5 Signs That a Buyer Isn’t Qualified

Unqualified home buyers can be a huge waste of time for agents hoping to show houses to those who can actually afford to make a purchase and put a paycheck in the realtor’s pocket. Qualifying for a mortgage can be tricky, and even those potential buyers who have been pre-approved run the risk of having their lender deny the mortgage in the end. Even so, there are sure signs that a buyer isn’t qualified, and realtors may want to steer clear from anyone exhibiting them.

Not Enough Money for a Down Payment

Real Estate Down Payment

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This first one isn’t always a sure sign, as many loan programs allow buyers, especially first-time home buyers, the chance to take on a mortgage without coming up with a down payment. Since the recession, however, practically no conventional home loans are extended to those who do not have a down payment. A qualified buyer will come to the table prepared to put down at least 3-5% of the home’s total price, if not more.

Unsteady Employment

Unsteady Employment

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Qualifying for a mortgage means meeting many requirements, but having steady employment is a major prerequisite. If a client mentions the fact that he’s held several jobs over the last few years, or has worked only temporary positions recently, chances are that he’s not going to be a qualified buyer. This isn’t to say that he doesn’t have a lump sum inheritance hidden away, but of course that’s highly unlikely. Qualified buyers will have at least two years of steady employment in the same job or field.

Inadequate Monthly Income

Monthly Income

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Buyers with a high debt-to-income ratio will not qualify for a mortgage. This may have been less of a cut and dry issue before the housing bubble burst, but today it’s highly emphasized. Qualified buyers should have a monthly income that is no less than 2 to 3 times higher than the projected monthly mortgage payment. This can be met with both incomes from a couple buying the home together.

Bad Credit Score

Credit Score

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Would-be home buyers may admit to you concerns they have about their poor credit score. A buyer doesn’t have to have a perfect credit score, but mortgage lenders will require a good score around 660. Clients that have recently gone through bankruptcy would also not qualify, at least not for a while. Encourage these clients to meet with a lender to find out exactly what steps they need to take to improve their score and become better qualified for a mortgage.

No Pre-Approval

Real Estate Pre-Approval

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New clients are not always aware that they should seek out pre-qualification or pre-approval prior to getting serious about home listings. Doing so makes them look good to you, the realtor, and gives them bargaining power when putting in offers. It’s much easier to talk down a homeowner with a solid offer that’s been pre-approved. Always ask potential buyers if they have gone through the pre-approval process before agreeing to take them on as clients.

Taking note of these key signs will ensure that neither you nor your clients waste time viewing houses, and it makes you a more credible realtor.

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