1. Discuss how agents get paid and hire a great agent.
The elephant in the room needs to be discussed: the lawsuits. Buyers have heard horror stories on the news, and it’s up to us as real estate professionals to clearly and concisely explain how buyer agents are compensated. Remuneration will vary from state to state and brokerage to brokerage, so be sure to check with your broker for the details. The point is to have the conversation up front with buyers.
Buyers should always hire a real estate agent to represent them. During the initial buyer consultation, you can explain the value you provide to buyers. Lead these consults by educating them on the home-buying process, the current market conditions, the money they’ll need (liquid and ready-to-go) for deposits, and how you’ll help guide them through the entire process. Make it about them and their needs, with you as their advocate.
2. Make a list of must-haves and do-not-wants.
I used to play a fun game with my buyer clients. I gave them a piece of paper and a pen. The instructions were simple: write down five must-have items in your new home and five things you absolutely do not want. For couples, I asked them to write their lists independently of each other (no cheating!).
The clarity that comes from this basic exercise is powerful. It gives buyers the space to prioritize their wish lists and deal breakers, knowing that any property within budget will unlikely fit ALL of their criteria. For single buyers, it’s a helpful activity. For couples, it’s a vital component of the process, as it allows them to compromise where needed and get on the same page before going out to view homes.
3. Meet with a financial advisor.
Before meeting with a mortgage lender, buyers should have a clear picture of their finances. In fact, the first question any good lender will ask is: “What’s your total monthly budget for housing?” Meeting with a financial advisor is the key to buyers being able to answer that question and help them avoid overspending. When it comes time to make an offer, buyers will feel much more confident knowing their maximum budget.
4. Get pre-approved with a local lender.
Yes, many buyers will hop online and get a generic pre-approval letter. While some of those letters are legitimate, there are many benefits of buyers working with a local lender (preferably one you’ve worked with before and have a professional relationship with already). Offers are more likely to be accepted when the buyer’s agent can assure the listing agent that the lender has successfully closed other deals with them before.
Many lenders will even be proactive and call the listing agent when the offer is submitted to “sell” the buyer and their qualifications. Last but not least, when things go wrong — and something usually goes wrong at some point — it’s in the buyer’s best interest to have a lender on call who’s easily accessible. There’s nothing more frustrating for agents or buyers than dealing with a 1-800 number when there’s a financing issue and the commitment date is looming.
5. Drive neighborhoods at different times of day.
Buyers need to get a sense of the noise, feeling of safety, and overall vibe of neighborhoods they’re considering. Driving around in morning rush hour traffic and at night is one of the best ways to get a true sense of the area.
6. Plan for lifestyle.
Each buyer will have their own lifestyle wants and needs, in addition to wants and needs for the property itself. For some buyers, local public school district ratings are a key factor in where they decide to look. For others, it’s proximity to restaurants, shopping, yoga classes, libraries, grocery stores, hospitals, etc. Ask buyers: “Do you commute to the office? If so, where is your office located, and what is the maximum commute time you’d tolerate?” These questions will help you narrow their search and focus on the best areas for each individual buyer.
This one can be hit or miss, but it never hurts to advise buyers to join the community Facebook groups for the towns they’re considering. There are typically groups for garage sales, individual neighborhoods, groups just for parents, etc. Buyers can learn a lot simply from reading the posts and comments in these groups.
8. Stick to the budget.
Buyers have now met with a financial advisor and a trusted lender and are armed with a definitive budget. Great! However, after taking a look at the properties within their budgets, some buyers are tempted to toss the budget out the window entirely. It’s never advisable to view homes above the budget unless you simply want to educate your buyers about what homes are selling for. Even that is a risky game.
Unfortunately, this is how I’ve seen it play out: buyers aren’t happy with the quality or size of the properties in their budget, so they start looking at homes above their price range. They fall in love with one and want to make an offer. Yet they’ll be unable to because they aren’t pre-approved for that amount. Subsequently, they’ll compare every other home you show them to the one they “lost,” and they’ll feel discouraged. Not ideal. Instead, draw a firm boundary with buyers. Explain that sticking to the budget is in their best interest. Should they choose to increase their budget, that’s a conversation they need to have with both their financial advisor and their lender.
9. Think long-term.
When I meet with a new buyer, one of my first questions is: How long do you plan to occupy the property? If they say it’s their forever home, great! They will no doubt build plenty of equity over the next few decades.
If they say they’ll only be there for a few years, there are more questions to ask. What’s their plan when they move on — will they sell the property or rent it out? If they plan to rent it out, you will need to keep that in mind when showing them homes. Some properties wouldn’t make sense to rent out, and some would not even be allowed to be rentals (certain condo associations prohibit it or have a limit on the percentage of rentals in the building).
10. Consider how the neighborhood impacts buyers’ health.
Encourage buyers to research aspects of the neighborhood that may impact their health, such as walkability. If buyers like to walk or jog, sidewalks or trails could be an important factor in their home-buying decision. Other factors buyers may want to consider are any climate hazards (volcanos, tsunamis, earthquakes), flood zones (which also have financial implications, as buyers would need to purchase flood insurance), or whether smoking is permitted (applies more to condos than single-family homes).
11. Call the police.
As agents, we are not allowed to give opinions on safety, yet as we all have experienced, most buyers will ask, “Is this neighborhood safe?” The best response is to let them know that feeling safe is entirely subjective. It depends on many deeply personal factors, and for many people, it’s simply a gut feeling. Driving the neighborhood (and walking around) is the best way for buyers to gauge their comfort level.
For data on crime and actual statistics, encourage buyers to call the local police department and ask about crime in the neighborhood. How many calls do they typically get? Are they typically violent crimes or cats in trees?
12. Check the national sex offender registry.
Buyers can and should look up any property they’re considering making an offer on in the national sex offender registry. Be very careful not to check it for them! Always be the source of the source. Doing so will limit your liability should the information provided be incorrect.
13. Talk to the neighbors.
This is my favorite type of leverage with buyers. Neighbors can provide valuable, first-hand insight into the area without being bound by legal or professional standards. For example, they are allowed to tell buyers whether or not they feel safe on the street. Whenever you are showing a property or meeting a buyer at an open house, be proactive in looking for neighbors walking by and introducing yourself and your buyers to them. If you’re friendly and approachable, most people will happily chat for a few minutes.
14. Bar hop. No, really!
Bartenders seem to know all the local gossip. Why not tap into that resource? Encourage your buyers to stick around after a day of showings, visit one or two of the local bars or restaurants, and strike up a conversation with the bartender. Teach them to ask the same questions they would ask a neighbor. Why do they enjoy living there? What unique factors make that area special?
15. Visit open houses.
Open houses are another amazing tool for leveraging your time. Send buyers to open houses armed with your business card, and let them know that if they want to make an offer, you will go check out the house beforehand. Doing so will save you a lot of time and help buyers move faster through the process of eliminating homes to find the right one for them.
Some buyers might feel uncomfortable signing in, but once you explain that all they need to do is tell the agent hosting the open house that they are already working with a buyer’s agent, all the follow-up calls will come to you, not them.
16. Make an offer when you find a property that meets 80% of the buyer’s needs.
No property is perfect. Refer back to the notes you took during the buyer consult, and when a property comes on the market that meets at least four of the buyer’s five must-have items, it’s time to make an offer. Encourage buyers to be decisive so they do not miss out on the best home for them. Notice I did not say perfect; I said best. That means it meets most of their criteria while remaining in their budget.
17. Be aggressive in your negotiation strategy.
Buyers should enter negotiations with one of two mindsets, depending on days on market and whether there are other offers in hand. Either “let’s get the lowest price possible” or “let’s win the bidding war.” These are two completely different offer strategies. Explaining both of these to the buyers and setting their expectations around which one is a more likely scenario in the current market will prepare them to be aggressive when it’s time to write an offer.
Escalation clauses are a helpful tool when there are multiple offers. They help prevent buyers from overpaying unnecessarily. Essentially, it’s a clause in the offer stating the buyers will pay a certain amount over and above the next highest offer, up to an exact price ceiling — the maximum the buyer is willing to pay for the property. Of course, check with your broker about the exact language to use, but I have won many bidding wars for my buyers using escalation clauses.
18. Do not skip the inspection.
Never advise a buyer to skip their inspection, even if it means they lose to a cash buyer. Even new construction properties have flaws, and buyers need a complete picture of the property they’re buying. If a buyer insists on waiving their inspection, get it in writing.
19. Communication is key.
Keep ahead of deadlines for your buyers and keep the lines of communication open. A weekly check-in is a good standard of practice, even if there is no news to report. Encourage buyers to respond in a timely fashion, and explain to them how important it is to stay ahead of deadlines and lock in extensions as needed.
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