Discover 3 absolutely critical questions it’s imperative you ask any buyer before you go into contract with them. We’ve unfortunately seen sellers lose tens of thousands of dollars when they miss these simple yet critical questions! If you want to successfully sell your properties and secure big profits, you must get answers to these 3 questions!
1. Has the Lender Reviewed the Buyer’s Financial Details?
The first critical question to ask BEFORE you accept an offer on your property is: Has the lender reviewed the buyer’s financial details? While most offers will include a prequalification or preapproval letter, it’s on YOU to read it carefully and then DIG DEEPER!
Their real estate agent may have said they’re a great buyer, but did their lender review their financials in detail? You may sign and proceed confidently because you like the offer and they are preapproved for a loan. But the next thing you know, 3 weeks have gone by and suddenly you learn they may not get their financing because the buyer had an overdraft fee on their bank statement and the loan’s not looking good. The lender could have checked earlier, but they didn’t!
Talk with the Lenders
So, while you may have a prequal or even a preapproval letter, often those aren’t worth the paper they’re printed on! It does NOT guarantee the lender has received and reviewed the buyer’s documentation. Ultimately, it's not a commitment to lend. The real value in those letters for sellers is having the lenders contact information. Which means you need to call and confirm details with the lender. Of course you’re not prying into their personal information, but you want to be sure the lender has truly reviewed the buyer’s financials. This will ensure you don’t let a less than ready and qualified buyer waste your time.
2. Can the Buyer Extend the Closing Date?
And that leads us to the second critical question to ask BEFORE you accept an offer on your property, and that is: Can the buyer extend the closing date? Most contracts will include contingencies for inspection, diligence, title issues, appraisal, and financing. The timeframes for these can run from a few days all the way to the closing date. Some may even allow for an extension to the closing date. So, you must read the contingent details closely to know what you’re agreeing to. If your buyer’s having trouble getting their loan, you don’t want to be tied up any longer than necessary to find that out. Remember, there are more buyers in the marketplace, but if you go into contract with the wrong one and find yourself waiting for them to scramble to meet loan qualifications, you’re stuck!
Dial Down Contingency Details
- You need to know when the buyer’s earnest money becomes non-refundable.
- Be clear when you can terminate unilaterally.
- Make sure there’s no language that will allow them to extend well beyond the closing date without your further agreement.
3. Will It Appraise for What Your Buyer is Offering?
And that brings us to our third critical question to ask BEFORE you accept an offer on your property, and that is: Will it appraise for what your buyer is offering? We are masters at this at Freedom Mentor. We evaluate this so carefully because it can waste so much of our time! You may be excited you received a high offer, but have you asked yourself: Is this too high?
Now if they’re paying cash it doesn’t matter, but if they’re getting a loan, you need to know that the property is going to be appraised. We help our apprentices on this with every single offer that comes in. The buyer’s appraisal will take several weeks, and while you may have made it through the inspections and title is looking good, if the property doesn’t appraise, it can torpedo your deal. The buyer can walk with their earnest money, and you have nothing to show for it but frustration, confusion, and lost time!
Control the Appraisal Process
So, you must master what to look for with comparable sales and control the appraisal process to ensure this doesn’t derail your deal at the last hour or cost you thousands if you’re cornered into dropping your price!
Get Answers to These 3 Questions!
Those are 3 critical questions to ask BEFORE you accept any offer. If you miss any of these, you risk:
- Wasting time
- Missing your prime sales window
- Reducing your profits significantly with extra holding costs, low appraisal adjustments, and additional concessions for marginal buyers
This is NOT the position you want to be in as a seller! But, if you make sure you have crystal clear answers to these 3 major questions, you will be in a much better position when you sell your property.
Every Successful Real Estate Investor Has a Mentor
As mentors, we work with our apprentices to steer clear of these problems and ensure we get profitable deals to the finish line quickly! And that's why every successful investor has a mentor! If you want to master these techniques and close profitable deals consistently – whether you’re just now getting started or ready to take your investing to the next level, text FREEDOM to 305-315-8030 or apply to our Apprentice Program here: Freedom Mentor Apprentice Program.
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