48% of Buyers Aren’t Pre-Approved and It’s Costing You Deals

A new study from NAR shows what's going on with home buyers and it's really, really powerful data.

When we look at home buyers, these 2000 groups, we found that 52% of them had been pre-approved. So they've gone through the process and they're pre-approved.

When you look at the reverse of that number, that means 48% have not. About half the buyers you're competing with when you're in a multiple offer situation are just pre-qualified. They're not pre-approved.

Now you need to make sure that number one, you're having a conversation with your buyer about the importance of being pre-approved. And secondly, educating your sellers about the difference between the two.

One thing that I would encourage you to do is have a conversation with your buyers as a starting point. So here's what I would say with my buyers:

I'd say, "You know, we're still in an extremely low inventory market. Things are changing a little bit and a few more listings are coming to market, but it's still a relatively low inventory market. And we still have super high demand.

So here's what I do to ensure that my buyers are a little bit more competitive because often when a listing sells, we still see a few multiple offers situations. And that is to get you pre-approved. And here's what I mean by that:

A lot of times, buyers are just straight up too lazy to go through this process of being pre-approved. They get pre-qualified, which means they just talked to a lender on the phone for 10 minutes, told them their income, told them their bills. And lenders say, well, based on what you've told me, we're going to give you a pre-qualification letter.

But here's the thing: If I'm competing with 5 or 10 other offers and 5 of the buyers that we're competing with have a pre-approval — meaning they've gone through the entire process and they're approved. And then you have 5 buyers who are just pre-qualified but they're not fully vetted. I guarantee the seller is always going to choose the pre-approved buyers, all things being equal. So let's do the work.

Let's just start you on that process. Because here's the deal: Once you find the home you want to buy, you're going to have to go through the approval process anyway. So by getting ahead of this curve, you're going to be in a much, much better negotiating position and be able to get in position to win these multiple bid offer situations. And potentially negotiate a better sale. How do you feel about that?"

That is a conversation we should be having with every single buyer. And when we don't do that, we're failing them and we're failing ourselves because we could lose out in these multiple offer situations.

Hope that helps you guys have a great day. Good selling, go shake that money tree.

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