4 Ways to Vet Prospective Property Buyers
If you are selling real estate in Jamaica, especially one that attracts a lot of interest, you could find yourself bombarded with calls from individuals who want to take a closer look at the property. Unfortunately, you’ll have no idea as to how serious the prospect is in actually purchasing the property. Also, you could end up wasting a lot of time and money on engaging with those callers who have little interest.
The alternative is to take a more selective approach even though there is no effective full-proof method available in Jamaica to vet prospective property buyers when selling real estate.
Assess the Buyer’s Commitment Level
One of the first things you can do after getting a call from a prospective buyer is to assess how motivated they are in purchasing the property for sale.
You want to know:
- If they have sufficient funds to make the purchase using their own funds; or
- If they’ve already ascertained that they can obtain approval from a reputable mortgage provider.
Prospective buyers needs to be able to have sufficient funds to cover the purchase price of the property along with all other associated costs (e.g., legal fee, stamp duty).
Ask up-front questions
As part of your vetting process, you could ask a number of varied questions, for example:
- Where is their place of work?
- What they do for a living?
- How long have they been working at their current place of work?
- Which mortgage provider(s) do they intend to use?
- How much will they use as a down payment?
- The interest rate(s) they’re likely to get?
- What is their understanding of the various transaction costs associated with purchasing a property?
Don’t hide what you’re trying to do. Be up-front with callers. Let them know that you are aiming to vet prospective property buyers before you spend the time they need to view in person. Your objective will be to ensure that they have a clear understanding of the level of financing they can afford.
Simply put, you want to know if prospective buyers can afford the property you have on offer. Bear in mind that even though a prospect may be in a high paying job, they may still not qualify for the level of financing they need (e.g., because they have significant recurring expenses).
If the caller seems uncertain or hasn’t a clue about one or more points, suggest that they talk to their lender first before getting back to you with regard to the relevant property for sale. However, if they seem to know what they’re about, you can opt to arrange a meeting even if they haven't talked to a lender.
You need to trust your gut and adopt your vetting approach for each prospective buyer that calls.
Obtain a Pre-Approval Letter
If you’re really precious with your time, you may choose to go a step further when attempting to vet prospective property buyers. You can choose to arrange viewings for your property for sale, only after you’ve received a pre-approval or affordability letter for the prospect from a financial institution. If you take this approach, you’ll be guaranteed that you’ll only be showing the property for sale to qualified buyers.
Be careful. Some prospects may get turned off.
However, there is no legal requirement for buyers to have a mortgage approval letter prior to submitting an offer. In addition, buyers will need to have their down-payment available to qualify for a mortgage with Jamaican lending institutions. As such, you could run the risk of disregarding some strong contenders including high-net worth buyers who simply do not need to obtain a mortgage, or who earn more than enough money to qualify for the financing they need. Such prospects may get turned off by having to go through what they consider to be unnecessary paperwork or effort at an early stage.
In addition, as a real estate agent, you may not want to dismiss prospects who’ve indicated that they are “just looking” with the intent to buy in the near future. Interacting with such prospects gives you the opportunity to build a strong relationship with them prior to when they are ready to make a commitment.
Encourage the Buyer to Obtain a Pre-Approval Letter
If you do not opt to obtain a pre-approval letter or affordability as part of your process to vet prospective property buyers, strongly encourage the prospect to start the process as soon as possible. This will be in their best interest to confirm the level of funds that they’ll have available for purchasing a property, so that they can confidently make an offer or increase their offer as needed.
You should not confirm the prospect as the successful buyer without confirmation that they will be able to secure sufficient funds to make the purchase. You do not want to accept an offer, and then find out three months later that the buyer can’t qualify for the loan they need or doesn’t have the money to close as they had claimed.
Check the Buyer’s Social Media Profile
When you’re meeting with strangers with no one else around, as is often the case when selling homes as a property owner or real estate agent, another big concern you may have is with regard to your safety and the security of the property. As a result, it is advisable to check out the social media profile of prospects before arranging viewings of a property for sale.
LinkedIn profiles can raise red flags.
LinkedIn profiles are especially useful as they can be used to quickly to confirm a prospect’s place of work, job title, professional network and other accomplishments. LinkedIn profiles can also raise red flags as to a prospect’s reliability and trustworthiness (e.g., if there are gaps in employment dates, and if there are inconsistencies when compared to the information you obtained over the phone).
You’ll only want to move forward with a viewing if there are no red flags after going through the prospect’s social media profile.
Save Yourself Time and Money
In a nutshell, as a seller, you want to spend most of your time with only those buyers who are ready from the onset to submit a serious offer, if the property is in line with their requirements. Taking the time to vet prospective property buyers will save you precious time and money, with less effort required for property viewings.
Furthermore, you’ll end up requiring less time to close the property deal, since the buyer will have already started the loan approval process or know exactly what is required to begin. As a result, you could also benefit by having a lower probability of the buyer backing out at the last minute.
This article is for general information purposes only and does not constitute legal advice. For more property-related articles and news, check us out at Nohuts.com.