Receiving an offer on your home is exciting, especially if the number is close to (or above) your asking price. However, not every offer is everything it appears to be on the surface.
Any buyer can technically place an offer on your home, but that does not mean they are actually qualified to purchase it.
While a communicative, high-quality buyer can lead to a smooth sale, choosing to work with the wrong buyer can lead to delays or more serious risks.
This blog offers an informed analysis of why verifying your home buyer is important, how to do it, and other methods of protecting yourself as you sell.
Looking to optimize your home’s market performance? Our strategic advisory services can help you achieve a smooth and lucrative sale. Call 416-722-4732 or reach us at evan@christensengroup.ca.
What are the Risks of Working With an Under Qualified Buyer?
A home purchase is a significant transaction, one that entails a substantial amount of variables. Unlike most types of purchases or sales you’ll experience where there’s a simple one-time exchange of money for a specific item or service, real estate transactions must follow a long list of financial and legal processes before the deal is finalized. It’s during these stages (known as closing) that sellers are most vulnerable to a jeopardized sale.
Occasionally, a seller will formally commit to working with a buyer, only to learn later on that they don’t have adequate funds, aren’t legally qualified to buy the property, or have had a change of heart and want to back out the deal. These circumstances can come with stress, financial losses, and even legal complications.
With that in mind, as a home seller, you must take steps to ensure that your potential buyer is financially qualified, compliant, and trustworthy.
Searching for more results-focused home selling insights? Follow these resources for more advice.
- Is an Accelerated Home Sale Possible in Today’s Market?
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- How to Sell Your Home Without Losing Money
Verifying Buyer Finances
When a potential buyer places an offer on your home, you’ll want to ensure they actually have the funds to back it up. If they don’t, your sale could fall through.
Rather than taking a buyer’s word at face value, always ask for proof. Most often, this means confirming that the buyer has received a mortgage pre-qualification or pre-approval for the necessary amount.
As a seller, it’s critical to understand the distinctions between mortgage pre-qualification and pre-approval. Pre-qualification is only a preliminary assessment of the buyer’s financial health, whereas a letter of pre-approval ensures that the buyer has been vetted by a lender and is likely to secure the necessary funds for the purchase.
After a buyer has offered proof of financing, it’s a good idea to communicate with their bank. Their lender will be able to confirm whether or not the pre-qualification or pre-approval you’ve been presented with is legitimate, accurate, and not expired. In a cash transaction, you can similarly verify a buyer’s proof of funds documentation by contacting their financial institution.
Fraud Protection
While still somewhat rare, real estate fraud is on the rise in Canada, therefore, along with verifying a buyer’s finances, you should also take steps to ensure they’re trustworthy and legitimate. This can be done by asking for government-issued identification such as a driver’s license or passport.
Depending on the circumstances of your sale, your agent and/or lawyer may recommend acquiring title insurance. This is a unique type of policy which offers an added layer of security against fraudulent buyers and potential scams. Title insurance is typically a small investment of a few hundred dollars, however, the protection it provides is well worth it.
Looking to optimize the sale of your Toronto home? Explore these blog posts for strategic insights.
- Strategic Pricing When Selling Your Home
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Work With an Experienced Real Estate Agent
Hands down, the most effective way to protect yourself as a home seller is by working with a reputable and deeply experienced real estate agent. As your dedicated guide to the market, it’s your agent’s professional duty, among other responsibilities, to reduce potential risks facing you as a seller – this includes verifying buyer candidates.
Sell Your Home With Christensen Group
At Christensen Real Estate Group, we’ve represented sellers in West Toronto and Etobicoke for over 40 years. Beyond ensuring your interests are protected, our vast industry experience is the foundation for a seamless and lucrative sale.
While navigating the many variables of selling may be complex, our track record is as straightforward as it gets. Leveraging our proven approach to market preparations, advertising, pricing, negotiations, and closing, we’re able to deliver results that exceed your expectations and provide peace of mind along the way.
Selling your home? Our strategic advisory services can help you achieve a smooth and lucrative sale. Call us at 416-722-4723 or reach us by email at evan@christensengroup.ca.
