Trying to sell your flip house?
If you are selling a house without a Realtor, we are certainly hoping your phone rings off the hook…. that your ads, flyers, social media efforts and word-of-mouth marketing all pay off.
We hope you get LOTS of phone calls…
But then we are faced with the biggest potential Time Suck of the entire process.Unqualified Buyers.
The sad truth is the majority of people calling without a realtor are going to be unqualified. They may want your house…. but they can’t buy it.
They just don’t have the cash or credit.
That WON’T stop them from calling. It WON’T stop them from wasting your time. It WON’T stop them from asking to see the house… or making an offer… or writing a contract.
See…. unqualified buyers want to buy a house. They just can’t. But that isn’t going to stop them from shopping.
If you don’t have a process for screening unqualified buyers, you are going to waste an inordinate amount of time driving to your house, turning on the lights, giving a great sales pitch… without getting paid.
So how do you get rid of Unqualified Buyers?
1. Don’t discriminate.
Even without Fair Housing laws, you don’t ever want to “judge a book by its cover”. Never pre-judge a potential buyer. You want to sell your house to the first interested buyer who can actually make a closing happen, right?
Race, national origin, religion, sexual orientation… none of these are reliable indicators of whether someone can successfully close on your flip house. So why would you eliminate a possible buyer (not to mention it’s illegal).
Every experienced investor eventually ends up selling a house…. usually for all cash… to someone who didn’t look like they could rub nickels together. But that ole’ redneck in overalls? Might just be the guy who buys your house. So never pre-judge. And don’t break the law.
“Uh… but didn’t you just say…?”
I said don’t pre-judge. Don’t illegally discriminate. But by all means, eliminate people who can’t or won’t buy from you. You do this by pre-qualifying interested buyers.
Look, buying a house isn’t a mystery. A buyer either has good credit… or they don’t. They either meet a lender’s income requirements…. or they don’t. They have the cash…. or they don’t.
Don’t waste time with people who don’t meet lending criteria- unless they have cash to buy the house. Ever.
INSIST on buyers who have already gone through the loan approval process.
3. Pre-Qualified vs. Approved
We work a lot with Realtors. They will often say their buyer is “pre-qualified”.
I don’t know what that means.
Someone is either approved for a loan or they are not.
If someone has talked to their bank, told a loan officer how much they make, and asked the loan officer how much house payment they can afford… that’s NOT approval. That’s a loan officer telling someone how much house they can afford IF the buyer is accurate about their finances (newsflash: they ain’t very accurate).
Loan approval requires a few simple things:
- Tax Returns
- Bank Statements
- Pay Stubs
- Tr-Bureau Credit Report
You will find that at least 70% of the people who call you to see your house simply will not qualify for a loan… and they don’t have enough to pay cash. One or two late car payments, and your “buyer” is someone asking to get their deposit back.
Why would you waste time with these people? Why would you show the house, or take it off the market, or tie it up under contract for 20 days?
INSIST on loan approval. If a buyer can’t tell you the loan officer that approved them already, send them to your own loan officer.
You do have a loan officer or mortgage broker to send leads to… don’t you???
NEVER show a house to someone who has not gone through this approval process. Otherwise you are simply wasting your time.
4. “But I don’t know if I even want your house yet”
Get used to hearing that.
When you tell a prospect you won’t even show them the house until they meet with a loan officer or mortgage lender… expect a little guff.
Really, you should expect a fair number to get mad at you.
After all, you just told them you don’t want to waste your time with them.
That’s a little insulting.
Imagine if you went shopping for a car… and the salesman required you to go meet with the finance manager before he would pop the hood or even get the keys.
Yup. That would be insulting.
But the difference is that lots of car dealers have loan programs for people who wouldn’t be able to get a bank loan. In fact, they usually make more profit on those customers.
That USED to be the case with houses. But not any more. Buyers either qualify for one of the few remaining financing options… or they don’t.
But if you show your house to people just because they called… without first verifying they have the financial capability to close on a contract? That’s just wasting time.
So get used to it… or get used to wasting your time.
What other tips do YOU have for screening buyers? Please leave a comment or share this post!