Qualifying the Prospect As To Need & Financial Capacity

Topics: Investor Success, Landlording

Just because a person can afford a house doesn’t mean that they want to buy one; and just because a person wants to buy a house doesn’t mean that he or she can afford one. It’s up to the seller or salesperson to ascertain the financial capacity and degree of motivation of a prospective buyer before spending any time trying to meet their needs.

Suppose someone calls on one of the cards, letters, or ads that I’ve run; my first step is to determine why they need to move. Is it because of a job change (possible financial impact)? Desire to get their kids into another school district, or to move closer to the school? Neighborhood or apartment complete problems such as maintenance, management, or high crime, etc. Do they need more space? Less space? What is their time frame within which they want to be in their new home? (School year, Christmas, 30 day eviction notice?)

Once you understand their motivation and determine that they are bona fide buyers, your next step is to find out how much money they have to work with as a down payment, how much they are currently paying for rent, and how much more they are willing to pay to live in their own house. This will tell you the price range of the house they can afford to buy, and give you some idea of the neighborhoods that they can buy in.

At this point, if you are trying to sell your own inventory, it’s up to you to try to steer them into the houses you have for sale. If you are a licensed salesperson, you can also try to sell your listings, or a listing from the MLS. If not, then you can try to pass them on to a friend who might have a house they’d be interested in. If it isn’t against the law, you might get some kind of referral fee for doing this, or at least get a reciprocal favor some time in the future.

I’ve found that taking the time to develop relationships with my fellow entrepreneurs has worked much better on a favor-swapping basis than paying and receiving payment for each opportunity that I’ve passed on. Over the long term, this can pay much greater dividends.

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