Whether you are working with a first-time homebuyer or an experienced homebuyer, it is vitally important for agents to discuss some important points with buyers before going on showings, and especially before offers are considered.
Educating your client will not only save you a tremendous amount of time to maximize search efficiency but also the buyer will appreciate being prepared with the knowledge you have provided them. Here are four ways to educate your client:
1. Buyer’s Budget – The most obvious first step when working with a new homebuyer client is to insist they speak with mortgage lenders/brokers to get pre-approved. But just as important is having the discussion of what the homebuyer’s budget truly is. I always provide my clients with a “net sheet” that estimates all the potential costs, including down payment, closing costs, out-of-pocket costs, etc. I also explain the timeline of what may be due when (i.e. pay earnest and inspection after offer acceptance; insurance and transfer taxes before closing; ALL the many expenses due at closing; moving and utilities; monthly PITI; property taxes and home improvements the first year; etc.). As we all have learned, what a homebuyer is preapproved for does not necessarily reflect what they can afford monthly, and if they have the cash necessary to close a deal.
2. Short Sales and Foreclosures – Especially in the current market, having the conversation on the difference between short sales and foreclosures as well as the pros and cons of the potentially long, riskier process is important to discuss before looking at these listings. Most consumers have heard of the great deals out there on homes that lenders are allowing to sell for low market prices. What they don’t usually realize is the process that comes along with it. For many, it is not something they have the time or stomach for. I explain to my buyer clients the difference between short sales and foreclosures/REO, the waiting and flexibility needed, the risk of having an offer contract denied at almost any stage, the lender’s authority, the distressed and “as is” condition of most of the homes, the potential to bear more closing costs, etc. This market of homes is not beneficial for everyone, so this discussion is important to have upfront.
3. Search Criteria – We all have clients that first come to us with, for example, “I would like a three-bedroom home in the Chicagoland suburbs.” To save everyone from having to comb through 300 listings, the search must be narrowed down. I discuss their current living situation and their goals for the future, what their commute is, schools and attributes of the home. We are blessed to have a sophisticated MLS that can search according to all sorts of criteria – finished basements, master bath, school districts, association fees, square footage, lot size, age of home – the possibilities are endless. I discuss options, setup automated searches on the MLS, forward a few attractive listings I would like their opinion of, and review any listings in detail that they indicate interest in. I also have a rule that when I take clients out on showings, we see no more than five homes at a time. Buyers quickly discover that by the time they see the fifth home, they are tired and the details get harder to keep sorted. Maximize everyone’s time!!
4. Buyer Homework – I always strongly urge my clients to do their homework by researching communities, looking into schools, calling insurers and attorneys, getting the best mortgage rate and terms, speaking to contractors, shopping at home improvement retailers, checking sex offender registries, gauging their work commute, etc. I may have many recommendations and advice but I empower my clients to conduct their own due diligence to make the best decisions for themselves and get information before diving into a particular area or home.
Agents really reflect their worth when they educate their clients. My clients know that I not only am there to see them through a deal, but most importantly as their total real estate resource.