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From
the dawn of time, home sellers have been interviewing potential listing agents
in order to select the right one to market their homes.
They realize that not all agents emerge from the same mold
(the term is used here in the forming/casting sense rather than in the
biological/fungal connotation). They
suspect that each might have a unique bag of tricks and method of operation.
With the recognition that selling one’s home is a major undertaking
with which they have limited familiarity, they make a conscious decision on whom
to employ. Buyer-brokerage exposes
potential buyers to a similar mindset. It will eventually occur
to homebuyers that they too should be making a conscious choice of their
representative in this important quest. As
the buyer-brokerage concept matures, homebuyers will be interviewing (three?)
agents to determine which one will best serve them in the home buying process.
If you have not seen this yet, get ready.
Prepare a presentation similar to but certainly not the same as what you
have been doing for sellers all along. That’s
right, a buyer-brokerage presentation. Try
to address all the things that you can do for a buyer as
his agent and then figure out why you are the best agent around to handle
the job. Those of us who are still
featuring our "dynamite marketing plan" in our listing presentations
should redouble our efforts to be modern, thinking agents: Try not to
over-stress the fact that you will find
a home for the buyer to buy. You
have a lot more to offer. Does all this mean
increased agent versus agent competition for buyers?
You bet it does. In the
event buyers are not yet falling all over themselves to interview you, take a
pro-active approach and offer them the idea, followed closely by your
presentation. Let us next examine how best to approach a
home purchase, which is for most buyers, their biggest financial decision.
We all hope that a home purchase will be as good an investment as homes
have been historically in the long term. We
all imagine the home we select should be a palace made for entertaining with a
pleasing flow. Meanwhile, in addition to a concern with our financial future
and due consideration for our guests, we should remember that the main purpose
of a home is to provide shelter. The home must be a place
to which your buyer will be happy coming home and it must provide the space he
needs in the rooms that are important to him.
We don’t even need to mention the importance of a location that suits
your buyer’s needs and a home that fits his pocketbook.
Although ample consideration will be given later to how to pay for a
home, it will be most valuable for your buyer to have a brief telephone
conversation with a few mortgage loan officers that you recommend.
In little more than five minutes he can get an initial idea of his upper
price limit. While this figure
might need some refinement, it will save a lot of time to have an estimate early
in the game. In addition, you should
provide a quick mortgage qualification estimate for your buyers. Do this as soon as possible; it separates the real estate
agents from the "taxi drivers." Remember
that it is your buyer’s decision whether to buy a home that stretches the
upper limit of his qualification, or to opt for a more modest abode and a more
comfortable monthly payment. The
choice must be considered very carefully: The cost of making a serious mistake
and having to sell the home after a short time, and then buy another, is
frequently 10% to 15% of the home's value. Home ownership was once
considered by some to be the best way to get rich quick, but it is likely that
current thinking in most real estate markets focuses more on the shelter value
of a home. Nevertheless, it is not
immoral to hope for appreciation in the value of one’s home. And concern that a home’s value should not decrease must
also receive due consideration. Compared
with any other investment, a home provides a basic necessity of life, shelter.
Because of this, as well as other factors, a home is a non-liquid asset.
While millions can decide to call their stock broker on some day in
October (your choice of day and year) and have sell orders executed promptly, a
widespread real estate sell-off would take time to accomplish.
These factors, shelter and non-liquidity, assure more reasonableness,
less emotion, less indulgence in "herd instinct" behavior, and hence
less volatility than almost any other form of investment other than United
States Savings Bonds (which have not been totally without question). In addition to the shelter
and non-liquid aspects which lend stability to the real estate market, there are
unique income tax benefits which also provide a foundation for stability: The
deductibility of mortgage interest and real estate tax, and the exclusion of
gains from income taxation for almost all sellers. While these valuable advantages are very real, encourage your
buyer to investigate fully the ifs, ands, and buts by either reviewing the
appropriate Tax Publications or consulting a tax accountant. Of course you knew all of
this! But when we’re just
starting out it’s important to insure we’re on the same page. |
