One of the best ways prospective home buyers can empower themselves when purchasing a home is to improve their buying power. The numbers may seem daunting but identifying ways to strengthen your financial standing will help you each step of the way.
When visualizing your dream home, it’s common for buyers to focus on the physical characteristics. But to mortgage lenders, a home is a numbers game. The following categories related to your buying power demonstrate how lenders identify your financial standing and determine your eligibility for a home purchase. Improvements in these areas will increase your buying power, propelling the strength of your offer when you’re ready to put it on the table.
How to Increase Your Buying Power
Increase Savings For Your Down Payment As the saying goes, cash is king. The down payment—often 20% of the home’s sale price—can sometimes be the deciding factor between competing offers for a particular home.
Try stashing away a little of each paycheck to build up your savings over time. Set a savings goal, commit a dedicated amount to each pay period, and watch the savings build as time goes on. If you prefer to keep your money separate, open a new account to which you can dedicate the added savings. Another way to save for your down payment is to generate additional income. If you have interest or experience in an area outside of your current job, explore opportunities for part-time work and dedicate the income earned to your down payment savings.
There are numerous benefits to offering a serious down payment. Putting 20% or more down can help your offer stand out, it may allow you to negotiate a lower interest rate on your mortgage and could remove the need for private mortgage insurance (PMI).
Improve Your Credit Score Plain and simple—a better credit score leads to better interest rate on your mortgage. Your payment history, amounts owed, length of credit history, credit mix, and new credit all factor into your credit score. Although improving it will not happen overnight, a higher credit score will pay dividends in the long run.
To improve your credit score, focus on paying down your credit cards, especially those with high interest. Refrain from opening new lines of credit that aren’t necessary and stay away from large purchases leading up to the time when you are preparing to make an offer. Keep in mind that student loans factor into your financial picture. Paying them off consistently will improve your financial standing in the eyes of lenders.
Stabilize Your Debt to Increase Buying Power When assessing what you can afford, banks will examine your debt-to-income ratio. Lenders want to know that you’ll be able to pay your mortgage on top of your remaining debt.
They do this by looking at your housing ratio, or front-end ratio, to determine what portion of your income will go to paying your mortgage. Your front-end ratio is calculated by taking your monthly mortgage payment and dividing by your monthly gross income. The higher the ratio, the higher risk of default.
Next, your back-end ratio, or debt-to-income ratio, is used to determine how much of your monthly income goes toward paying your debts. Your back-end ratio is calculated by taking your monthly debt expense (the principal, interest, taxes, and insurance of your mortgage payments, credit card payments, student loans, and any other loan payments), and dividing it by your gross monthly income.
Similar to your credit score, paying off credit cards, and making steady, consistent progress on your loans will help to decrease your debt and improve your debt-to-income ratios, which will increase your buying power.
Although these aspects of your finances don’t cover everything that goes into the purchase of a home, they do play a significant role in how lenders assess your financial standing and thereby eligibility for approval. Increasing your buying power takes time and strategy. Plan accordingly so that when you find your dream home, you’re in the best position possible to buy it.
Hosting an open house for another real estate agent helps newer agents to gain experience, grow their brand, and meet new clients. And often, veteran agents are happy to delegate an open house to a colleague.
“For newer real estate agents, offering to host an open house is the perfect opportunity to get their feet wet in the business,” says Laura McGee of Keller Williams Realty Greater Worcester. “This allows the newer agents to receive valuable on-the-job training and helps a very busy established realtor free up some valuable time for other tasks.”
With that said, hosting an open house can feel daunting to new agents. Don’t worry—we’re here to help. In this guide, we’ll cover everything you need to know about hosting an open house for another agent, from the initial ask to nailing it on the day of the event.
Step 1: Request to host an open house
In some real estate firms, it’s common practice to delegate an open house to a less-experienced agent. However, often agents have to take the initiative and offer to take on this responsibility.
Before you ask, consult your office’s policies for hosting an open house for another agent’s listing. There may already be rules in place for how these situations are managed.
Once you understand your office’s policies, look for experienced agents who already have several open houses scheduled.
“I only ask top agents with many listings, because they are in need of agents to hold an open house on the weekends,” says Irvine, California, agent Benny Kang. “If they have five listings, the top agent will need at least four people to do open houses that weekend.”
When you ask to host an open house for another agent, emphasize how your stepping in will free up time in their busy schedule — not how it could benefit your career. Detail your past client-facing experiences and past involvement in marketing homes so the agent feels confident you’ll present their property well. And, of course, say thank you if they accept.
Step 2: Secure a written agreement with the agent
Before you begin preparations for your open house, discuss the details of your arrangement with the listing agent and your broker and get a written agreement in place. This will ensure that both you and the agent whose open house you’re managing know exactly what duties you’re taking on.
When working out an agreement on hosting an open house for another agent, be sure the following items are clearly outlined:
Your specific responsibilities. This could include anything from ensuring a home is clean and properly staged to who will foot the bill for marketing materials. Compensation. Will there be any compensation? If so, will you receive a flat fee, hourly rate, or any other type of pay for hosting the agent’s open house? “Typically, if the agent is holding an open house to the public and they may also pick up business, they don’t want or expect to be paid,” says Dallas-based real estate agent Paige Elliott.
Client contacts and leads.It’s fairly common practice that the agent hosting the open house will collect open house attendees’ information and use it to develop their own client base. However, make sure this is the case and clarify if leads’ contact information also needs to be added to a company-wide database. Now that all the details are ironed out, it’s time to move on to research.
Step 3: Do your homework
With a written agreement in place, it’s time to familiarize yourself with the house you’re showing and the surrounding neighborhood. If you’ve done this research, you’ll be able to knowledgeably answer any questions that arise during the open house.
To start, create a property fact sheet. This is a one-page paper that includes such information as the home’s address, square footage, number of bedrooms and bathrooms, asking price, and exterior and interior photos of the property.
You’ll also want to research local listings for comparable houses, so you can establish yourself as an expert in the area and provide potential buyers with other homes to consider if this one doesn’t fit their needs.
It’s also helpful to attend other open houses occurring in the area. You’ll be able to see how homes are staged and observe how agents describe their properties to get inspiration for your own open house.
Step 4: Promote the open house
Once you’ve scheduled the open house, it’s time to get your marketing materials together to promote the open house and help attract visitors.
To begin, advertise the event online.
Post in your local Multiple Listing Service (MLS).
Share the event on your firm’s website.
Share the event on social media through posts on your firm’s account and your professional and personal accounts. You may even want to create a public Facebook event for the open house. This way, when people mark that they’re “interested” or “going” to the event, this information will appear in their friends’ feeds, making them aware of the open house as well.
Post the event on popular sites, like Zillow, Realtor.org and Nextdoor.
In the weeks leading up to the open house, contact your sphere of influence and your firm’s email marketing list, as well as any potential buyers who are interested in a home in that area and price range. You can also distribute flyers around the neighborhood, place them on bulletin boards and local businesses, and hand them out at community events.
It can be beneficial to go door to door and distribute door hangers advertising the open house or even speak directly with the neighbors. You can bill the open house as a “Choose Your Neighbors” event and invite neighbors to bring friends to a special viewing of the property before the open house officially kicks off.
Finally, ensure you have enticing signage that’ll get people’s attention. For yard signage, “Open House” should be the largest, most eye-catching words, and be sure to include arrows to direct people to the home’s location. Don’t be afraid of going overboard with signs — research shows that successful open houses have 20 and 40 signs located throughout the neighborhood.
Step 5: Connect with visitors
On the day of the open house, don’t just greet attendees and hand out information — be an active participant.
To begin, have a sign-in sheet positioned near the door for visitors to leave their contact information, including name, phone number, and email address. With this sheet, you can follow up with attendees after the event.
You may also want to consider using a digital sign-in tool like Spacio, the real estate industry’s top open house app lead-generation system.
On the day of the open house, have a sign-in sheet positioned near the door and request that visitors provide their information — including name, phone number, and email address — so you can easily follow up with everyone later. You may also want to consider using an open house sign-in tool like Spacio, the real estate industry’s top open house app lead-generation system, which is illustrated below.
While it’s important to give people space as they tour a home, offer to take them room by room, if they’d like, and make yourself available to answer any questions. You may even want to prepare an open-house script. A script can help you not only sell the house itself, but also yourself.
Make conversation with visitors and learn about prospective buyers so you can better understand their needs — and potentially offer to show them other homes in the area. If someone seems particularly interested in the property, make note of it so you can remember to follow up with them promptly.
Step 6: Follow up with attendees
After the open house’s conclusion, touch base with the people who attended the event.
Begin by sending a “thank you” email to everyone who visited and be sure to include a link to the home’s listing. If certain attendees seemed particularly interested in the house, you may also want to call them and ask if they have any additional information about the property.
When you reach out to people, also take the opportunity to remind them that even if they’re not interested in this exact listing, you’d be happy to provide them with information about similar listings from your firm.