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Rookie Mistake #1

My first experience with taking on a client without digging deeper and getting an exclusive buyers agreement turned out to be 3 hours of wasted time.

On a nice Saturday evening during dinner, I received a phone call from someone that wanted to look at a house on the market. He was particularly interested in rehabbing a house he drove by and wanted to look further. I immediately got excited but tried to get him to meet me at my office to to meet and get more information from him, however, he was pushy and didn't have time the next couple of days due to other appointments. Thinking that I didn't want to lose a potential client, I went out and showed him the house. This took 1 hour due to looking and discussing how he would rehab the house.

The day following that, I made a follow up call and mentioned that there were other properties in the area that I may be able to show him. We agreed to go and looked at several other houses, but he liked the first one best therefore we went back to see it again. This took almost 2 hours! We talked a bit more, I gave him my game plan and told him that I would send over a buyers agreement to review and sign.

Day three comes around, he asked if I was going to start my plan and start doing the work. I asked if he got a chance to review the buyers agreement, he said he hasn't yet. Then he asked if he was going to be charged anything as a buyer and I assured him that commissions comes from the seller. He said he was going to read it over.

Days later, I never heard from him nor got any phone calls back. I wonder why...

From what I learned from this is:

1. Taking someone to see houses doesn't always guarantee that you'll get that contract. I think that having a buyers agreement are a must in order to make sure everyone is on the same page.

2. Get buyers prequalified on paper...that way they are prepared to go forward.

3. Dinner>showing houses...I was really hungry when I got home :-(

Posted by Johnny Huang, MBA Realtor on 02/12/2008 04:15 PM

Comments (14)

client buying agreements, showing houses, rookie mistake

Post is included in group: Real Estate Rookie

14 Comments on Rookie Mistake #1

Buyer's agency paperwork is key. You learn their real agenda if they won't sign.

02/12/2008 04:27 PM

by Karen Webster...Grand Rapids, MI Realtor (5 Star Real Estate, Grand Rapids MI)

I think we have all done this, and the good thing is you probably will think twice about doing it again. I know I do.

02/12/2008 04:30 PM

by Steve Hirschler, Big Bear Real Estate (Coldwell Banker, Mountain Gallery Realtors)

Johnny,

Signed agreement and lengthy buyer needs analysis BEFORE they get to look. Cements in place what they are looking for and your value to them.

List and SEll (hope dinner was good) Gary @ RentonHomefinder

02/12/2008 04:31 PM

by Gary McNinch Renton WA Real Estate (Keller Williams SES Renton )

Hi Johnny..I've done that do....don't you just want to kick yourself...Before I go out and show a home, I make sure they are prequalified...I ask them if they have talked to a lender, if they say they have, I'll ask for a copy of the letter, if now, I have them call my lender, if they call, I'll go show them the home, if they don't, they weren't serious anyway....

02/12/2008 04:44 PM

by Konnie MAC Northern Virginia Real Estate (Konnie McKee )

Johnny, don't let it get you down. We've all been there and done that. Chalk this one up to experience and a learned lesson. Good luck to you!

02/12/2008 06:42 PM

Buyer agency agreement is key. One of my colleagues absolutely refuses to do any showings unless the potential buyer has signed on with him. However, since I am relatively new to this business, I personally would not look at it as 3 wasted hours. Rather time spent getting out and meeting new people and seeing properties I haven't seen yet. Of course, after a few months, this would get pretty old, LOL!

02/13/2008 02:35 PM

by Paula Hartwick - Arnprior, Ontario Real Estate (Re/Max Town Centre Realty Ltd., Brokerage)

Johnny,

Every "mistake" is a learning experience. Sometimes we need to get burnt before we realize the fire is hot.

All buyers must sign your buyer agency at the table and next step is they get prequalified before you are able to show them homes. You can send them homes to look at after they have signed and before the prequal, but tell them you will not be able to show the homes until you have a letter in hand from a bank in case they want to make an offer.

This is common practice and I have found that anyone who does not want to do either of the above, is not really looking for a house through a Realtor..or maybe they know another Realtor. Either way, it's best not to get involved for everyone's sake.

02/13/2008 06:04 PM

by Karen Hurst ~ Real Estate Broker ~ Warwick ~ Rhode Island (Storm Realty LLC)

In my area it is so hard to get buyers to sign a buyers agency agreement. It would be great if they would. Jessica Cordell

02/14/2008 10:49 AM

by Jessica Cordell (Century 21 Hendershot Realty)

Sometimes that is the price you pay to learn the lesson. I hope you are OK.

02/14/2008 08:29 PM

by Latonia Parks (Keller Williams Realty)

When I looked at this blog, I didn't realize this became a featured post. I feel so honored and want to thank you all for your input and positive feedback.

Sometimes lessons come the hard way via the "school of hard knocks". I think that there's something about that school that makes people work a bit smarter.

02/14/2008 10:37 PM

by Johnny Huang, MBA Realtor (Keller Williams Realty East Bay)

Hello Johnny, we've all probably done that at one time or another. But we learn and we keep learning. Its getting better each day. Thanks for sharing

02/15/2008 06:50 AM

by Sonya Rosser (ERA Buckhead Realty)

Oh yea, and it only took you three (3) hours.

02/15/2008 06:51 AM

by Sonya Rosser (ERA Buckhead Realty)

Jimmy,

Time has taught me that the hardest questions to ask are the most important. In this case a couple of questions could have saved you the aggrevation and allowed you to spend time doing something you wanted to do.

1. Have you been working with another agent?

2. I only work with a signed buyers agreement, can I fax it or email to you now to sign?

3. Do you have an APPROVAL letter from your lender?

Approval Letter Explanation: My opinion from the lending side of things is that most new Real Estate agents are ok with just a prequal letter. I have seen record number of deals falling through from "Prequal" letters. They really are not worth the paper they are written on. And most originators will give them out like FREE trading cards in hopes to get a deal. You will also have a better chance of your contract being accepted with an APPROVAL or COMMITMENT letter. I will tell you this is more work for the lender and a good referral partner will not mind and has systems in place to handle this. It iwll also take a day or two longer to get. Well worth it. Anybody can be pre-approved based on credit and income for a TBD property. Also get yourself a good lendiing realtionship where you can call them and be able to get unapproved buyers approved quickly, even if the buyer ends up not using them, you will have peace of mind.

If you ask these questions you will sort through the "tire kickers" and the true market buyers. You may spend less time in the beginning with buyers, but the time you do spend will actually pay you for your efforts.

My experience tells me that people that are not willing to commit to working with me exclusively will ultimately be a waste of time. I know this sounds a bit harsh , but think about it. These clients also have jobs and perform services and own businesses. Would they expect me to utilize their services without paying them for it? Why is our time any less valuable. It IS NOT part of our job and understanding that alone WILL make you much more successful in this business. You will also find that you are more respected by those that choose to work with you.

Thanks. I hope this helps and good luck with your career in Real Estate. Hope to see you around AR.

02/15/2008 12:25 PM

by Senior Advocate, Reverse Mortgage Info

I recently wrote about losing a referral because I told them I wouldn't show them around unless they got a pre-approval. They got upset and never called again, but I figured if I lost them over something that simple, then they were never really clients or serious about buying anyway. Hopefully a rookie will read this and learn from your mistake!