I made my living for five years as a licensed real estate salesman and Broker primarily selling houses. When your sole source of living expenses is commission income, you swiftly discover that your time really is money, and you dare not waste any of it. The key to avoiding wasting time with buyers in this tough market is to qualify them rigorously in terms of the capacity to qualify for and make payments on available loan packages; and to discover what their true needs are versus their “wants”.
The more choices you give buyers, the longer it will take for them to decide which to select, so limiting their choices to only a few properties that will meet their needs and financial capacity will save a lot of time and enable you to sell more properties within a given time period.
When it comes to financial capacity, I like to be direct. I ask them from the onset how much money they have to put down, and what their overall budget is. If they haven’t taken the time to figure this out, the first thing on my agenda is to find these things out. If they are going to need to borrow a high percentage of the purchase price, I want to ask some pointed questions about their personal credit situation. If they don’t know, I’ll want to get their signed permission to pull credit scores before we get started.
If they resist these questions, this is a signal to me to send them to my most aggressive competitor so he can waste his time instead of my wasting my own.
When it comes to sorting out “wants” from “needs”, I like to start by asking buyers what their current, or last, house was like; number of bedrooms and baths, size of the garage, size of the lot, and whether on a corner or not; etc. I also ask each partner which feature of their old house they liked least, and which they liked best. Then I ask which features they would change in their next house. Finally, to test them, I try to show them how much each added feature will increase the price and their payments. Somewhere in this process, I hope to be able to fill in the blanks in my own mind as to what they can and will afford in their new house.
From this point on, I can choose two or three houses from MLS or from investment inventory that best meet their needs while providing some of their “wants” while staying within their budget. Next time we’ll look at ways to use trade-ins to create sales.