I used to love watching the opening segment of a particular TV show about first-time buyers. I can’t for the life of me remember the name of it.
It opened every episode with the same agent, but a new buying couple each week. The agent had asked them which neighborhood they had chosen and then takes them on a walking tour of it.
As they pass homes for sale, she casually asks the couple to take a stab at guessing the list price.
As many times as I watched that show, I saw not one couple get anywhere near the list price and all of them underestimated it.
You no doubt deal with this particular misconception daily in your real estate biz. Buyers who long to live in a certain neighborhood or have their hearts set on a certain home style or size have huge expectations about you and the process.
The time for them to be set straight is before they look at homes. If that doesn’t work, drastic measures might, such as a showing them (during the consultation) a stack of MLS listings of homes they can afford.
But delusions about how far their FHA loan (with a 580-credit score) will take them aren’t the only real estate buyer expectations they have.
Are you helping feed into their real estate buyer expectations?
Despite the rhetoric from the housing industry and individual agents, now is NOT always “a great time to buy a home!”
We’re not saying you should enthusiastically advertise a crappy real estate market, but there is a middle ground in there somewhere.
You, as your buyers’ trusted advisor, are expected to give your clients an accurate picture of what they’re up against in the current market. It’s your job to help manage real estate buyer expectations.
Then, let them in your plan on how you and they will handle whatever comes their way.
Gently shoot down those “we need a circular driveway in front of our mega-mansion” wishes of the first-time buyer who can barely qualify for a mortgage.
Unless, of course, you love driving aimlessly around town, weekend after weekend, because their delusions don’t (and won’t) match reality.
The seller ain’t your daddy
You’ve no doubt experienced the homebuyers who insist on submitting a lowball offer and then ask for concession after concession. Not only are these offers insulting to some homeowners, they’ve just about said “aloha” to anything else they hope to get from the seller.
Let your buying clients know that, unless the sellers are desperate, they’re going to fight for every penny of their money just as hard as they are willing to fight to get a share of it.
You know what to do here, but for newbies: before you submit a lowball offer, run the comps and then share them with your buyers, explaining what the numbers mean.
If the home isn’t overpriced and, depending on the market, they may just need to strike a compromise between requesting concessions or submitting a lower offer. Again, we all know that neither may be acceptable to some sellers and utter insanity in some markets.
You can’t afford move-in ready in that price range
One of the things I remember most vividly about my daughter’s childhood was taking her with me when I was house hunting. We’d drive through neighborhoods looking at the exteriors of homes with for sale signs.
At one point, from the back seat (in her little, tiny voice), I heard her sigh and say “For sale, for sale – isn’t there anything for gives?”
That pretty much sums up real estate buyer expectations. The old “champagne taste and a beer pocketbook” mentality.
Many would never walk onto the showroom floor of the local Mercedes dealership and offer to pay half price for the 2019 S560 when the only Mercedes they can afford is of the, really old, high-mileage pre-owned variety.
Yet they think nothing of insisting on a raft of amenities in a home that is “move-in ready.” Sure, we’re all guilty of longing for instant gratification, but nobody is going to sell their turnkey, $350,000 market-value home for $250,000.
“It’s sort of the scourge of HGTV – [buyers] think that move-in ready means that it’s going to be completely to [their] taste, and fixer-upper means just change around some carpet, maybe some paint. And that’s not the case at all,” District of Columbia Redfin agent Dan Galloway tells USNews.com.
These clients require that unpleasant conversation wherein you explain that they are not going to get “flawless” at starter-home prices.
Surprisingly, you’ll avoid this whole mess if you’re working with Millennials. A recent Clever Real Estate study finds that nearly 70 percent of our youngest buyers “would put an offer on a home in need of major repairs.”
If your clients are in one of the older generations, prepare to have “those” conversations with them to help manage their real estate buyer expectations and avoid disappointment.
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