Imagine that you’re scheduled for surgery in the morning and, since nobody told you not to eat the night before (they just assumed you knew not to), you gorge on an amazing Italian dinner at Luigi’s. The next morning, as you slip away under a blanket of anesthesia, you don’t even think to let them know about the gluttony of the previous evening.
Assumptions can be deadly, whether literally or to the pocketbook. While a real estate agent operating under the assumption that his or her client knows everything needed for a smooth transaction isn’t a life or death scenario, it is most definitely a sure path to a waste of time at best and a dereliction of duty at worst.
Do yourself and your clients a favor and figure out what they are most typically unaware of and then offer explanations during the initial meeting. Here are some of the most common things that buyers haven’t a clue about and smart ways to bring them up to speed.
1. Get preapproved or get disappointed
Versta Research (for a survey commissioned by Discover Financial Services) surveyed homebuyers last summer and 71 percent of them agreed with the statement “I’ve just started reviewing ideas, looking at homes, and exploring my options.” Only 22 percent of them had seen a lender.
So, most of them are just starting the process and the first step they took was to look at homes. Now, since 60 percent of them weren’t working with an agent at the time they were surveyed, it’s understandable they’d be going about it all wrong.
But, this wasn’t the first home-buying rodeo for more than half of the respondents, meaning more than half most likely worked with an agent in the past.
A good buyers’ agent understands the value of determining whether or not a potential client has visited a lender. A better one makes abundantly clear the ramifications of NOT seeing one — so clear, in fact, that by the time they’re buying their next home they remember.
Knowing how much they can spend is paramount, both in avoiding wasting your time and theirs. Then, there’s the fact that sellers want to see a preapproval letter. The one thing many agents don’t warn their clients about, however, is the danger of disappointment should the unapproved shop for homes, clueless about how much they can afford to spend or even IF they can get a loan.
Experienced agents know well the couple that fell in love with a house they found open on a Sunday afternoon only to learn later that it was way out of their price range. Nothing you show them after that will stack up.
2. Get to know the home loan process
In the aforementioned study only 41 percent of buyers had taken the time to figure out what they’d need for a down payment.
So, although it’s a given that agents should counsel their buyers that they need to see a lender before looking at homes, they also need to warn their clients about the out-of-pocket costs involved in the purchase of one.
Another warning that too many buyers don’t receive is about changes in their circumstances before they close. Sure, this should come from their lender, but it seldom does.
Remind your clients that it’s not a done deal until it closes. Changing jobs, making large purchases on credit and allowing credit inquiries after loan approval have all proven detrimental to many buyers. The lender’s soft pull just before closing should be explained fully to your buyers.
3. Make a wish list
This is the fun part of the process for your buyer but it’s actually a time saver for you. Sure, wish lists aren’t set in stone and we all know how quickly and drastically they can change. But, with your assistance, your buyers can create extremely helpful lists.
The best wish list is based not on their dreams, but on their fears. Find out what they despise about their current living conditions and, along with whatever other reason they have for moving, these items are good indications of why they want to move and what they truly want.
4. Don’t lack vision or buy into a manufactured vision
We’ve all had that buyer that can’t seem to look beyond ugly wallpaper, ratty carpets and even something as simple as dirty dishes in the sink. Before stepping foot in even one house, warn your clients that what they see may not necessarily be what they have to live with for the rest of the time they own the home.
On the other hand, you may want to warn them that what they see may not necessarily be what they get—especially if what they’re seeing is a model home. Staging adds the “wow factor” relatively inexpensively for the seller but at additional cost to the buyer. Caution to look beyond the sexy staging to the bones of the home.
5. Read and understand HOA docs
Ah, the HOA document package—at least a week’s worth of boring reading for people that aren’t prepared or qualified to read the legal jargon.
It’s all too easy for your clients to skim the docs or, worse yet, give up reading the minute the reading gets tough. As you know, what’s in those documents is information vital to both their budgets and their future comfort in their new home.
Their best bet is to pay an attorney to read everything and then explain, in plain English, the pertinent information. Counsel your clients to not sign anything until they fully understand the HOA documents. If they still insist on not reading them, or having an attorney read them, at least you’ve done your duty.
6. Make your offer in accordance with current market conditions
Most experienced agents are familiar with the buyer who feels that they have to bargain with the seller. Every home they make an offer on is yet another chance to lay on the “el regateo” like they’re in a bazaar, wheeling and dealing over a tschotske.
If you’ve explained current market conditions to your buyer, explain as well how these conditions impact their offer on a home. In other words, tell your clients not to lowball in a hot seller’s market, forget asking for too much in concessions and be willing to give a little bit.
The flip side should be explained as well— no matter how bad they want the house, if they’re in the driver’s seat (in a buyer’s market) they needs to slow down and avoid giving money away.
7. The inspection report may not be as bad as it looks
How about those humongous home inspection photos that make even the tiniest problem look massive? They’re enough to disturb even the most level-headed buyer.
Before the home inspection takes place is the ideal time to sit down with your buyer and explain the process. Let your clients know that the inspector is being paid to be nit-picky and, thus, the report may be quite lengthy and the photos may be frightening and misleading.
This simple explanation may just keep them from freaking out over the overly large photo of a wall plate-less electrical outlet. By the same token, let them know that many larger problems can be dealt with through negotiations with the seller.
Working with buyers is one of the more challenging aspects of being an agent, but it doesn't have to be. Make it a point to have the right conversations at the outset. These discussions do more than ease your clients’ concerns; they pave the way to a smoother transaction. That’s good for all concerned.