As mortgage loan originators, we often find ourselves in discussions with real estate agents seeking advice on how to streamline their processes, save time, and ultimately increase sales. Recently, one such conversation led to emphasizing a crucial but often overlooked aspect of the home-buying journey: the importance of understanding a buyer’s comfort zone when it comes to monthly housing payments.
Many agents are diligent about requiring buyers to obtain pre-approval before embarking on house-hunting expeditions. However, the flaw lies not in the preapproval process itself but rather in the failure to dig deeper into the buyer’s financial preferences. While a preapproval provides a maximum total housing payment a buyer is approved for, it may not necessarily reflect the payment they are comfortable with each month.
Here’s where the disconnect often occurs: agents rush to show homes that buyers are technically approved to purchase based on their preapproval, but these homes might exceed the buyers’ comfort levels in terms of monthly payments. This oversight results in wasted time and effort for both the agent and the buyer.
To work smarter, not harder, agents should integrate a simple yet effective step into their workflow: consulting with a lender before scheduling property showings. By sending a list of potential properties to a lender for a thorough financial analysis, agents can ensure that they’re only showcasing homes that align with the buyer’s budget and comfort level.
Furthermore, when discussing affordability with buyers, agents should shift their focus from the maximum sales price to the maximum monthly payment the buyer can comfortably afford. This distinction is crucial, especially considering factors like property taxes, which vary significantly depending on the location of the property. For instance, two homes listed at the same price point may have vastly different monthly payments due to variations in property taxes.
Consider this scenario: a $400,000 home in one neighborhood might have annual property taxes amounting to $3,600 ($300/month), while a similar-priced home in another area could incur $9,600 ($800/month) in annual property taxes, resulting in a $500 higher monthly payment. By prioritizing the buyer’s preferred monthly payment over the maximum sales price, agents can avoid unnecessary surprises and ensure a smoother home buying experience.
Implementing these strategies not only saves time and resources but also allows agents to reallocate their saved time into activities that drive business growth, such as prospecting for new clients. By being more intentional with their time and resources, agents can increase their sales effectiveness and achieve greater overall success in the competitive real estate market.
In conclusion, the key to success for real estate agents lies in working smarter, not harder. By prioritizing a buyer’s comfort level with monthly payments and leveraging the expertise of lenders to assess affordability upfront, agents can streamline their processes, save time, and ultimately boost sales effectiveness. It’s time to embrace efficiency and maximize results in the ever-evolving world of real estate.
Author: Chris DeMatteis, NMLS ID 214872
