Jacqueline Kyo Thomas
Generating new real estate buyer leads is important, but it's even more important to qualify them to make sure that they are serious about buying a home. Otherwise you'll waste your time with buyers who aren't ready to buy, and you won't have enough time to provide high quality service to your clients who are serious about making a purchase. This is why you need to qualify your leads.
In this post, we'll help you create a real estate lead qualification process that maximizes your time, and pairs you with someone who's ready to buy.
Let's get started!
When to Qualify Leads
Lead qualification should happen immediately after lead generation.
Here's an ideal process:
Step 1: You generate a new lead, either through your marketing effort or from a referral.
Step 2: You ask them a list of questions to help you determine their readiness to buy.
Step 3: Those who are ready to buy become prospects, or qualified leads. You then focus your attention on helping them find a suitable home and providing them with excellent service. Those leads who aren't ready become contacts. You'll use email to nurture them until they're ready to buy.
Questions to Ask When Qualifying Your Real Estate Leads
Ask these questions to help you determine the lead’s readiness to buy.
Why are you Looking to Buy a Home?
This question will help you determine if the buyer is actually motivated to buy or is simply house hunting to scratch their curiosity.
You can find out a lot about your buyer based on their answer to this question, such as if they're relocating, downsizing, looking to purchase an investment property, or hoping to make their first home purchase, etc.
Knowing this information can give you a strong idea of who the buyer is and what types of properties they're looking for (close to transportation, low maintenance, high ROI, etc.).
You can then provide better property recommendations because you understand their motivations for buying.
When are you Hoping to Buy a Home?
The goal is to get a lead who needs to purchase a home within the next 2-3 months. This is someone who is ready to buy now and not drag their feet.
Sometimes, you'll encounter leads who are thinking of buying in the next year or two. That's “contact list” material. Continue nurturing them until they're ready to make a move, but don't waste all of your time and energy working with them because they're not ready to buy yet.
An alternative to this question is: How long have you been looking to buy? If they've been looking for a long time, they're probably not motivated to buy. Or they may have high (and unrealistic) expectations for a home which points to a nightmare client.
When determining the lead’s readiness, another question to ask is: If I found the perfect home right now, how would you be willing and ready to buy now? A qualified lead will always answer in the affirmative. A lukewarm lead will waffle.
Where are You Looking to Buy?
A qualified lead is someone who's ready to buy in your service area. While you are licensed to sell real estate anywhere in the state of Massachusetts, you probably don't want to drive several hours each way to show houses. You could be wasting your time (and gas money), and won't know the local market well enough to provide good service. If a client is looking for a property far outside of the area you usually work in, you may be better off referring them to a trusted colleague who works in that area.
What Type of Property Are You Looking to Purchase?
A lookie loo is someone who hasn't settled on the one property type that will suit their needs and wants. If they don't have a specific type of property in mind, they haven't thought about it enough and likely aren't ready to buy. They may need to talk things over with you, or visit some open houses, before you begin seriously showing them homes, especially if you are in a competitive market.
Most qualified buyers know exactly what type of property they want to purchase, down to the number of bathrooms and the total square footage. They have a preferred location and they're not afraid to tell you where. While this lead may seem more challenging, they are definitely more qualified.
The last thing you want is to cycle through every property in the MLS in hopes of finding the one that your client loves. While they'll eventually narrow down what they want, you'll have wasted a lot of time, they will get frustrated, and you may not even get the sale.
Instead of actively working with these clients, put them on your email list and share valuable content to help them narrow down their list.
How Much Would You Like to Spend?
Knowing your buyer's price point is essential, but there's more than one reason to ask this question.
In addition to giving you a range for looking at potential properties, it also gives you an idea of the buyer's readiness. If the buyer doesn't know how much they can afford, that's a red flag because it tells you that they probably haven't been pre-approved by a lender. Most buyers will need to secure a mortgage. However, every now and then, you will meet with a buyer who can pay with cash, but that's even more of a reason for them to know how much they can afford.
Have You Been Pre-Approved By a Lender?
If you didn't get the answer by asking the previous question, ask directly if your lead has been pre-approved. Some leads won't know that this is a necessary step, and will be thankful you've informed them before they find their dream home. Other leads may not be ready to buy yet, but will benefit from ongoing financial education through your nurturing emails, blog posts, and social media posts.
If your lead doesn't have a pre-approval yet, but is willing to secure a mortgage loan pre-approval right away, they may be an excellent lead. Refer them to your favorite lender and prepare some showings!
Are You Working With Another Agent Currently?
Some buyers like to work with more than one agent at a time. There are many reasons for this. They may not like working with the other agent but don't want to hurt their feelings by rejecting them. They may feel like two heads are better than one. Whatever the reason, this lead is unqualified.
Some leads may be shy when answering this question. They may outright lie because they want to see what you can do for them. To fish out the truth, ask if they've signed a buyer-broker agreement, which ties their hands and yours.
Don't Be Afraid to Refer Leads
What do you do with a lead who's ready to buy but may not be the right fit for you (for example, leads who are looking for properties outside of your city)? You refer them and earn network karma. You can continue to stay in touch with these contacts, but don't attempt to hold on to a lead that won't work out as a client. It doesn't do you, or the lead, any good!
A Word About Fair Housing
There are some questions that you cannot ask when qualifying leads. The Fair Housing Act and state laws protects certain groups of people ("protected classes") from discrimination in the sale, purchase, or rental of housing. Never qualify leads on the basis of protected class, and always treat all customers and clients equally, regardless of protected class.
Under federal law, you cannot ask questions about your lead’s race, color, national origin, religion, sex, familial status, or disability.
The state of Massachusetts expands these classes to also include gender expression, gender identity, sexual orientation, ancestry, genetic information, marital status, veteran or active military status, age, and source of income (such as a Section 8 voucher).
On a hyper-local level, your city may also have additional protected classes, so it's always best to check with your city government.
As an agent, you cannot refuse to represent or work with anyone in a protected class, or discourage them from purchasing or leasing a property. You cannot use different qualification criteria for anyone in a protected class. And you must provide the same level of service to all clients, regardless of protected class.
As HUD points out in these examples, housing discrimination isn't always obvious. In the context of lead qualification, when you are qualifying leads don't ask questions such as:
- Are you married?
- When are you due?
- Do you attend the local church?
- Etc.
Some of these questions may sound like innocent ice breakers, but these questions are discriminatory and could land you in hot water. So, be careful with the lead qualification questions you ask. Be sure that you're not using illegal questions to filter your leads, and always be consistent with your lead qualification process and ask the same questions of every lead to avoid implicit biases.
Final Thoughts
It’s important to qualify leads because your time is limited, and it’s best spent with leads who are serious about purchasing a home.
While not all leads are ready to buy now, that doesn't mean that they'll never be ready to buy. Even though you should focus your efforts on your most qualified leads to provide them with the best possible service, you can still keep in contact with everyone else so that you maintain top of mind.
Before you go, check out these related posts:
Real Estate Lead Nurturing in the Age of COVID-19