Is there anything worse than having to call a listing agent and explain that your buyers have to collapse the deal over financing?
You spent untold weeks with these people, showing properties and walking them through every single step of purchasing a home.
You negotiated late into the night--or all day Sunday--with the listing agent, fighting hard for your buyers to get this home. You convinced the listing agent these folks were golden.
You may have even navigated a tricky home inspection by now.
And it's all falling apart because the lender said 'no dice' on a mortgage for these people.
What. The. Hell.
You thought your clients were pre-qualified, and you told the other agent they were too. You have egg on your face. The buyers are in tears. You're wondering if this real estate career is all worth it. And now you have to start all over again ...if they can even get financing?
The mortgage market is unpredictable, and housing affordability is not going to improve in Canada any time soon. Double-digit collapse rates are a fact of life now in real estate offices, and it's usually over financing. Home inspection non-waivers are less common because a good agent can negotiate away a leaky toilet or broken furnace. What's not so easy to do is find a few hundred thousand-dollar mortgage lying around at the eleventh hour.
Why does this keep happening? Is it because good borrowers are finding it hard to qualify? Are the lenders being mean? Do mortgage brokers need to check their collective licenses at the door and go do something else?
No, no and no.
As with so many things in the real estate business, where things go wrong is at the very beginning of the relationship with the client. The tough conversations that are simply not had. The questions that no one wants to ask. And the fear that you'll turn off a prospective client by talking money.
Money is a sensitive subject to be sure, but no money means no home ownership. It's that simple. It's your moral imperative to talk money with clients, even if you're not the bank or the broker. And yet ...
How many of you are writing offers without having had the money conversation first? And is it really the time to talk mortgage financing and pre-approvals at the moment you're writing an offer? Your buyer is not thinking about paperwork or the bank in that moment. They're about to make a dream come true. They are literally flooded with emotions, a wild mixture of fear and hope and excitement. They might not even remember their own name, let alone the why's and what-fors of their mortgage pre-qualification.
So, let's back things up to the beginning of the relationship and see how the money conversation can be managed more proactively. In turn, you won't spend another evening or weekend away from your family showing homes to someone who can't close.
When you get on the phone for the very first time with a prospective buyer (and I do hope you're talking on the phone first), THAT is the time to talk money.
Yes, the very first time you talk.
Do you need to ask for their bank balance? No. But you need to open the door to talking money, mortgages and how they're going to in fact make this dream come true.
If you run your discovery meeting right, the prospective buyer will want to work with you more because you're establishing right off the hop that:
You're a professional. You know what you're talking about and take this seriously. Lots don't.
You know what it takes to make the dream work. That is, team work and yes, money.
You care about what happens to your clients by setting them up for success from the start.
Here are some qualifying questions you can ask, without offending anyone, on that first call:
What price range are you thinking?
Have you talked with a mortgage broker? This opens discussion around 'broker versus bank.'
Would this be a cash purchase or will you need a mortgage? This is for the prospect who knows everything and wants to see a house now.
What are your plans for financing the purchase? Softball, open ended question. Easy!
Who's your mortgage broker? (Also softball).
I used that last one all the time when I was in real estate. It's direct, but comes from a place of curiosity rather than putting someone in the hot seat. Their answer to this question reveals a lot about their engagement thus far with the mortgage pre-approval process.
Rarely do folks balk at these questions. They may pause for a moment, because they weren't expecting a pro like you. Be quiet and wait for their response, even if it's a little uncomfortable. The odd person who does get weird with you about their financing should make you think twice about working with them.
Remember, as much as it's your job to show and sell homes, it's also your job to have these conversations about money. The offer is only worth the financing behind it. Your clients need and deserve your gentle guidance on this tough subject. Don't leave it to chance--or another round of evenings and weekends showing homes to someone who can't buy.
Learn how to systemize--and personalize--your own 5-star qualify-and-close process. Check out my coaching program and apply!
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