Why getting prequalified before you go looking at properties serves you. Why would you do this and how does this work when you are on vacation and an ocean away from your paperwork at home? It's simpler than you think and we break it down here on this video which is the second one in my series that I'm doing on my talk with Valerie Harjo with Guardian Lending.
Question #2: I have my buyers get prequalified before we go looking at properties and, I have to tell you, if they don’t want to do that I don’t show them properties. How long does it actually take, and what do buyers need to do to get prequalified?
Lynda Gill: How long does it actually take and what do buyers need to do to get pre-qualified? You did talk a little bit about that, but I guess what I want to touch on, and maybe you can talk about this too, is, I understand the resistance to “I don't want to get pre-qualified. I know how much I have, I can do this. I've got a loan officer a back wherever” but sometimes, like back in my rookie days when I first started and didn't pre-qualify people, I would find that either we're looking at properties that they couldn't afford and then they would get heartbroken or they were looking at a price point that was very limiting because they could go higher very comfortably and sometimes it was a surprise to them. They have a resistance to, to get pre-qualified.
And I just want to know, like, when they give you a call what is that call like? You're not throwing them up against the wall and grilling on them for hours I assume?
Valerie Harjo: I think the key thing is really encouraging people to understand is sometimes our market, we are in a very hot market in Hawaii, and we have been for a number of years. We are in an accelerating market. We have limited inventory and it's really something that I try in that real estate background that I have in my past to support you is to really encourage clients who call in to understand that the best thing is to be prepared, it’s going to really give them a head start on writing any offers.
What I generally like to do, I am a communicator, and I think that I'm an over communicator sometimes, but I really like to make that phone call actually. A lot of people just to do things on email, but I really try to encourage a phone call so that we can talk through that process so I can help them understand what it's going to look like when they are here, what kind of market it is, what financial reform has done to the lending world. Some people haven't had a loan in many years. They're here on vacation, they're retired and they don't really have a understanding of all the changes that have happened since 2008.
So I really encourage them on a phone. To walk through the process to help them understand how long it's going to take, what it is going to be. So I think a lot of it is really encouraging to show them this is not a commitment to land, we don't pull credit necessarily out the gate. It's really just a documentation process.
It's also really going to give them a leg up on getting pre-qualified or would I, of course like is pre-approved over pre-qualifying. A client telling me what they've made, what they have for bills, what their liabilities are is not really very solid, as that's just not validated.
So our pre-approval process, which I always encourage is that validation. And that is the documentation. Clients look at their documentation, different from a lender. So a lot of times it might be on their income. It might be on their assets. And then I also can look at their documentation for reference.
Maybe they transfer funds to different accounts. Maybe they have some side income type jobs that can impact their qualifying. They might've had some gaps in employment. So all of those things are really important to look at to really give that solid pre-approval so that when you write that offer, that all of that has been reviewed.
Lynda Gill: And that has happened as well. When you're looking at their finances from a different lens and, of course, a knowledge base that they don't have. And we've had the experience before where people have been like, “okay, we didn't know about this and we need to get this cleaned up. We're going to be back next year.” And I'm like, yeah, no problem. Just keep reading my blog, keep up with what's happening with Kauai real estate for next year, and that has happened. And so it's almost like they're doing themselves a service by getting that, that financial “look see”, how comfortable this is going to be for them.
Valerie Harjo: Yup. Yup. That's correct. And, I think the thing that also ends up happening with those clients, as we know, on a small island with a lot of real estate agents that we know and, lenders that we know, I think it really has shown, especially in some of the clients that we have worked with that perspective where you want to have a solid pre-approval.
I want to have a solid pre-approval. We really then know that we can go forward with that transaction. And we know that we are likely going to close on that barring any unusual circumstance. So my goal is always, again, my real estate background is that when they put pen to paper, writing that offer that I can provide a solid approval for you. Then really, hopefully the only thing that's left to work out is the property issues, your appraisals and inspections and that kind of thing. But the buyer should really be very solid once they write that offer, in my opinion.