A CHECKLIST FOR DETERMINING BUYER QUALIFICATIONS
29 Nov, 2021
Selling your home is an emotional experience. You’re selling a piece of your life, and you want it to go to someone who deserves it, right?
You’ll likely have many people walk through your home and a handful may even give you an offer on the home. So how do you know which buyer is the right one for your home?
Use this checklist for determining buyer qualifications and finding the right buyer for your home.
Is the Buyer Pre-Approved?
Just because people walk through your home doesn’t mean they are serious buyers. It’s best practice to accept only offers from pre-approved buyers. Not pre-qualified, pre-approved. These are buyers you know not only are serious but have a good chance at securing the financing needed to buy the home.
This weeds out the ‘nosy neighbors’ and others just walking through your home to walk through it.
When you look at the buyer’s pre-approval letter, look at the terms outlined. Are there a lot of outstanding conditions the buyer has to satisfy? Are the terms of the loan friendly or do you think there’s a risk the buyer will back out?
What Type of Loan Does the Buyer Have?
Along with being pre-approved, consider the type of loan the buyer is getting. Conventional loans are among the easiest to handle for sellers. They don’t have special appraisal requirements and they are fairly lenient in all aspects of the loan process.
Some sellers don’t like to deal with government-backed loans, so pay attention to the pre-approval letter if it matters to you. For example, if you don’t want to wait for a VA appraisal or you don’t think your home will pass the appraisal, you may want to stick to buyers with conventional financing.
Does the Buyer Have Contingencies?
Buyers can ask for contingencies on the contract, but that doesn’t mean you have to accept them. If you’re selling your home in a buyer’s market, it means there are more sellers than buyers out there. You may find yourself settling for whatever contract comes your way. But, if you have options, consider how many contingencies (and which ones) you’re willing to handle.
Common contingencies buyers ask for include:
- Sale of home – If the buyer has a home to sell before he/she can buy your home, they may ask for a sale of home contingency. This gives them until a specific date to sell their home and if they can’t, they can back out of your contract.
- Mortgage contingency – This gives buyers time to secure financing and if they can’t, they can back out of the contract. You can avoid this contingency by only working with pre-approved buyers.
- Inspection contingency – This gives buyers time to order an inspection and have it completed, with time to review it to decide if they want to buy the home. If the inspection shows there are many issues with the property, the buyer can back out without losing his/her earnest money.
These are the most common contingencies, but there are many more buyers may ask for. Before you list your home, decide who many contingencies you’re willing to accept so you don’t get swayed by a higher sales price and get stuck with too many contingencies.
Is the Buyer a Good Fit for the Home?
Because selling a home is emotional, you may want to choose buyers that are a good fit for the house. If you’re using a real estate agent to sell your home, it may be hard to figure this out, but there’s one telltale way.
If the buyer writes you a letter, you can see in their words if they are a good fit. Buyers who know what’s good for them will write a heartfelt letter about why they fell in love with your house and why they want it. You may find that you have something in common or it may just give you peace of mind knowing the house will be in good hands.
Is the Buyer Making an Earnest Money Deposit?
You’ll know a serious buyer when you see how much earnest money he/she will put down. A serious buyer that wants the house will put money into escrow he/she can lose if they don’t buy the house.
Buyers that balk at the idea of putting money down or want every contingency possible in the contract so they get their money back probably aren’t as serious of a buyer.
Do you See Eye-to-Eye?
Finally, ask yourself, do you and the buyer see eye-to-eye? Selling a house isn’t for the faint of heart. You have a lot of decisions to make, paperwork to complete, and people to deal with. If you and the buyer don’t get along, it could make the process even more frustrating.
When you see eye-to-eye, you’ll make decisions together and won’t have to worry about every little decision you have to make.
Finding the perfect buyer for your home isn’t an easy task. You’ll likely have many people showing interest in your home, but that doesn’t mean any of them are qualified to buy your home.
A lot rides on your decision when choosing someone to buy your home, especially if you need the funds to buy your next home too. Create your own ‘buyer checklist’ and make sure the offers you entertain are from buyers who meet your criteria.
Don’t settle and sell your home to just anyone. This could be one of the largest financial transactions you make in your time, make it a smart one so you make the money you hoped on your home and so you can use the money to invest in your next home.
Contact us for a no-obligation conversation. Valley Mortgage is the largest independent mortgage lender in North Dakota and northern Minnesota. We’ve been helping folks like you for more than 38 years. If you haven’t reviewed our website, click here. Please call us at 701-461-8450 to get all the details about home mortgages and refinancing. There’s no cost, no obligation. Valley Mortgage does all the processing right here in our Fargo, ND office.