Buyers Have No Credit

Buyers Have No Credit

Anyone who has been in Real Estate for any length of time will tell you, the rule number 1 is make sure the buyer is pre-approved and has a letter to prove it. No agent is going to run around with buyers showing homes without knowing what price the buyers are pre-approved for. The Agent has to first of all know what price range to search in to show buyers homes they can afford. Second of all, the Agent needs a pre-approval letter to submit with an Offer to Purchase. The process is rather simple.

I used to ask buyers for a pre-approval letter face to face during the first meeting. The reasoning behind that was, everyone knows other people and those buyers just may know someone thinking about buying a house. Come on now. Everyone loves to share their real estate experiences with family, friends, and coworkers. People love to talk about Real Estate like they are the experts. Well most people. Anyway, never turn down a potential lead.

During the covid lock downs that all changed. Wisconsin shut down Real Estate for a few months and after considering Real Estate essential, heard that a number of people used it as an excuse to leave the house. Some people would call up a Real Estate Agent and set up a tour of homes. It was anything to get out of the house. The governor heard about it and set up an agreement with the local Real Estate Associations. Agents were only allowed to show homes to pre-approved Buyers. That made sense. During the covid scare Sellers did not want tire kickers in their homes.

So what can a Real Estate Agent do with a potential Buyer with no credit? In other words, their credit score is too low to get a home loan. Agents have to know how to ask questions. Most Agents work with Loan Officers with a background in establishing and boosting credit scores. Many local banks have programs. An agent can go over the basics on establishing and raising a credit score. In this case the Buyers paid for everything with cash or a check. They didn’t trust banks or credit card companies. The solution was to find a credit card with no annual fees, as much cash back as you can find, and begin using the card, making sure it was paid in full every month. In a few months their credit score went up enough to qualify for a home loan.

Other Buyers may have poor credit because they have a number of charge cards with little to no available credit. Based on some formula creditors use, people are allowed so much credit. That includes charge cards, home loans, auto loans, and other loans. A Lender is better able to explain the procedure and make suggestions. Which is the key point here. Team up with a lender able to help on every front.

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