“I am pre-QUALIFIED to buy a home why are you asking me to get pre-approved?! I just want you to take me to go look for a house we are so excited to see what is available”.

Misconceptions about the “order” of things can plague a Realtor through out their career.

As a broker, you will have to explain the difference between pre-qualify and pre-approval countless times.

So many times that it will be redundant and frustrating.

The reason it is frustrating is because it is so obvious that the process starts here.

You think: “Why would a potential buyer think they should go look for homes before they know how much home they can afford?”.

Of course you think that.

It is a logical first step in your reality.

Not always the case with potential buyers, especially first time buyers.

Getting pre-approved for a specific loan amount brings a persons entire financial picture into the light. 

Every “blip”…

Every ounce of debt.

For the consumer this can be intimidating.

It can feel like a  “facing the facts” moment of what their financial story says about them.

Some people are ok with hearing their story out loud from a mortgage consultant.

Others are worried they will not like what they will hear.

And others are not even aware that they are avoiding the process.

As a broker until you know what home a prospect can afford you potentially investing your time in a client that may not be able to buy the homes they want you to take them to look at.

Some brokers feel that if they invest their time showing people homes that they will buy a home through them once they eventually get approved for a specific loan amount.

Maybe that works out.

But I do not think your time is worth the gamble.

The answer to this problem is in how you educated the consumer.

VERBIAGE:

“I understand you are wanting to go look at houses right away and I would like to be the person helping you find a home.  Pre-qualification is not the same thing as pre-approved and that should be explained better to people by my industry. 

(Note:Take ownership even though this is not your fault...it will pay off)

 

 I can tell this probably was not explained to you, which is not your fault and my job anyway.  A pre-qualification isn’t the documentation that will get a sellers attention the same way a pre-approval letter will.  

(Note: Does this not sound better than: a pre-qual may be based off bad information concerning your finances) 

 I care about my clients enough to be the one who tells them that before we look at homes so that when you see the home you want I can put an offer in for you immediately.

 (and that just being honest)

 This is a competitive market and the pre-approval is the literal amount a bank has already approved you, where as a pre-qualification is the banks surface level guess of what you may be approved for.  The numbers may even be the same but the approval document is what gives your offer more incentive to the seller.  In the past I agreed to show a client homes prior to getting pre-approved and I had to watch my clients lose the home they wanted because someone else who put in an offer already had the pre-approval taken care of. The other piece of good news by getting pre-approved now is that other Realtors do not do this first even knowing it could impact their client.  Maybe they are to eager for their client to sign with them…I do not know why to be honest because I spend very little time thinking about my competition or anything other than your best interest.. So if they are putting in offers at the same time we are, guess who will likely get the house? You”

Notice you didn’t have to have a money conversation?

All we talked about was the different weight the two pieces of paper hold.

The incentive was that we are counting on the buyers wanting to have an advantage when it comes to how their offer stands in the seller’s opinion.

We know from their opening statement that they thought they had what they needed to begin looking at homes.

They are eager.

We had to speak to both points to make the buyers feel like we had listened and understood.

To them it seems like we are willing not to sign them until we make sure they have what they need.

And that is true, but it is also to make sure this is a client that qualifies not just for a home…

But for our professional service.

Never assume your willingness to invest your time and take a chance they will get approved will mean they eventually buy a home with you.

If you really care about your brand and your clients you will start the process with the mortgage pre-approval.

It is in everyone’s best interest.