A Buyer Lead arrives in your inbox. The potential buyer asks if you could please send them properties. When you ask them the price range of the property they are looking for, they say between $500-$600,000. Your eyes light up as this is a great potential commission to earn on that selling price.
Once you send them the properties for their consideration, they pick several and ask if you can show them right away. You ask them if they are prequalified for a mortgage, and they say they are paying CASH. Do you keep moving forward, or ask, “Show Me the Money” in the form of a letter from their financial institution?
Yes, you may have heard what you should do a million times, yet every day real estate agents keep making exceptions instead of making good business judgements.
Here are four recent examples from frustrated real estate agents that could have been avoided:
Mistake #1: Taking buyers to see property when they are not Pre-qualified or Pre-approved yet.
Real Life Example: A buyer’s agent took out a couple interested in seeing a $10 million dollar property on the market. The Buyer was big in the entertainment business and boasted about working with many of the famous musicians we know of today.
Did the agent ask to see whether he was pre-qualified or had the funds to buy a home at this price? No. They were thinking that no one would go look at a $10 million dollar home and not be able to afford it.
Turns out that the Buyer did make an offer on the property. After the offer was made and the lender checked his financials, there was no way that this buyer could get approved for a loan at the current time.
Solution: Work with a lender to speak with your Buyers. Never take a Buyer out that is not pre-qualified or pre-approved. Lean towards the pre-approved, which shows more of a commitment and is a better tool when you want an offer to be accepted by the Seller.
Mistake #2: Taking buyers to see properties in a price range they don’t want to spend.
Real Life Example: Buyer’s Agent takes out a couple to see properties that are valued around $200,000. It is currently a Sellers’ market in their area. The Buyers make an offer for $150,000, which gets turned down. Then they go see another property and make another low offer, which also gets turned down.
The buyers had just sold their home and did have the funds to buy in cash at the listed prices. Their reason for making low offers was that was there was a limit to what they wanted to spend.
Solution: Make sure you know what the Buyers really want to spend before you take them out to view properties. Even in a Buyer’s market, most Sellers will not go down $50,000 unless the listing is way overpriced, and the Seller gets realistic or is highly motivated. Sit down with them before you go out and spend time making offers that will not be accepted.
Mistake #3: Taking loyalty for granted and not getting a Buyer’s agreement.
This is one of the biggest mistakes agents spoke about when asked.
Real Life Example 1: An agent was working with a couple showing them properties with the promise that when she found them a new home, they would list their property for sale with her. She drove them around for months and finally found them a property that they loved. Then she never heard back from them after reaching out to them numerous times. They ended up buying the property she showed them with a “friend” of theirs that has their real estate license. This couple also listed their home for sale with their friend.
The agent thought that since she found them the property that they loved that she was procuring cause and would be entitled to the commission. It turns out that that unless she has an agreement with the Buyers among other stipulations as defined through NAR, she was not considered procuring cause.
Real Life Example 2: Jennifer made showing appointments to fit her Buyers schedule. The Buyers expected her to be available to them at a moment’s notice to see a property. She had a family and a life and was not available 24 hours a day. The Buyers were working with many agents, which Jennifer did not know. The Buyers were also calling the Listing Agent when doing a home search on their own thinking they would get a better deal. When the Buyers purchased a home with another agent, she felt devastated since she had put so much time and energy working with them.
Solution: Have the Buyers sign a Buyer Broker Agreement or at the very least, sign an agreement for each property that you take them to see. Your time is valuable as well as your expertise. If someone does not value your time, then move on. If you use Form Simplicity, review the library of blank forms to see the contracts and agreements your association, board or brokerage has made available to protect all parties.
Mistake #4: Not taking precautions to ensure your safety.
Real Life Example: Sue gets a call and retrieves the message a few minutes later. It is from a gentleman who found her online through her website. He was interested in seeing penthouse homes in a neighborhood she specializes in. He wanted to go out the next day. Seems legitimage, right?
He told her where he currently lived. Sue thought she was taking the appropriate precautions by looking up his property through the tax appraiser website along with the MLS. She checked to confirm that he did indeed own the property, for how long, as well as the price paid, and current value.
He said he needed a building that allowed him enough parking spaces for his 3 cars. She carefully researched the information, called each listing agent, and then made appointments to see the penthouse condos.
Sue met him at the first property and was going to drive to the second property when he suddenly got into her car. He said that he walked to the first property she showed him, and that they could go together to the next property. She was a bit surprised as he owns 3 cars and lives over a mile away. That should have been alarm #1.
Then the buyer takes off his face mask, and this is during the COVID pandemic. She asks him to please put his mask back on, and he refuses to, saying that he does not have the virus. That should have been alarm #2.
Sue takes the Buyer to see the next property. When done, she drives the Buyer to the entrance of his condo building. He asks her if she wants to come up to see it since it is highly upgraded and she may be selling it when he finds a new place. She says no. Then he asked her if he could kiss her goodnight. No more alarms needed.
Stalker or Buyer?
Was this guy really interested in buying a property or did he see her photo on the internet and view it as an opportunity to meet her? You never know these days what is in people’s minds.
Caution: Please do not go and show any property or meet anyone at a property that you have not met in your office, and who is not pre-qualified or pre-approved first!
Solution: Ask for a copy of their driver’s license and leave a copy with your broker. This applies to everyone that you take out to show property. If you use Form Simplicity, upload documents including drivers licenses and photos so the information is in a safe portal should you or your broker need to access the files.
Make sure someone at all times knows who you are going to meet. In the event something happens. at the very least, there is a paper trail. There are also safety apps that you can have installed on your phone. Consider Safety to be one of your first priorities.
Life is so important and something to be grateful for especially now. Here is to being safe and to working with Buyers who are loyal, honest and Pre-Approved!
Written for Form Simplicity by Janice Zaltman, a Realtor, LEED AP, Marketing Coach and Writer with more than 20 years of experience in the sales, marketing and media fields.