For Agents’ Eyes Only…
Each Thursday we will be posting a blog to help real estate professionals understand how they can better assist their buyers and sellers navigate the current real estate market. Hope you find the information helpful. – The KCM Crew
Over the last few years, we have flown to California many times to help our west coast clients identify the opportunities in a very challenging real estate market. We have come to realize that there are two different types of pilots: those who are smart enough to understand the importance of managing expectations…and those who are not.
Every time we fly over the Rockies, we hit some turbulence. The smart pilot will get on the public address system and alert us before this happens. They will give us the opportunity to return to our seats and buckle in. They may suggest we put our tray tables back to the upright position for the next few minutes. They then let us know that they will inform us when it is again safe to move about the plane. We may get a little nervous at first but, because we have prepared, nothing crazy happens. When we land, we don’t even remember the bouncing around.
Then there is the other type of pilot. The one that doesn’t care enough to alert us to a possible challenge. Same exact bumpy air. However, people are not prepared. Drinks spill, computers drop and perhaps a passenger in the aisle falls. Chaos could ensue. Not because of the bumpy ride but instead because a pilot was not smart enough to manage expectations.
You must manage your clients’ expectations. Here are two examples:
The Appraisal Challenge
In the current lending environment, you are facing appraisal challenges much more often. Are you discussing that with your sellers upfront or are you waiting for the turbulence to catch them off-guard?
Possible talking point at the original listing conversation:
“Mr. & Mrs. Seller, I want to be totally honest with you. I will need to sell your house twice before you can move. Don’t worry, I’m only going to charge one commission (#humor). However, in the current market, I need to sell your home first to a buyer and then to the bank (the appraiser). The second sale (the bank) may be the more difficult one. I promise to work hard for you on both sales and keep you informed each step of the way.”
When the transactions go smoothly (approximately 80% of the time), the seller will be happy you handled everything. You have also set up the opportunity to talk about a possible renegotiation of the price if the appraisal falls short.
The Challenge of Time in a Short Sale
Though short sales are closing much quicker than they have in the past, they still take significantly longer than a traditional transaction. When counseling your buyer, are you managing this expectation up front?
Possible talking point at the original buyer consultation:
“Mr. & Mrs. Buyer, I know you want to see if you can find a short sale and save some money. You’re right. According to the National Association of Realtors, a short sale sells at a 13% discount. You will have equity in your home the day you move in. We call this equity ‘patience equity’ because it will require you to be a little more patient than if you were buying a regularly priced home. I want you to understand that it will take more time and that’s why you will get the discount. Is that okay with you?”
Remind your buyer of this conversation if their patience starts to wear out.
Just like the better pilots make sure their passengers are informed of possible challenges, the better agents also make sure they manage their clients’ expectations.