When we see a candidate that has made over six figures for the past number of years, but owes on everything they own, that’s concerning and we will ask that person, “what have you spent your money on these last few years?” We drill down on each and every candidate we pre-qualify because if they don’t have what they say they do, or cannot prove to us via cash accounts, no pre-qualification letter will be issued. What we typically see used is a simple one page net worth statement required by most broker offices. No back up materials and no true buyer screening done with the hopes of this information being true. We think you should stop doing this. That’s right, stop pre-qualifying candidates. What I really mean is, if this business listing requires any level of financing, let the lender do this for you. Most broker offices have lender contacts that can be used for pre-qualifying. Maybe they do many deals with them, or maybe only one or two a year. In any case, most lenders would be happy to pre-qualify a buyer upfront for some level of financing or purchase price. This true level of pre-qualification is more important today then ever before due to the fact that spending a month with a buyer that cannot truly be financed only builds frustration on many levels and reduces a broker’s credibility.
This not only takes the burden off your office and the broker reviewing this buyer’s information, but also brings another level of security to a seller when you explain they have been pre-qualified by a lender. If you are counting on a lender for buyer screening, then you must also understand what they will require and how long will it take. Be sure they’ll stand behind their letter and has a true sense of securing an approval should this buyer locate a business.
Now we all know that is not the typical buyer, and his scenario has only crossed my desk once in so many years. The typical answer is that some funds are coming from parents, some from my uncle, some from a friend, and the list goes on and on. Usually, they scramble to explain how the can come up with the money. That does not fly with our firm, and shouldn’t with yours either. We pre-qualify buyers every day for broker offices throughout the country, and here is our criteria
We leave little room for error here as we are less concerned about the borrower, as opposed to the broker, who counts on our letter. Our buyer pre-qual letters are produced within two hours of all requested documentation being submitted and comes at no cost or obligation to the buyer in any way. We want the broker to know the buyer’s level and chances of securing financing without question.