Spotting a Serious Buyer: What to Watch Out For
Selling a home can be an exciting but complicated process, whether you’re the seller or the agent. When you get an offer, it’s easy to get carried away and think, “This is it!” Unfortunately, not everyone who puts an offer on the table is truly serious about buying. Some may just be testing the waters, while others may get cold feet as closing draws near. There are also those who are “perennial shoppers” – they like looking around for options but know deep down they’re not really ready to make the big move.
How do you know if you have a serious buyer? Here are the signs to watch for:
Are they working with a Realtor?
A buyer who goes home shopping without a Realtor may not be serious about closing a sale. A study conducted by the National Association of Realtors (NAR) showed that around 87% of buyers had help from an agent or broker in purchasing a home, so going solo is not a good sign. Someone who avoids the commitment that comes with engaging with a professional might not be motivated to start the buying process.
Since it’s often the seller who pays the agent’s commission, the buyer gets the agent’s services for free. A buyer will not pass up on the chance to get free assistance from an expert if they’re truly serious about finding and purchasing a home.
How long have they been house hunting?
A buyer who has just started searching for a home may not be ready to make an offer. The home buying process typically involves looking at several houses before making the final selection. On average, it takes a buyer about three months to decide whether to buy a home or to even look at one in person.
Some buyers may volunteer upfront that they’ve just started their home search and still plan to look at more options. With others, however, you may need to do some digging to get at this information.
Engage buyers in a conversation about how long they’ve been house hunting, how many properties they’ve seen, and if they’ve made offers for other homes. Someone who has been shopping long enough and comes back to you after an open house or viewing is more likely to put an offer.
Do they have financing in place?
A good indication of a buyer’s serious intent is having mortgage pre-approval. This means the buyer has already sorted out their finances and are ready to finalize their mortgage. Pre-approval shows that a lender has found the buyer qualified for a home loan up to a certain amount. The buyer does not need to have their pre-approval letter in hand during showings or open houses, but has to attach this to their offer letter.
Are they asking the right questions?
A serious buyer will want to know all the details related to the ownership of the home, such as:
- Maintenance issues
- Heating and cooling systems
- Foundation problems
- Property taxes
- Other financial details like closing discounts or earnest money
A buyer who talks about the house in a possessive manner is also likely to be seriously interested. For example, they might be thinking out loud about how to arrange the living room or the upgrades they’d want to make in the future. This means the buyer is visualizing themselves living in the house – and that’s a good sign.
How do they behave at an open house?
According to a NAR survey, only 50% of those who attend open houses go on to buy a home. Many serious buyers conduct their search online and ask their Realtors to arrange a private showing of the homes they like.
If you’re a Realtor, you can give your client feedback about how a buyer behaves in an open house. A serious buyer will try to be on their best behavior. They know they are being observed and will want to make a good impression on you and the seller. They will show signs that they like the house and ask questions about it, the neighborhood, and other details. If they’re particularly critical or nitpicky, they’re probably not the right buyer for the property.
Does their offer appear legitimate?
You can tell a buyer is not serious when they make an extremely lowball offer. Despite this, it’s still best to respond with a counter-offer and keep the door open for possible negotiations. If the buyer continues to make unreasonably low offers, that’s the time to stop engaging with them.
A serious buyer will make their best offer right from the start. Someone who truly wants a property will even include a few sweeteners to make their offer more attractive, such as:
- More earnest money
- Contingencies that will address the seller’s stress points, such as a quick closing, or a long closing to give the seller more time to move to their next home
- A so-called “love letter,” expressing what the buyer loves about the home and why their offer should be considered over the others
- A copy of their mortgage pre-approval
Is the buyer eager to close?
If the seller has accepted an offer and the buyer appears to be stalling the closing process, it’s likely they’re thinking of canceling or renegotiating the contract. One sign of a buyer balking out is when they’re too intent on looking for defects or problems in the property.
As a real estate agent, you can help your clients identify the serious buyers and deal with the not-so-serious ones. It’s important to watch for signs that a buyer is simply wasting your and your client’s time, and at the same time, making sure you’re not closing the door to real opportunities.
If you want more home buying or selling tips, check our blog for similar resources, or get in touch with us at 1.800.979.5799.
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