How Should a Home Seller Screen a Buyer to Avoid Problems?

Copyright © 2014- 2019  AUTHOR: Paul R. Marino, REALTOR®, e-Pro®

 

First off, some clarification. Selling your home using the services of a Flat Fee MLS Listing Service (sometimes referred to as an Entry Only MLS Listing Service) is not a For Sale By Owner, “go it alone” method of selling your property. You are hardly alone when your property has been formally entered into the official MLS system, and you have agreed to compensate a buyer broker for the difficult job of finding a buyer. Your property will be displayed on Realtor.com®, Trulia®, Zillow®, and literally hundreds of websites out there that are simply replicating off the MLS.

 

As long as you are offering a competitive rate of buyer broker compensation (2% will easily get the job done), brokers have just as much financial incentive to show your property as they do any other property. The only thing that matters is the home is listed in the MLS, and by contractual agreement, the buyer broker will be paid at closing, if in fact they bring in a Buyer. They are unconcerned about specifically targeting properties listed only by “Big Box XYZ Realty Corp.”, since your money is just as green as theirs. The only difference is, you are not saddled with paying the huge overhead associated with a “brick and mortar” real estate office. Now I ask you, who do you think is most deserving of that “other” 2% to 3% that is normally paid out to the listing broker of a “brick and mortar” real estate office? ANSWER: Look in the mirror.

 

OK, so you’re in the MLS. Does that mean your home is sold? Of course not. It does mean you now have extensive – literally global exposure. So let’s assume you’ve done your homework, carefully read my blog entitled (“The Intelligent Way to Determine Your Home Value”), and priced your property correctly. Assuming you’ve done all this, good things will start to happen – as in, the phone will start to ring.

 

It is absolutely critical that you know how to handle buyer interest in your property. If you behave like this is your first date, you’re going to be taken advantage of. You can potentially waste HUGE amounts of time, and needlessly expose yourself to abuse, harassment, and disappointment. But you’re smarter than that. This isn’t your first date. You know there are a lot of “tire kickers”, “story tellers”, “pipe dreamers”, and, if I must be crass, “liars” out there, just waiting to ensnare you. What to do? It’s called “screening” folks. And if you want to make your life a living hell, ignore me. It is absolutely vital that you screen your buyers before anyone ever sets foot in your home. Interest in your property will likely have been generated by the MLS entry (and subsequent replication to Realtor.com®, Zillow®, Trulia®, and others).

 

The overwhelming majority of buyers in today’s market use a buyer broker. Why shouldn’t they? It puts a trained professional in their corner. Smart buyer broker’s are not going to waste their time driving around town only to discover two months down the road the Buyers have a credit score of  322 and would have trouble financing a tool shed, much less a house. So it’s a good thing the buyers are working with a Buyer Broker, because hopefully, this is just another line of defense that is all aimed at bringing only serious, qualified buyers over the threshold. But we can’t just rely on “hope”; we need the facts.

 

Screening is a little like being a private eye. Just because someone tells you they’re a pilot for American Airlines doesn’t mean they are a pilot for American Airlines. Maybe they just work for American Airlines, as in, maybe they are an assistant weekend only baggage handler (nothing against baggage handlers, because I want you to be very gentle with my luggage). Or maybe they know somebody whose cousin works for American Airlines. You get my point. Everything you are told by the buyer needs to be independently verified. Not to say everything you hear is a fairy tale, but be cautious. This does not mean you have to treat them rudely, snobbishly, or skeptically. Just take in the data and smile. There will be plenty of time for data checking.

 

In my earlier blog (“Essential Documents You Need To Compete as a Flat Fee MLS Listing”), I go into great detail outlining that thorough documentation is the key to avoiding needless “back and forth” with a buyer. The abundant detail, numerous photographs, and virtual tour will go a long way towards “putting your cards on the table”. Now its time for them to do the same.   Before anyone comes through your home, you need to know a number of very specific things. Some of these requirements can be communicated via your MLS listing. In the interest of brevity, I am going to list four of the most important questions you must ask:

 

1] Do you have a “pre-approval” letter from your lender? This is NOT the same as a “pre-qualification”. The difference is, a “pre-approval” has actually checked credit, assets, and income. If the answer is “No”, I would be very reluctant to even agree to an appointment. Why? Because serious buyers have this document in hand, and are proud to show it off.

 

2] Do the buyers have to sell anything (as in another house) in order for your home to be purchased? This is not necessarily a “deal killer”, but if the answer is “Yes”, and they haven’t even listed their home in the MLS, you are wasting your time. Your home will be sold long before they even get ready to buy.

 

3] Are the buyers working with a real estate agent, or are they targeting properties on their own account? This is important. You don’t want to find out several weeks into the negotiations that the buyers have a Buyer Agency Agreement with a buyer broker, and the broker is entitled to compensation that comes out of your bottom line.

 

4] What are the first and last names of the prospective buyers and where do they live? You will need this to conduct any serious research.   While there are other “probing” questions you can ask, these are the “biggies”. So, armed with this information, do some digging. Need to confirm they are financially qualified? Ask to see a “pre-qualification” hard copy. They say they work for American Airlines, take a look at Facebook, or LinkedIn to gain insight. They say their house is for sale? Just go up on Realtor.com® and confirm it is for sale. You get the idea.

 

Be ESPECIALLY careful when allowing prospective Buyers through your home that are not “tied” to a buyer broker. Not to say they all have evil intent. But why take chances. First off, why would anyone not utilize a buyer broker in this day and age, when this service has nothing but an “upside” to the buyer? I have no idea. And last but not least: NEVER show your home alone with no one else around. Bad idea. Very bad idea.