By Jeff Stern

I don’t show homes to just anyone. In fact, I avoid showing to one particular kind of buyer.

They are the buyers who have not taken the step of becoming preapproved to buy a home.



Any buyer who has not taken the basic step of getting preapproval from a bank is not ready to look at homes. And they’re certainly incapable of making a solid offer.

It’s not only saved me countless thousands of hours over the years because I’m not running around showing everything to everyone with a whim, it’s also saved my seller clients thousands of hours of time and frustration. My sellers don’t have to evacuate for needless showings, or entertain fruitless offers that unnecessarily tie their home up, potentially losing an opportunity from a financially qualified buyer and having their hopes dashed just because of unpreparedness.

My colleagues often ask me how. How can I possibly turn people away? Wouldn’t refusing people wreck my business?

Here’s the secret though. The customer is absolutely, always right, but remember a customer is not every random stranger who talks to you. It’s someone engaged, participating and in a position to buy a home. Anyone outside of that can’t be the boss of your time. Well, they can, but it’s not wise to let them.

How valuable is your sellers’ time? How valuable is your time? Are you willing to give it to any random stranger, without regard for your client’s best interests? What essentially happens is your clients are inconvenienced and quite possibly disadvantaged and you are investing your time poorly, which will most likely result in failure to sell their home.

I’m not. I like the way Carl Sandburg said, “Time is the most valuable coin in your life. You and you alone will determine how that coin will be spent. Be careful that you do not let other people spend it for you.”

A colleague felt the pain of giving away that coin. My clients were interested in a property and wanted to make an offer. The seller’s agent was on his way to receive our offer when he called.

“You’re not going to believe this – one of the agents in my office is writing an offer right now!”

I advised my clients on how to compete without giving away the farm, so to speak. In the back of my mind, I suspected it would be an offer like many others that surface this way – unapproved buyers promising what they can’t – and it would fall through.

The seller accepted the other offer. The seller’s agent arranged to hand-deliver the declined offer to me the following day. I received it early that afternoon and as I expected (but much sooner than I thought), not 20 minutes later, the agent called me with news.

“So, the other offer fell through. Their financing was declined.”

I wasn’t surprised. It happens more than you’d think.

“You know Jeff,” he said, “I know you advise agents to work only with buyers who have been pre-approved, but I can’t convince my office to do it. Here’s the proof that it’s a colossal waste of time not to.”

I felt his pain. It is a colossal waste of time – for sellers, buyers and us too. That’s why I don’t do it.

If, like that sellers’ agent, you are in an office that won’t adopt this, can I make a suggestion? Why not refer such prospective buyers to your colleagues? They’d gladly receive the referrals, and you’d be free to pursue serious, pre-approved buyers.

Your seller clients will thank you and your colleagues will also thank you for keeping them busy.

As for the unqualified buyers, they too deserve respect and the opportunity to see homes. That is why we host open houses.

Jeff Stern, a 27-year real estate veteran with Re/Max Performance Realty in Winnipeg, received the 2017 CMHC/MREA Distinguished Realtor Award. He is an instructor for the Provincial Real Estate Licensing program, a member of the Education Committee and sits on the Professional Standards Investigation and Hearing Committee at MREA. He gives back to the community as chair of the MREA Shelter Foundation and writes stimulating and enlightening articles on his blog.

13 COMMENTS

  1. Thanks Carolyne, when I receive an offer contingent on financing, if I know the agent I don’t worry about it unless I have had a deal go south with them before and find it was due to the agent failing to ensure the buyer was pre-approved. If I don’t know the agent and it is a hot property I ask them if they have confirmed the buyer had provided all the necessary information to their lender and if in doubt either attach a 24hr Time Clause allowing the seller to entertain backup offers. In this current climate of tight mortgage requirements why any agent would show, let alone write on any property until it is done boggles my mind.

  2. Hi, How do we convince a buyer to get pre approved first. many buyers are like sitting on fence they want to see the house first and then think about getting financing.

    Paresh Desai

    • Don’t show them houses until they’re pre-approved. Why waste everyone’s time?

      “Hey Mr & Mrs Client – before we go out and start looking at homes, it’s important we have a pre-approval in place. Not only does it let us know the price range of houses to look at, but also gives us an upper hand when we do find your dream house and want to put a strong offer in on it. Would you like me to have my preferred mortgage expert reach out to you to get a pre-qualification done – he can usually have it done for within 24 hours. When would be a good time for him to reach out to you today?”

    • Just curious… Your google search says you are a real estate specialist. First piece of advice is: be careful about using that moniker if you practice in Ontario.

      In an effort to answer your REM comment/question, this is simply my personal humble advice:

      How many times have we heard: “Under all is the land.” (And the good Lord isn’t making any more land, the basis on which all property stands.)

      And in reality, we as agents are simply the delivery boys. But before we ever help someone sell and or buy a property, we must first sell ourselves (our expertise). First and foremost we are in the people business, tightly followed by the finance business.

      It doesn’t, not should it, matter to us what, if any, house the buyer wants to buy. It’s his money not ours. We are simply purveyors of information, guideposts if you will. But before anything can move forward, we absolutely must develop rapport with Mr and or Mrs John Q. Public. You must engage their trust. So if you simply say something as uncomplicated as: “I am really a selfish person. How so? I want your business, and I want to do such a good job for you that you will send me all your family, friends, and business associates, and whatever house I help you acquire, when you are ready to sell it, you will select me once again as “your” preferred agent.”

      I start all my real estate relationships by knowing as best as possible exactly what I’m dealing with. This is how I earn my living. Buy even more important is how I treat you and your business with respect.”

      “Personally, I am not going to prequalify you. Personally I don’t care where you work, how much money you earn, how much of that money together or alone you decide you want to spend. That is the job of the money/finance provider. I will work for you to establish the best possible buying power your money will dictate.”

      “But before we go out to look at houses, we need to prepare the sellers that we are coming. And they need to know that they too can trust us – to show their property only to would-be buyers who can afford to buy it if they decide they like it enough to consider.a purchase. As much as we respect you and your time, we must also respect them and their time; and, their property. It’s how we treat both sides of a transaction.”

      “So, before you get all excited about a house you might love and wish to call home, we need to know for sure that your bank or mortgage broker supports your decision – before we go shopping.”

      “You surely don’t want to be disappointed, and we want to avoid that at all costs. Makes us look less than efficient. So, one of my personal rules is to get you prequalified so I can do the very best job for you.”

      Some such conversation can take an hour or maybe even two, in a nice quiet, undisturbed location, ideally your office or some neutral location. Never make your people feel rushed. Set aside dedicated time to be with them to build rapport. If you are good on the phone and find it easy to develop rapport on the phone, then close the door in a quiet uninterrupted spot – and talk. Unless it’s an emergency do not interrupt the flow of your discussion by taking other calls as your phone might continue to ring.

      Always remember, if these people aren’t ready yet, they will be at some point later, and you want them to remember how well you treated them, even if it takes three years of occasionally staying in touch. It’s called business-building for the future. NEXT! I can’t begin to count how many of these discussions I had where people simply thought they were ready and in reality, they weren’t. They thanked me profusely for being gentle and kind and taking time to explain. And they came back. When they were really ready, and prequalified.

      This worked for me, developing a 24% market share in my trading area. I was the go-to person, and I produced wonderful referrals over the years. So I’m living proof it works. Patience required? Absolutely!

      If you are just starting out, be prepared that it might take a couple of years to get grounded in this business, but it is an education money cannot buy, and only time will tell how successful you will be.

      In the meantime, get all your buyers prequalified by a finance expert. Leave that part of the real estate job to someone who already has the perfect answers that enable you to do the perfect job for your buyers and sellers. Everyone will go home happy, especially you, with your worked smart, not hard, well-earned commission cheque in hand and a great testimonial.

      Never forget: first and foremost we are in the people business.

      Cordially
      Carolyne L 🍁

        • You made my day, Tim. I would be honoured, absolutely. Thank you kindly.

          At the moment I am recovering from a massive heart attack following the cancer death of my husband.

          But when I get back on my feet, if I do. surely we could arrange something. I would be pleased and happy to help. Really the business need not be complicated.

          I had an amazing long-term career as a well-respected REALTOR(r) See “Carolyne’s Clients Speak” at:

          http://www.carolyne.com/awards.html#speaks

          but I had to put my life on hold dealing with a family cancer situation. I can’t say when I would be able to physically help, but I’m only a phone call away.

          Editor Jim will tell you how to connect with me.

          Thank you for your kind words.

          LET’s DO BUSINESS! (I’ve put my lic on hold so cannot even do referrals, and I haven’t updated my site for a couple of years.) You might find some helpful old articles I penned over the years, at: http://www.carolyne.com/bramptonhomes/index.html

          At age 76, I can’t guess what the future holds. Only time will tell. I stay in touch with the real estate world via REM.

          Cordially
          Carolyne L

        • Tim

          Just curious… What are your thoughts, relative to the mortgage business, on Ross’ concept of “your goal is to be their friend in business,” at:

          http://www.remonline.com/pitfalls-of-working-for-kith-and-kin/#comment-311382

          My long comment at his article is not meant to be negative. Just different. Ross’ concept certainly has worked well for some agents. It had just never been my way, personally. In retrospect I’m thinking the concept might work more safely and better for male agents? Might work really well as a guy-thing. Better than perhaps as a girl-thing?

          I’d like to hear others’ comments on building business in the friendship vein. It might come down to a personality-thing, perhaps. If you as a real estate sales rep have a husband or a wife, I’m wondering how or if they fit into the mix of a spouse’s real estate-client relationship.

          I never ever discussed my client business at home. Not about listings and not about offers and subsequent sales. I guarded my client business like a bulldog, including their privacy. Simply put: “no” business discussion at home.

          How does that work in the mortgage business world? Is there any fear of overlapping gossip that can come out of conversation, intended or otherwise?

          There’s very little privacy left in the world. Do you know or care how much mortgage is on your relatives’ or neighbours’ houses? Might that, like in real estate, be a reason for not doing business with “your goal is to be their friend in business,”

          I can see the concept getting in the way of doing business. But of course that’s just my humble opinion, again not meant as criticism.

          REM can be such a good learning tool. But often there is not enough genuine back and forth discussion. Again, just my thoughts.

          With respect
          Carolyne L 🍁

          • For me, personally, I do not “befriend” my clients, though I would certainly consider myself very friendly. I am not a transactional mortgage broker, but a relational mortgage broker. That being said, I think that rarely translates into “friendship.” I get hugs from lots of my clients at the end of transactions, but I rarely get invited to summer BBQ’s at their house. None of them know my partner or kids, other than the photos they see on the wall of my office.

            I do, however, take a slightly different approach with referral partners. I find the relationships with my referral partners much more fruitful and fulfilling when we interact socially as well as professionally.

  3. The best thing you can do is partner with a good local mortgage broker. You’re missing such a huge opportunity by simply sending your clients off to a bank. Partner with a good broker, and they can keep you in the loop. Forget the letters or proof of financing – send your clients to a good broker whom you work with, and they should keep you in the know. If you’re working together with the broker, you can make the financing part of the transaction seamless. :)

    • Tim,
      I agree completely. The only time my clients had a mortgage involvement with a bank was because they stated they preferred to deal with their own bank. We don’t care where the mortgage financing is had.

      They were often so disappointed as sometimes it took their banks up to three weeks to respond to a phone call requesting preapproval. By then they understood their banks were in no hurry to do business.

      That’s when I gave the clients mortgage broker contact information. Never let my clients down in 35 years and clients often were pleasantly surprised they got better than bank rates. Banks lost boatloads of mortgage business due to bad staff attitude nothing to do with govt rules and regs. You would think by now they’d have figured out their “hospitality” is the key lacking component.

      Carolyne L 🍁

    • Speaking of letters and relative to the world of financing topic, there isn’t really an appropriate place to post this. But you seem a very sincere participant in the industry so I share this information at this discussion:

      When I first opened my boutique company in 1991, it was the first of its kind in the area. You wouldn’t believe how many times I heard: you can’t do this and you can’t do that; everything from, you can’t use “those colours,” to you cannot register a real estate company with just your first name. (Who do you think you are?) It was all a little frustrating at times. But I prevailed. In three weeks from leaving my long term corp employer start to finish I was up and operating. No one was more surprised than me, because I had never intended to leave. My very first sale was a million-dollar referral from a soon to be other client who had known me through other on street sales.

      But here’s an odd situation I ran into regarding deposits. There were no commission trusts at the time.

      At my new brokerage, each deposit was put into the brokerage “real estate trust account” (required to be called exactly that), as was the rule of the day. Being a small company I had complete control. And I had witnessed bad administration attitude at my old branch, where often agents had to be chased down to get actual trust deposit cheques related to each APS.

      At my corp a real estate trust account cheque was issued on the strength of the certified funds deposit placed into the real estate trust, and recorded, buying a GIC, specific to the trade record ID, address and names. And a copy of the GIC bank confirmation receipt was attached to the trade record sheet. A strict paper trail for each and every transaction. And it was so simple to manage and keep track of. The GIC expiration date instruction was set to be redeposited into the real estate trust account automatically one day ahead of closing plus interest earned. Bank instruction included: do not roll over. Easy to follow bookkeeping.

      A template letter I created was put with a copy of the physical deposit cheque received from the buyer, a copy of the matching receipt required by the Ministry, a copy of my corp real estate account trust cheque buying the GIC, showing the interest to be earned, along with a copy of the GIC bank sheet itself.

      The template but personalized letter stated the specific name of my corporate real estate trust account, the bank name and address location where the real estate trust funds were on deposit, and stated that shortly after closing the stated interest would be paid as stated on the APS. The interest would be recorded and reported as buyer earned interest-income and they would be notified, as per rules. The letter also stated if the reader had any questions to contact their own agent.

      A full set of this information was mailed to the buyer, to the seller, and to the other brokerage involved in the transaction. Everyone involved knew exactly where the related deposit trust money was and provided a proof paper trail.

      Remember it was 1991, there were no commission trust accounts yet, and several companies had gone upside down. Buyers and agents were genuinely concerned, and rightfully so, as to the whereabouts of their real estate deposit.

      I received so much hate mail and actual threatening phone calls from irate colleagues saying who did I think I was contacting their people direct, that I stopped doing it. Made many enemies. I still think it was a courteous business procedure.

      The public responded very positively saying they had bought and sold real estate elsewhere and no one had ever acknowledged exactly where the deposit was.

      But I still think it was a good way to show everyone involved the paper trail. I wanted total transparency, and word spread like wildfire that the new brokerage was indeed transparent and was making other companies look bad for not being transparent likewise.

      Any thoughts on this? In retrospect I think I was wrong to have stopped doing it. Interest bearing real estate trust accounts are handled differently in today’s world. But my intentions were honourable and I shouldn’t have been bullied into giving up my procedure.

      Carolyne L 🍁

  4. This is such excellent advice, Jeff!

    Two things I note: I actually had the would-be buyer bring me a letter from their bank or other lender. I even typed a sample letter for them to present to their banker as a suggestion; it was simply a blank form to be typed on bank stationery; said their name and that they were preapproved for a maximum purchase amount of $$$ (of course they didn’t have to spend that amount) and that this approval was good for 60 days (or whatever the bank preferred as a timeline.) and that the preapproval was subject to the selected property having had an adequate appraisal.

    Oh, by the way, the bank signature had to print their own name also. Had one situation where the bank employee no longer worked at the bank and no one could read and identify the employee signature. True.

    Only once in all the years did I run into a stumbling block. The buyer’s banker sent them away, saying: tell the agent to go find you a house and THEN and only then would she write an approval letter. And said that the house would have to have an appraisal first anyhow. That bank didn’t believe in “preapproval.” First go look at many houses, then come come back here. “Tell your agent to do HER job. That’s what she gets paid to do: show houses.”

    I could hardly believe it. I suggested they talk to a local mortgage broker. They did, and they bought a house.

    I spoke to the banker personally. Her excuse: no other agent had ever asked for such a thing.

    Just curious…. How do you handle an incoming offer from another agent, on your listing, contingent on financing being arranged?

    Back in the 1980’s the related information had to be on the offer (in finite detail). That stopped happening. So I always asked the other agent where, on behalf of my seller, their buyer was acquiring financing.

    Occasionally, the answer was: “I don’t know”, or “I have no idea.” I would have to advise my seller of all possibilities including the opportunity of losing another ready and prequalified buyer.

    One time the agent had his buyer out in the car. We invited them to come in. They told my seller their agent advised it was none of our business. My seller declined the offer.

    That particular real estate office didn’t believe in having their buyers get preapproved. Just run around showing houses. That’s why you are an agent. A very very large office.

    Their agents actually brought three more offers on that house. Each time my seller rejected the offer. It’s not about not accepting offers contingent upon financing; it’s about whether it is tying up of the seller’s house and likely not to net a sold sign, perhaps missing, as you say, a real buyer.

    There’s far too much time spent chasing shadows in this business. Your article is one of the best ever published on REM.

    Sincerely
    Carolyne L 🍁

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