Want to make more sales? Take this tip from a mortgage specialist who has been there, and change your finance game at open homes.
I have attended many open homes with real estate agent partners.
If there’s one piece of advice I would give, it’s this, “Don’t take ‘yes’ for an answer”.
I’ve seen agents ask buyers if they’re pre-approved, and take the ‘yes’ at face value.
A surprisingly large number of buyers say their finance is locked in when it isn’t.
Are they lying?
You don’t need to have your lie detector set up because I’m not suggesting these buyers are lying. They really do believe what they’re saying. Unfortunately, I’ve had too many agents come to me in a panic, asking for help to rescue a deal, because the couple who signed the sale contract has been stunned to discover that the bank won’t give them a loan.
Beware the vague pre-approval
Here’s what’s happened. The couple has punched a few numbers into an online calculator or had a brief chat with a banker. The banker was in ‘sales’ mode and gave them reassurance that “everything should be fine” and possibly gave them a heavily qualified pre-approval notification.
This could be as useful as, “Yes, from the brief bit of information you’ve provided, it appears you might be approved for a mortgage”. However, the couple, in their exuberance has taken this to mean, “Yes, it is 100 per cent guaranteed you will be given a mortgage”.
I have been able to rescue deals like this when I am called and can act fast before it all falls apart. Unfortunately, if it is left to an inexperienced mortgage broker or lender who wastes time and puts in applications without knowing if they will be approved, it can ruin the hopeful buyer’s chances altogether. Being called too late after all this has happened can mean that I have been unable to save the deal.
When an agent asks “Have you been pre-approved?” and the buyer says “Yes’, the agent should do a little digging.
You’ll need to be tactful, because you won’t want to pry or send the message that you think the buyer is dishonest or stupid. Here’s a piece of dialogue you might want to use:
“Forgive me for pressing you on this, but I know from experience that the mortgage process can be very confusing, and sometimes buyers can discover at the worst possible moment that they’re actually not pre-approved. Have you got something in writing from a broker or a bank?”
If they really have been pre-approved, they’ll answer in the affirmative and you will be able to see the pre-approval amount as well as the qualifiers behind it. If it doesn’t look like something involving much rigour or something printed from an online calculator, show some caution and get them to double check with the lender that the current purchase is within their borrowing limit.
If they haven’t been pre-approved and are just expecting to go back to the lender they have always dealt with, you should discreetly direct them to get a formal pre-approval. At the end of the day, it will save them a lot of headaches as well as save time once deadlines become an issue.
The buyers will thank you for your advice and the vendors will benefit from having offers from genuinely qualified buyers. A win-win situation all round.
ABOUT THE AUTHOR
Peter Ellis is the founder of LendingMate.com.au, focused on helping borrowers who struggle with obtaining home loan finance. He welcomes the opportunity to work in partnership with estate agents in helping to build their lending knowledge as well as being someone they can turn to, to get their hardest deals over the line.