Qualifying Prospects: Screening Prospective Tenants, Buyers, Landlords, and Investors.
What Is Meant By Qualification And Screening of Prospects?
Qualifying and screening prospective tenants and other parties to a real estate transaction is the process of determining whether a specific buyer, seller, or tenant has a specific real estate need and is ready, willing and able to complete a transaction.
The importance of qualifying and screening prospective tenants, landlords, buyers and sellers is to ensure a successful transaction and ensure on going performance of the agreement. This involves:
- Establishing criteria and ensuring the space or property corresponds to the needs of the occupant.
- Ensuring the occupant and use contribute to the on going value of the property for the landlord and neighboring tenants.
- Setting and managing expectations of the parties involved.
- Verifying the finances, resources, ability, and intent of the parties to perform as agreed.
Effective qualification and screening reduces the risk of conflict and misunderstanding. It is also an important function of brokerage professionals and other representatives to know their clients so they can represent them in good faith.
Qualifying buyers and screening prospective tenants is equally imperative in both the residential and commercial real estate business. The principle is the same for both. However, screening residential occupants and home buyers and sellers is much more standardized than evaluating parties to a commercial real estate transaction. Laws and regulations also differ.
Commercial Tenant Screening, and Landlord and Investor Qualification
Qualification and screening is key to determining how the specific needs of the client can best be served. It is a crucial first step for both commercial tenant, landlord and commercial real estate agent that establishes good communication between the parties.
Communication and Education
Through good communication and rapport, the commercial real estate agent's objective is to discover the specific needs and preferences, motivation, capability, and decision making authority of their client. It's an important part of identifying issues, educating each other, and managing expectations. The qualification process also helps ensure time and resources are well spent.
Identify Client Needs
Identifying specific needs involves understanding the particular real estate, or investment needs of the client that will guide the commercial real estate agent in establishing the appropriate criteria for selecting the right property for a buyer or tenant, or real estate marketing program in case the client is a commercial property seller.
Client Motivation
Client motivation is another factor to discover through the qualification process. If dealing with a tenant, a commercial real estate agent will want to know when their lease is expiring and why a client wants new commercial space. If dealing with a commercial property investor, it is important to know why they want to sell their investment property, or what is compelling them to buy another investment property.
Financial Capacity
Financial capability is a critical factor in a client's ability to be able to complete a real estate transaction. Without the financial resources, a commercial real estate transaction might be impossible, or a client's resources might be out of line with their expectations and preferences. A prospective landlord will want to know they have a credit worthy tenant. A buyer of commercial property may need to qualify for financing.
Decision Making Authority
Decision making authority is imperative in concluding a commercial real estate transaction. When dealing with smaller firms and investors, commercial real estate agents general deal directly with the owner or decision maker in the firm. In large companies, their may be a more complex process for making real estate decisions and commercial real estate agents should determine what that process is, and who has ultimate signing authority.