Virus or no virus, there are buyers out there who’ve been waiting for home prices to drop.
The key for you, is to develop “a listening” for which renters are “mulling it (homebuying) over” in their mind, so you can engage them with a conversation BEFORE your competition does.
Inman: Making Sure Your
Client Never Calls Another Agent
After a rapport is established, the next step for you will be to evaluate which of the protentional buyers have the CAPACITY to follow thru on their goal.
Are Your Buyers Serious? Or Using You?
Here are the Signs!
The following is a (shortened) post from Inman! Enjoy the post & stay safe!
Profiles of a Renters Ready to Buy!
Renting a place to live may give a renter the freedom to move and offers relief from the responsibilities of homeownership, but most people yearn for their own home.
Here are 8 signs a renter is ready to make the switch from renter to homeowner.
Buyers Are Tired of Rising Rent Prices.
Paying rent is a bad investment for the future
Study: Renters More Financially Stressed Than Homeowners
If you overhear a renter complaining about a recent rent increase FOCUS ON THEM.
Buying vs. Renting: 56 Pros and Cons
The higher the rent increases the more resentment and the higher the motivation is for the renter!
Rising rents make it harder to budget for monthly housing costs and to save for other financial goals.
Many renters are motivated by the pride of ownership and wanting more control over their dwelling place (i.e. pets)
Survey: “Stigmas” Against Renters
Credit Scores Have Improved
Good credit scores get buyers a better interest rate and loan terms.
Low credit scores are the most common reason why renters can’t buy; usually, low scores are due to and a history of late payments and /or too much debt hurt scores.
Credit Re-Scoring vs. Credit Repair
These FICO Myths are Killing Credit Scores!
Before renters apply for a mortgage, they need to get a copy of (mortgage) their credit report.
A free credit report is virtually worthless when evaluating a buyer for a mortgage.
Tax liens and court judgments can be a big deal killer as well.
Although borrowers with a credit score as low as 620 can qualify for a home loan, they may have to make a bigger down payment and/or pay a higher interest rate.
Managing Debt
When screening mortgage applicants, lenders look at a buyer’s debt-to-income ratio, or “DTI”.
A key metric calculation is adding up a buyer’s total monthly debts, then dividing the sum by a gross monthly income arriving a “debt to income ratio” (DTI).
Mortgage brokers typically allow a DTI ratio of up to 49% for Fannie Mae and VA loans and as high as 60%+ more for FHA loans.
High Debt Ratio FHA & VA (65% – DTI)
Because of the lending abuse that brought on the “Great Recession” and the Dodd-Frank lending reforms, institutional lenders (banks -credit unions and so-called “mortgage bankers”) have a “drop dead” debt a ratio of 43%.
A higher DTI level translates into a buyer’s increased purchasing power AND whether we both earn a commission check.
To determine (to the decimal point) what a buyer qualifies for – direct your buyer to work with an MLO that goes through the full automated underwriting process & obtain a Fannie/FHA/VA case number.
“DU” Loan Approvals – Never Lose a Buyer Again
Few lenders actually go the extra step of formally inputting a buyer’s complete documentation and issuing full disclosures, as the entire process takes an additional 2-3 hours (vs. just issuing a prequal letter).
Why Pre-Approval Letters are Worthless!
Every (responsible) lender does a prequal interview, but most letters are worthless. Truly worthless.
If you’re an experienced agent – you’ve already found this out!
Buyers Have Enough Reserves for Owning A Home
Buyers need reserves (and a home warranty plan) when they buy a home!
When a pipe bursts or the air conditioner goes out in a rental unit it’s the landlord’s responsibility. That’s not the case when with homeownership.
Buyers Can Afford the Down Payment & Closing Costs
The down payment required depends on the type of loan.
For conventional loans, 5% down is usually required – FHA loans require just 3.5% down.
Another expense you have to be ready for is the closing costs, which typically equal 2% to 3% of the property’s sale price.
There are ways to lower closing costs to zero!
Lender Paid Closing Costs
The good news is that some closing costs are negotiable.
Negotiating for “Seller Paid” Closing Costs!
Buyers are Ready to Settle Down in One Place
Buying a home involves many upfront costs, buyers anticipating relocating are not a good candidate for ownership!
Stable employment is probably the best indicator of future homeownership.
Stable employment translates into a stable income, which often leads to renters “putting down roots”.
A Major Life Change
Most renters decide to purchase a home after a major life event; marriage/divorce, an addition to the family (i.e. newborn or elderly parent arrive), a new job, or children leaving the nest are the most common reasons.
ID Owners Who Down Size – Retire Early and Sell!
Corporate relocation can be another catalyst, as many corporations will pay closing costs for employees to relocate.
Buyers Know Exactly What They Want
Usually, it’s a specific school district (50%), close proximity to work and/or other family members are compelling reasons for homeownership!
Buyers Pay More for Good School Districts
Type of use is also a major consideration; especially for senior citizens (1 story is usually preferred vs. a home with stairs).
Houses, townhouses, condos, co-ops, duplexes – offer distinct considerations for costs, upkeep, and personal enjoyment.
Copywrite © August, 2018 Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Daniel Dobbs, Author- VP-Broker Mutual Home Mortgage 265 S. Randolph #120 Brea, Ca. 92821 Cell: 949 250-3981 Dandobbs6@gmail.com NMLS #307631 BRE #00986886