Yes, I do only get paid if you buy a home, and I think you should offer 112% of list price, waive inspection, offer to pay the difference between contract price and appraised value out of pocket, and allow the sellers to name your first-born child.
Funny click-bait blog titles aside, we do find ourselves in a funny situation right now, don’t we? We need our clients trust us, and we are focused on doing what’s in our clients’ best interest; but it can be difficult to advise a buyer how to write a great offer without sounding like we’re just trying to get paid. On the one hand, in a crazy seller-friendly market, it’s pretty obvious that in order to write a winning offer, a buyer is likely going to have to pay a premium and waive one or several contingencies (inspection and financing being two big ones). On the other hand, it’s also true that some agents out there are willing to sell out their buyers in order to secure a commission next month. So what’s a pure-of-heart agent to do?
First, let’s be clear. Not all houses are worth buying, with or without a premium. Hopefully during your time in the car with your buyers you’ve made that clear. You’ve spent hours (days/weeks/months!) teaching them to look critically at homes, and to identify a good house, on good dirt. You’ve helped them avoid buying the wrong house – several times. And you’ve told them that every time someone buys one of those dysfunctional houses or lots, the buyer pool has gotten a little shallower. If you’re doing that part right, they’ll be inclined to believe that your advice about an offer is coming from the right place.
What it comes down to is this: in order to give your best advice, and for them to really hear it, you must believe they trust that your counsel isn’t self-serving. The first time you tell a new buyer what it’s going to take to win a bidding war, it’s going to be hard to swallow. My own mother (hi mom) would likely balk. Because the kind of offer that will win does seem a little bit crazy, right? Sure could look like you’re just trying to get a contract/commission. Believe it or not, the best thing might actually be for them to challenge your motives. Let them. And don’t take it personally. Acknowledge that it is a reasonable theory, and then go right on teaching them what it means to be in a sellers’ market. Of course, all of this is a lot easier if your client is a referral from someone you’ve already helped and who has shared how much you did to help and protect them; but it can be done with an internet lead as well. It’s just harder (sometimes work is work).
Sometimes it can’t all happen right away. Sometimes you have to write and submit an offer that can’t win. That’s okay. This is a process, and there will be other houses. Not a lot of folks get the first house they swing at, and it can be instructive to follow that first house to close and see what it went for. Also, a lot of listing agents will disclose information about competing offers and sometimes will share the terms of the winning offer (as an aside, some agents believe they cannot disclose this information; but they can!)
To be the most successful, the agent/buyer relationship demands trust. When you can trust them to hear you, you will be free to give them your best.
*next week we will discuss in greater detail how to communicate some of the more important aspects of a strong competitive offer to your buyers.
This has been the month of deals that do not go as expected. We’ve had buyers walk, neighbors crash open houses trying to torpedo our efforts, a short-sale/bankruptcy sale stretch waaaay out, and oh my God, does every single appraisal suddenly have to take a month? Don’t get me wrong, this is really not going to be about me whining that things have been a little tough. Sometimes work is work. If we couldn’t handle the occasional challenge, we wouldn’t last long in this business.
But I am going to whine a little, and hope that you will take to heart what I have to say.
Please, please, please, if things start to go sideways on you, DO NOT stick your head in the sand and hope someone else will solve the problem. DO NOT stop taking calls. DO NOT wait days to let your clients know what’s happening. And DO NOT squander this opportunity to show your clients you are there to fight for their best interests.
You can’t always anticipate where trouble will come from, but the longer you’re in the business, the more you’ll be able to prepare your clients for what might happen. We all know some banks are terrible about hitting close dates for example. I’m not one to call such entities out online though, wouldn’t want to ruffle feathers. So we’ll just say watch out for Fells Wargo, and B of Nay, to (not) name a few. We have to take care in our efforts to put our clients in a preferred lenders hands, knowing that some may suspect we have some kind of vested interest besides wanting to see a positive outcome. So sometimes we end up having to deal with a sub-par lender. When that happens, just be ready to jump in and make things happen, and if you can, try to avoid the temptation to say “I told you so”. No real upside to making your clients feel bad. Just do the work, get it done, and make sure they see you doing it. That’s how you’ll create raving fans. Take every opportunity to communicate with your clients. Remember that things that are just a part of your day-to-day are a very big deal to them.
And agent to agent communication? Also so important! Don’t hide. It doesn’t make things better. It just pisses us off, and gives us no choice but to assume worst case scenarios. Just pick up when we call, text us a quick update, tell us you’re waiting to hear back from whomever….just don’t bury your head in the sand. If you are going to last in this business, you’ll likely find yourself in a deal together down the road, or maybe yours will be one of many offers on a popular listing. So play nice.
So who, in this scenario is the idiot? Well, honestly, many, if not most agents when they’re showing homes, and every agent showing homes in TV and movies.
I’ll expand. 30 years ago, all agents represented the sellers. So when “your” agent showed you a house, they really represented the seller. So of course, their goal was to make the sale. They might show up early, open windows, turn on lights, bake cookies….they wanted to get paid!!
Fast-forward to today, and our goal now, as true buyers’ agents, should be to represent our buyers, which means to protect their best interests. They don’t need us to point out quartz countertops and excellent color choices (things that can be changed). Rather they should come to rely on us to tell them what they don’t know to look for like water damage, bad floorplans, shoddy workmanship, sloped floors, lack of natural light, and other issues that will become problems during their ownership or when they go to sell. If you want to build a referral business, shouldn’t you make sure your clients buy good houses? Later in another post, we will expand on this. We talk a lot about incurable and curable dysfunction in homes with our clients.
We are in a position of power and influence during this important moment in our clients’ lives. We could certainly take notice of their enthusiasm about a home, harness that energy, and give it enough momentum to get them all the way to the close – maybe even help keep it together during the process by minimizing inspection concerns when they arise. In fact, I’ve certainly seen plenty of agents do just that. But who are you helping when you do that? I guess the seller will be a fan. And you’ll get paid sooner, and will have worked fewer hours than you might have. But is that any way to do business? Does that feel good? Are you likely to get the call to later list the lemon you railroaded them in to? In a word, no. Don’t be an idiot.
Is our way more work? Yes. We absolutely show more homes per client this way, and make less money per hour. But we sleep great at night. And in the morning, we go to work, and instead of cold-calling and knocking on doors for the first half of our day, we focus on how to help our current clients, and then our phone rings. It’s either a returning client, or one of their friends asking for our help. Because we did the hard work to make sure our people didn’t buy a bad house, and they happily volunteered to refer us when they heard someone was looking to buy.
I don’t think most agents set out to screw their clients. I just think they fall in to the old models of doing business. The models that have given our industry a less-than-fantastic reputation. We don’t have to do that. In fact many agents who seek our mentorship or attend our classes are thrilled at the prospect of doing it another way. They see top-producing agents burning through new clients and think that’s the model to follow. Forgetting how much money they spend getting and capturing those new leads, and unaware how few of them they retain.
So start now. No more talking clients in to houses. Talk them out of houses. If you can’t find enough reason not to buy it, maybe it’s a good one. That’s your new philosophy. Don’t know enough about houses? (don’t worry, neither do most of your peers) Learn! Preview lots of houses, always attend inspections, ask questions and listen. Lots of agents make plenty of money in real estate using sales tactics, and never bother to learn how to tell a good house from a bad one. They’re idiots. They are not serving their clients. Don’t be an Idiot, be and Advocate.
So we’ve decided we are bloggers now.
I’ve been resisting for years, unwilling to take on a commitment to write on a regular basis, worried that our day-to-day tasks would prevent us from following through. And I don’t like to start something unless I’m confident I’ll persist. So this is me saying I’m confident we will persist.
The topic? Well, real estate of course, but more specifically, how to be an agent who focuses on success as measured by the happiness of your clients, rather than by the more conventional metrics (income, quickness to contract…etc.). Alex and I have been teaching classes and mentoring agents for a decade, and much of what we teach flies in the face of the conventional realtor dogma.
Seen Glengarry Glen Ross? Watch it. But for the love of God, don’t do what they do. One of our goals in this industry is to undo the decades of damage done by hard-sell agents. We don’t have to do it that way. We don’t sell homes to people if it isn’t in their best interest. Largely because we like being able to sleep at night. And guess what? People call us because we did right by them. It’s been very rewarding to see the lightbulb over new – and sometimes not so new – agents’ heads when they hear there is a way to find success in real estate without employing disingenuous tactics to make or preserve a sale.
Our audience? Primarily real estate agents or people who may want to get in to the business. Maybe the content will be interesting to spectators, maybe not. HGTV seems to do ok with real estate “reality” TV, so maybe folks will tune in here too.
The title? Well for now, let’s call it “Don’t be an Idiot, Be an Advocate”. This is to be a guide for agents who want what we want: a successful business built on referrals earned through education, advocacy, and negotiation. We hope to mix in some fun stories and nerdy stats…something for everyone.
If this goes the way most things do, the end result will likely look quite a bit different than we imagine it now; but that’s ok with us. Hope it’s ok with you!