“Queens For Sale by Owner: 10 Questions to Ask about a Buyer’s Pre-Approval,” by George Herrera, Realtor & Co-Owner of the Queens Home Team at Keller Williams Realty.
We sell a lot of properties in Queens, and as you can probably imagine, most of them are sold to buyers who are obtaining some type of financing to purchase. Now, in Queens when buyers make offers on properties, they typically submit what’s called a “Binder” which simply outlines the price, terms, and conditions of the offer. Then it is also common practice for Buyers to submit a current pre-approval (not pre-qualification) and(or) proof of funds. Now, this is usually all we have during negotiations, and as you can imagine, this is not much information to go off. Our job is to find qualified buyers for our Sellers’ properties, so before we even get Attorneys involved to start the contract process, we first ask a set of questions and gather specific information in order to make sure they are qualified, and also to anticipate any financing issues that may come up during the process. Unfortunately if you don’t get all this information up front, you run the risk of a very long and drawn out transaction, or even worse, a dead deal.
So, below is a list of the questions we ask a buyer (or their loan officer), before going into contract with a buyer. If you are a For Sale By Owner, this information will be very helpful in bulletproofing your transaction…
1. What is the credit score? If the buyer is taking a conventional loan 740+ is considered top tier going down to 620. FHA loans require 580 or better.
2. Does the buyer have at least 3 trade lines for at least 12 months? If not, ask for alternate trade lines (rent, cell, car insurance, cable, electric, etc).
3. Is the buyer self employed, 1099, or W-2?
4. If Self Employed – Has the buyer been self employed for at least 2 years? If no, ask their loan officer how they are qualified because most banks require 2 years. There are some banks that offer a one year program but you should look into it, this can cause an issue.
5. If W-2 – Is the bank using the buyer’s base income? If not, what else are they using to qualify (overtime, bonuses, etc)? They may have to average out last 2 years if so.
6. Does the buyer own another property? This can cause an issue if the buyer is trying to buy owner occupied or not.
7. Is the buyer using rental income to qualify for the loan? If so, what is the rental amount? Is it market rent?
8. What is the buyer’s Debt to Income Ratio? There two DTI ratios to look for: Front End DTI & Back End DTI. Front End DTI includes only the house payment, while Back End DTI includes the house payment along with all other consumer debt.
9. Where is the down payment coming from? It must be traceable and seasoned for 60 days.
10. Is the buyer receiving a gift? If so, has the gift been verified by the loan officer? This could be an issue depending on whether or not the buyer is buying as owner occupied or not.
Site and blog courtesy of George & Abigail Herrera with the Queens Home Team at Keller Williams Realty Landmark II.
BUY: queensometeam.com/buy | SELL: queenshometeam.com/sell