more caution from our fellow Realtors before placing a client in the car.

I personally have my buyers financing in order before showing property.
Web Reference: http://pamwintebauer.com
0 votes Thank Flag Link Wed Aug 22, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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Only if you want to annoy the agents and buyers. like it or not, there will be unqualified buyers and even a few who are just looking...the best advice you can follow is to let everyone who has even a passing interest in your home into your home and let the agents do their thing. the real burden on you is not that great and if an agent wants to waste their time...let 'em.
0 votes Thank Flag Link Wed Aug 22, 2007
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