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How well-versed are you in the financial roadmap to get your buyer client into a house? 

There are key questions every agent should be asking home buyers. Then there are several follow-up questions that are probably even more important.

So, today is all about that roadmap—and all the questions you should be asking. 

Most of us know what LPMAMA stands for. It’s an acronym that provides a framework for conversations around buyer qualification. 

Each letter stands for a pillar in the agent-client conversation: 

  • L = Location
  • P = Price
  • M = Motivation
  • A = Agent
  • M = Mortgage
  • A = Appointment

According to Zillow, 70% of people who sold a home also bought a home last year. So, you really want to understand all this to tap into the two transaction opportunities that are there. 

Once you help someone buy a home, you can typically get the listing. I don’t want to say this comes easily because I don’t believe listings are easy. But you’re more likely to be chosen as their listing agent when you’ve done a great job on the purchase side. 

So, knowing that’s the case, understanding how to navigate the roadmap when there may be a home to sell is going to be really important. Having a flowchart in front of you—a visual representation of that roadmap—can be a great help in keeping these conversations moving in the right direction. 

Don’t ask: “Are you preapproved?”

I’m not a big fan of asking, “Hey, are you pre-approved?” Instead, ask, 

“What money do you have allotted to put towards the home purchase?” 

Then the next question is—

“Have you spoken to anybody about the financing?” 

Not “Are you pre-approved?” but “Have you spoken to anybody about it?” This is a great way to find out if they’ve talked to a lender or not. 

How to ask if they have a home to sell

The next question you need to ask is whether they have a home to sell. Rather than asking straight-out, “Do you have a home to sell?” try this instead: 

“Hey, just one more thing. I know we’re meeting later today to talk about what’s important to you. Check out these couple of properties. Most of our clients like a free home equity review. Would you like one?”

That will flush out whether they have a home to sell or not in a way that focuses on adding value. If they say no, and they’ve been pre-approved with enough cash to put down, great! They’re able to purchase a home. 

If they have a home to sell, there’s more. 

Buy first—or sell first?

If there is a home to sell, you need to ask the following question: 

“Have you spoken to anybody about whether you’re going to buy first, sell first, and what your preference is?”

According to Zillow, right around 30% of the people who had a home to sell were able to purchase first rather than get their home sold or have to do everything at the same time. 

That’s about one-third of the buyers out there. If they can purchase without selling, they’ve got the cash to close, and they don’t have a high debt-to-income ratio, then you’re in great shape. 

In my view, that’s ideal for many home sellers because they know where they’re going and have concrete plans. 

What if they need cash from the sale?

If they need the cash from the sale—or they’ve got a high debt-to-income ratio (i.e., their debt with a new monthly payment exceeds the allowable ratios according to Fannie Mae and Freddie Mac), then you need to talk about what the options are. 

If they need the cash from the sale, then the next question is—

“Have you considered a home equity line of credit (HELOC)? Are you able to tap into that equity?”

Remember, a debt-to-income (DTI) ratio refers to monthly recurring payments related to debt. So, that’s not going to allow them to get a home equity line because their DTI is still not going to qualify if they use that HELOC. 

If they don’t have a high debt-to-income ratio, and their cash is locked up in the home, a HELOC might be a great option. Some companies and mortgage lenders offer bridge loans, so there might be some financing you can tap into to get to that equity.

If they can use that, great. If they can’t qualify for a home equity line, then you’ve got to look at selling their home first. Selling the home first could involve—

  • A leaseback agreement 
  • A longer settlement that allows the buyer to go out and find a new home (if your buyer is comfortable doing that)
  • Temporary housing—if your buyer wants to close, get the money in the bank and go buy something
  • Borrow money from a relative (Ask your buyer if they have parents or someone they can lean into for the cash they need to go out and buy a new home) 
  • Move in with a relative temporarily

These are all the options. A flowchart (like the one I use) will give you a roadmap to answering questions so you can make the best recommendations to clients. 

In this new era of real estate, where contracts will be required before showing homes, having all the options—everything laid out in front of you—will make you look like the knowledge broker

It’s going to show how well you understand what’s required to guide someone through the buy/ sell process. 

Some of the biggest concerns homebuyers have when there’s a property to sell are timing, making it all work, and getting their home sold. And when you have these options in front of you in the form of a flowchart you can follow when you’re asking questions, that’s going to lead you down the path to what to say next. 

It’s also going to help you win more business and guide more people through a stressful and challenging transaction.