Qualifying a buyer for owner financing

[Jeff G.]

Hi all. 2 partners and I are trying to sell a SFR via owner financing, and we could use some guidance on what we should / can / can't do regarding qualifying a buyer. Credit check? Current employment? Employment history?

I've done some searching on this site, and still am while awaiting replies, but we're in a bit of a hurry so I thought I'd also post the question.

Thank you.

[Brian Fouts]

Buyer questions to help qualify them...

What is your price range?

What is  your budget for monthly payments?

Have you owned a home before?

Do you need to sell a home in order to buy a home? 

What is  your time frame, when are you looking to move?  This tells you if they are a motivated buyer.

Do you have a lease currently?  If so, when does it end?

How many are in your family?  Do you have school age children?

Do you rent or own your current home?  Rent amount?

How much can you comfortably afford to put down on a home purchase?

Is there a particular area or location you prefer?

Do many beds, baths, sf do you need?

Is there anyone else that will be part of making a home buying decision?

Are you employed?  If so, where and how long?  Same for the spouse.

How do you communicate best?  Email, phone, etc.

Last, try to understand their main human need.  Certain, uncertainty (variety), significance, or love/connection.  Usually, the best home buyer is a person with certainty and love/connection as their main human needs.  This means security, a viewable future, etc.  People that are uncertainty/variety driven don't like the "tied down" aspect of owning a home, more likely to default or be short term.  Significance driven people make it all about them, buying a home needs to make them feel important.  This all is just my opinion, but knowing how best to communicate with someone as well as know their focus is a good thing.

Last, you need to know your local laws and guidelines as some of the above questions can put you in hot water with local codes or Dodd Frank, etc.  The above questions are examples of ones I, or my partners, have asked depending on our situation.  Being a licensed agent versus lender versus investor can have an impact as to how you ask certain questions.