Are Home Buyers Really Liars? (#006)
Are home buyers really liars, as real estate agents are sometimes fond of saying?
Well... let's talk about that.
In Episode 6 of the Lab Tested Real Estate Podcast we discuss:
This episode comes with two free tools for a more organized and profitable business:
Irene Nash: 00:00 Hey there and welcome to Episode Six of the Lab Tested Real Estate Podcast. Okay, are buyers really liars? Yes you'll hear that, but let's talk about what buyers do that make agents say that. And we're also going to look at what agents are maybe doing or not doing, that kind of sets the stage for buyers to do the wrong thing, essentially. And I'll share a really practical step that you can take, to make sure that your buyers are committed to you and not confused about the home buying process.
Irene Nash: 00:32 Alright. So, one of the things that buyers will do is, they will change areas after they've already said, "Okay. I want to live here, here or here." Well, that actually is pretty legitimate. It's really quite normal for people to figure out after the fact that there's a neighborhood they hadn't considered that would actually work out. Or they don't like one neighborhood that they thought they would, et cetera. So, changing area honestly, kind of understandable. A red flag here would be, if they really are bopping all over the place and don't seem to have any plan for where they want to be. And especially, if it seems like they just like to go look in houses. Real estate is not a recreation, at least it's not for me and not for most professional people. It takes us away from our families, our dogs, our recreation. And do beware of people that just seem like they love to look at houses, but you're getting the feeling that they really aren't that keen on actually buying a house. So, that is a red flag to look out for.
Irene Nash: 01:27 Another thing buyers do is that they say they want or don't want certain features. And then they end up buying a house with exactly the features that they said they didn't want. So, for example, maybe buyers tell you that they want a four-bedroom house. And then end up buying a three-bedroom house because it had a den or an extra finished room or a flex room. Or maybe they said they needed a garage, and then they end up buying a house with a carport. Well, how much of those situations are because we didn't ask enough questions or the right questions? Maybe if we had just asked a little more, we would have realized that three bedrooms plus a den was actually fine for them. Or if we had asked about the garage, we would have found out. "Well actually, no, just covered parking is fine. A carport's going to be okay." Or you might have found out that hey, they don't even want to park a car in that garage. They actually just want a workshop. And so, this other house that doesn't have a garage but it does have a workshop, like a separate shed, that actually works okay, too.
Irene Nash: 02:24 It's really not a questions of the buyers lying, it's a question of us, the agents, asking the questions that really figure out what it is that they need and why they're looking for what they say they're looking for. Another thing that buyers do is that sometimes they delay getting pre-approved and this can be a red flag. Because clearly, if someone's not serious that's one of the things they're going to do. They're going to put off talking to a lender, and there's definitely a limit to how many houses you want to show somebody who has not gotten pre-approved. Some people won't even show one house to someone who's not pre-approved. I honestly don't do that and I've sold to plenty of people that needed a week to get going. But, really the question is, why are they not getting pre-approved? Could it possibly be something else? Are they maybe, intimidated or they don't know any good lenders? Or the whole process scares them because they've heard so many horror stories about people getting bad loans? Or has no one actually explained to them how important it is to be pre-approved while you're shopping for homes? Is it just a question of ignorance or is there something else that really does show that they're not going to be buyers that you want to work with?
Irene Nash: 03:32 Alright, what about buyers that just don't seem as eager as they should be to show up and look at houses that come on market, that fall well within the category of what they want? Well, this can also be a red flag because, this is something I learned a long time ago. People may not say what they want, and they may not know what they want, but they will always do what they want. So, even if someone thinks they want to buy a house and says they want to buy a house. If deep in their heart there is some issue that means they actually don't want to buy a house... Yup, one symptom of that is that they will not show up in a motivated manner to see houses that maybe, they really do need to see right when they come on, in order to have a shot at them.
Irene Nash: 04:16 But, another explanation is, is that it hasn't actually been explained to them, if you're in a fast market, how motivated they need to be to actually show up to look at a house. Some people just don't understand it. If they bought a house 10 years ago, and now the market has changed and it's really fast. Yeah, even if all the newspapers and all the social media and everything is talking about the hot market, they may not realize that they need to be on the ball. And the other thing is, even if you're in a slow market, it only takes one other buyer to snatch that house away from your people, and that's another thing that's really important for them to know.
Irene Nash: 04:52 Alright. This is the painful one. What about agents who buy with another agent after you've spent time with them? Well, couple different scenarios for this as well. One is that they are actually, not very ethical people and they knew they were going to take up some of your time, and then they were just decided they were going to schlep into maybe, going with someone who gave them a big discount or someone who was just more convenient because they walked into an open house and that agent was there. And that just was ... it was just easier to write up the contract with that person. That is just an ethics question and you can't force people to have good ethics, but certainly I totally understand that, that would cause agents to be bitter and say, "Buyers are liars." But, believe it or not, some people really don't understand the agency process. I have a really good friend in real estate, she's a trainer. She's one of the best people for cold calling and on the phone that I've ever even known. I would buy a used donkey from her on a cold call, just because she has that kind of voice and she's just really, really good at what she does.
Irene Nash: 05:53 But, she had buyers that you know, she got along well with. She had shown them quite a few houses. And then, they called her all excited because they had bought this house over the weekend at an open house and, okay. She had never actually explained to them that she wasn't going to get paid if that happened. They were on her side, but they were just uninformed. So believe it or not, as much as it's hard to ... For us to imagine that people may not know that, they may not know that. So this leads to the solution, because my first question to her when she told me about this was, "Hey, did you do a Home Buyer Consultation with these guys?" And she's like, "No! No, I know I really should have but I just didn't." Well, Home Buyer Consultations are the answer, I'm telling you. Yes, they take a little bit of time, but they will save you so much time. And when I say Home Buyer Consultation, I mean a no-obligation consultation where you meet with them and you spend like an hour, going over the entire home buying process. You make sure that they know everything that they need to know, in order to make informed decisions including, how you get paid.
Irene Nash: 07:01 And this believe it or not, will save you a lot of time. Because it saves you a lot of time answering questions out in the field showing houses, stuff that you don't even realize until they ask you, that's holding people up from making a decision because, they should have known it on day one because you should have told them. And instead, you're answering questions on the fly over the course of weeks. And the other thing, is it's going to weed out buyers that you don't want to work with because, they're not going to want to show up for this thing, and it is a really good filtration point that brings your actual client base that you work with down to the people who are truly good prospects.
Irene Nash: 07:36 So, here's a quick overview of what I include in a Home Buyer Consultation. And again: No obligation, meet with clients, doesn't have to be in the office, but it does have to be in a place where you can sit down and actually, hear each other.
New Speaker: 07:50 And I go over number one, the goal, which is always to find a house that works for them. But that will always have ... Also have good resale value when it's their turn to sell. Two, an overview of the steps. So instead of some big miss mash of scary, "I'm not really sure what happens then, and how long does it take? And what's the next step?" It's like, "Oh! Here's a list. First this happens, then this happens, then this happens. And then, here we are at the very end." And then number three, what to look for in a house. And of course, people know when to like a house but sometimes, they don't know when they shouldn't like a house. And I outline all the features that my experience has told me creates functionality and resale value. Because, those are for the most part, the two things that people want. They want to be happy in a house, and they also want ti to have appeal to other people when they go to sell it.
Irene Nash: 08:41 Number four, I go over the state law of buyer ... Or the state law of agency, which includes buyer agency. And I am not talking about a Buyer Representation Agreement. I'm talking about the law in your state that explains the relationship between a buyer's agent and a buyer. In Washington State anyway, it's essentially saying, "here is what you have the right to expect when you work with a buyer's agent". A lot of people don't actually realize that the old days are gone. Because in the old days, in most states and maybe all states, both agents worked for the seller. Even if the person working with a buyer had never met the seller, the way the contracts were written, both agents represented the seller. It was really a bad situation, and that is why a buyer agency has become the norm here in the United States.
Irene Nash: 09:29 It is really important to go over this pamphlet, and I don't go over the entire thing. But I go over the parts that have to do with buyers ... Buyer agency and ethics in a transaction. And then, I give them the pamphlet because obviously, I'm not supposed to pick ... Cherry pick what they're able to read in it. But you also don't want to hear bodies drop to the floor during your presentation because you've read the entire thing. And honestly, people take you much more seriously when you do that. It's like, "Oh! This is an actual profession which has standards and I have rights, and agents have certain obligations." And especially, if you run into people as I have, even recently, who have some person who last bought a house 25 years ago say to them. "Well you know, both agents work for the seller." How are you supposed to know that they think that until you show them the law of agency, and inform them differently?
Irene Nash: 10:23 Okay, number five, I give them tips on how to choose a good mortgage professional, and I explain to them why it's so important to have a pre-approval letter. Number six, I go over how we determine the right price to offer on a house once they've found a great house. Take the mystery out of it, it's not rocket science. It is a skill and it does take a lot of knowledge, but it should be completely understandable to your buyers as you do it with them. Number seven, I summarize what is in the offer, what the different contingencies and I ... Number eight, I explain also, what a contingency is and you know, what it means to them. Number nine, I explain what earnest money is, what a typical percentage is. It usually varies by area but you'll be able to tell them. And I make sure that they know it goes towards the down payment because again, it's just something that we think is obvious that some people don't know. Number 10, I explain what happens after mutual acceptance. So, I actually list it out and then I, just cover it briefly.
Irene Nash: 11:22 Number 11, is what typically happens during the structural inspection. And by the way, I also explain the qualities that I think they should be looking for in an inspection. Number 12, I explain the other reviews, contingencies and I also explain what happens during the appraisal, because a lot of people confuse the appraisal with the inspection. They're two different things, the appraisal is ordered by the lender versus the inspection where you're there with the buyers and the inspector, and it's a completely different process. Number 13, I explain how I help them keep track of everything. I have a timeline worksheet, all of the contingencies in the contract have deadlines. And boy, you don't want to just hand the contract over to people and say, "Well, good luck." And it is really, really important to keep track of deadlines because if you go past a deadline by just one day, you can do ... You can waive the inspection by default. I mean you know, other things can happen that will put your buyer's earnest money at risk.
Irene Nash: 12:17 In fact, I'm going to have a download of a Timeline Transaction Worksheet in Word that you can modify as you wish. So you can go to labtestedrealestate.com/6, just the number 6. That will take you to this podcast and you'll see the options for the download below the post. And then number 14, I explain what escrow is. Here we call the closing agency, escrow, you might call it something else in your area. Just so that they're not hearing terminology that they don't understand. Number 15, I explain when people are going to be signing documents. Is it the day of closing in your area? Is it a couple of days before closing? It's good to give people just a heads up beforehand so they know what to expect. And then optionally, if you know you're going to be running into short sales and bank owned homes in your home search, it's a really good idea to explain what those are, what the differences are between short sales and bank owned homes, and what the pros and cons are in terms of, buying those houses.
Irene Nash: 13:16 And finally, if you are in a really hot market and you know it's really likely that you're going to be in a multiple offer situation. I always cover multiple offers, or at least I have for the last many, many years because we've been in that market. Strategies that we use to make our offers strong in a multiple offer and not just that, but also how to think about multiple offers. Because every now and then you hear someone say, "Well, I don't want to get into a bidding war." But what they're really saying is, "I don't want to overpay for a house." Which, I totally get. And the thing is, you have to take every house on a case-by-case scenario. If the house is priced under market, there's going to be a bidding war even in the slowest market in the world. If the house is priced under market, you can expect more than one offer.
Irene Nash: 13:59 Even in a raging hot market, if you price the house too high, it may only get one offer or no offers. The market is like a machine, and people don't need to be afraid about getting into a multiple offer. Your ace in the hole, your weapon that is your best friend and when you go into a multiple offer, is a correct price evaluation, which is a whole different topic. But as long as you know what the market value of this house pretty closely is, then they don't have to worry about overpaying. They can bid up as much as they want, and not get past that point where they feel, "Okay. After this price, I'd be paying over market and I don't want to"
Irene Nash: 14:39 So, can you see how this is super helpful in terms of, educating your client? Making them feel like they have a really good idea of what to expect in the home buying process. It takes away a lot of fear involved with like, the home inspection, picking an inspector, not sure about getting pre-approved. All these things that you may not realize are holding them up, now they're completely informed. And it really saves you a lot of time because, if you end up working with these clients, you're not answering these questions in dribs and drabs and bits and droplets as you show them houses. Which is A) a really inefficient use of time and, B) completely holds people back from being able to make decisions because they don't know enough.
Irene Nash: 15:23 Alright. I'm going to make this Part One, so it doesn't get super long. And in the next episode, I want to talk about how a friend of mine who's a really good newer agent in Seattle, handles the Home Buyer Consultations with her leads, which are mostly cold leads from the Internet. I'll also talk about some language you can use that makes it really easy to invite people for Home Buyer Consultations. And, we'll go over something that I think it's best to not say when you're talking about Home Buyer Consultations.
Irene Nash: 15:53 Okay. I hope you found this helpful. Be sure to head over to labtestedrealestate.com/6 to get your downloads. And while you're there, click on our Podcast page to subscribe to the podcast. This is Irene Nash saying, thanks for listening.