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A better understanding of home loans could make you a better agent

04 June 2018 | 11 minute read
Tanya Mayer

Buyers have high expectations from a buyer’s agent these days. After all, a home is no small purchase, so they will want to know they are dealing with someone who is knowledgeable and skilled enough to get them a good result.

They will want your help to fill in any knowledge gaps they may have (after all, you are the expert!), so you need to be sure you have a thorough understanding of every part of the process, from doing background checks to bidding on a property and negotiating with the seller.

If they don’t trust that you’re going to do a good job for them, then they will probably go off and hire someone else. Here, we focus on some things you’ll want to know about home loans if you’re going to be a good agent.

● Understanding the home loan pre-approval process

Nobody wants to waste hours of their precious time showing clients around a bunch of homes that turn out to be way above their budget. The first thing you need to do before you even start showing buyers properties is to make sure they are pre-approved for a loan.

A home loan pre-approval is a key part of the home loan process. It lets buyers, and their agents, know how much they can borrow based on information about their income, liabilities and debts. With this knowledge, they can shop with confidence and have extra leverage to negotiate. It should be one of the very first steps in the home buying process, so be sure to tick this off the list first thing.

Don’t just leave this up to the buyer, though. A good agent should be able to offer help getting clients pre-approved, so make sure you have a good network of trusted lenders you can connect them with who will take them through the process.

Ideally, they should get a full assessment pre-approval done, rather than a system-generated one, as this is much more thorough and so considered more reliable. In any case, a full approval will typically be required before committing unconditionally to a purchase or exchanging contracts.


Pre-approvals usually last three to six months, so keep the expiry date in mind. The buyer should ask the lender about what happens if they are unable to find a suitable property within the time frame. They should also ask their lender about the types of properties they will not accept, such as those located in certain suburbs or ones that are in poor repair. Asking questions such as these can save you a great deal of time, and headaches, down the line.

If your buyer’s circumstances change, they may no longer be approved, so be sure to have the lender reassess the application if anything comes up. A change of circumstances can include having a child, taking on a new loan or getting a new job.

● Extra leverage to negotiate

When it comes time for the negotiations, that full assessment pre-approval will really come in handy. You’ll find that most sellers want to sell their property fast, so if you can put a buyer in front of them that’s already got a lender ready to advance to full approval, then it could put you in a much stronger position.

But don’t just stop there. The best negotiators will do what they can to gather as much information as possible. It’s not just about knowing the value of the property you’re after, although that is important; it’s also about learning as much as you can about the other party and their motives.

Why are they looking to sell? What is their situation like? How motivated, or desperate, are they to sell?

Understanding your seller and their motivations for wanting to sell their property can make a big difference in getting the results you want. After all, information is power. Arm yourself with what you can to secure the best deal possible.

You could even use all this extra leverage to negotiate additional points, such as home repairs, the closing date or better terms. If the home you’re interested in has been on the market for a while, then you may find that the seller is more open to bargaining.

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