How to Avoid Flaky Home Buyers

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Look for Financially Qualified Home Buyers

In order to purchase, potential real estate buyers must be financially qualified. If you’ve listed your home with a realtor, this is a given. Real estate agents aren’t going to waste their time showing houses to buyers who can’t actually purchase. If you’re selling your house by owner, require buyers to bring letters from their lenders before you show the house. A letter of prequalification may be based only on the buyer’s stated levels of income and debt. Ask instead for a letter documenting loan approval, also called a 90% letter. These letters should state that the lender has verified financial documents, such as pay stubs, tax returns and credit scores. You may decide to show a house based only on a prequalification, but offers should definitely be accompanied by loan approval, subject only to property contingencies, such as appraisal and title search.

Seek Out Ready, Willing and Able Real Estate Buyers

Besides looking at how able a buyer is financially, realtors also screen buyers to see if they’re ready and willing to buy. Assessing a buyer’s willingness can be tricky. A home is the biggest purchase most people will make. Good realtors ask questions, listen closely, and watch their buyers to help them overcome fears and psychological barriers to home buying. If you’re selling by owner, don’t be afraid to ask the same kind of questions that realtors ask in their buyer interviews. What is the buyer’s motivation to purchase? How long has s/he been looking? What features are most important in their new home? Has s/he made offers on other homes?

Avoid Lowball Home Buyers

Everyone loves a good deal, but when the real estate market shifts, buyers looking for a steal may appear. You can’t avoid every lowball offer, but you can discourage many of them by doing your homework. Get a professional opinion of value from a realtor or an appraiser, and don’t overprice. Overpriced homes typically end up selling for less than they’re worth, and you’ll have to deal with plenty of lowball offers along the way.

Avoid Unreasonable Terms

Buyers make many types of requests and demands. Be reasonable but firm in your response. Make sure you and the buyer understand all the terms of your agreement. Put everything in writing and insist that all parties sign to show their agreement. Don’t hold a property for a buyer without a signed contract and an earnest money deposit.
Buyers sometimes ask for a “lease-option,” where they rent the property with an option to purchase. Unless you’ve decided to rent rather than sell, don’t even consider this request. In this situation the buyer could opt not to make good on his offer and lock in a price that might be to your disadvantage if the sale actually goes through. A better option is a lease-purchase, where the buyer executes a signed agreement to purchase, moves in as a tenant, and closes at a later date. This arrangement helps buyers who can’t close right away, usually because of financial constraints, as long as they’re reasonably certain they can close in the future. There’s always the risk that the buyer’s circumstances won’t improve, so be sure there’s a clear exit strategy written into the rental agreement. Typically, earnest money becomes non-refundable when a buyer takes occupancy prior to closing.

The Open House Dilemma

You want plenty of buyers to see your house. Should you hold it open? While open houses generate traffic, you’re giving carte blanche for flaky buyers to traipse through your home. Statistically, a home is unlikely to sell as the result of an open house. Realtors generally hold them to pick up new buyers to whom they can show other properties. If you do hold an open house, be sure to lock up valuables and have other people on hand to supervise as buyers walk through. When the open house is over, make sure buyers haven’t unlocked windows or doors with the intent of breaking in later.

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