3 Costly Pitfalls to Avoid When Working with Buyers
1. Not pre-qualifying buyers
This point cannot be stressed enough. Many buyers will swear to you that they have the money for that ocean-front mansion, or that second vacation home. Some will even get offended if you ask them to get pre-qualified for a mortgage. However, until you have an approval from a lender stating that your buyers are pre-approved for a mortgage, you can never be too sure.
Many agents get too excited and “commission-minded” at the first sight or sound of a buyer and they completely neglect this step. As a professional buyers agent, you have to explain to your buyers that this is the first step in the buying process. Not only do you need to know if they have sufficient funds and financing to afford their desired home, but sometimes they may have other financial issues that need to be sorted out before closing. Tell them that it’s a free and easy process, at absolutely no obligation to them.
2. Showing over-budget homes in hopes of a higher commission
When working with buyers it’s easy to lose focus and try to sell the most expensive house available that fits their criteria. After all, the higher the price, the bigger your commission checks. There are 2 big risks that can result from this way of thinking. The most obvious downside is that your buyers will not be able to afford the home since it’s out of their budget. You could lose the sale entirely, because they are likely to blame you for not being able to “make it happen”.
Let’s assume though, that they stick with you and decide to search for a cheaper home. This is where the second threat poses itself. Try as you may, but in most cases, the homes you find simply won’t be as appealing as the previous, more expensive one that your buyers fell in love with. They will tell you that the homes you picked out for them to see simply won’t cut the mustard because they are still heartbroken after the first deal break.
Hopefully, they will come to their senses and buy a home they can afford through you and realize that’s the best they can have for now. In other cases though, they may decide to just wait until a later time when they can afford the heftier price tag of that initial property. This leaves you with a bunch of wasted time, and no commission.
3. Not defining needs vs. wants
It is crucial that before you start sifting through hundreds of listings that you clearly define what your buyers must have in a home, versus what they would like to have. They may say they want to have a swimming pool, a 3 car garage, and a summer kitchen, but in reality they may only be able to afford one of these features in the area they are looking to move into.
If they have 3 kids, and require a 4 bedroom house, you need to prioritize that criteria. If there is a home with a pool and a big garage that’s within their budget, that’s great. If not, you need to play a counselor role and address their disappointment. Explain that the luxuries they desire bring a higher price tag (one they cannot afford), but for less money they are still getting a nice 4 bedroom house in a great neighborhood where the kids can play safely.
After they move in their new home, they will realize how unnecessary those extra features would have been, and will remember to call upon your excellent services as a real estate agent when they need to move again.