Client Confidentiality is Not All Reaching

By
Managing Real Estate Broker with Howard Hanna Rand Realty License # 49FA1074963

One of the joys of being a broker-owner is helping my newer agents develop their client base. New agents that get a listing or a buyer in their first few weeks typically have a good outlook for success in my experience, even if that listing doesn't sell or that buyer never closes. One of my agents has a buyer who was referred to him and he's been asking me how to tackle some of the challenges they pose. A few details:

  • They have been looking for a home for over a year. 
  • They want to spend close to $1 million.
  • Their home email account is "not set up yet."
  • They want my agent to make an offer of almost $200,000 less than asking price on a home
  • They do not want to provide an updated pre approval letter
  • They do not want to articulate how much of a down payment they'll make. 
I love million dollar buyers. Who wouldn't? And not everyone finds a home in 6 weeks. But the "no email" things concerns me, especially given the economic strata they claim to be in, and their unwillingness to provide their financial qualifications is an outright deal killer. Their objection to providing a pre approval or down payment information is based on the idea that such details are private and should not matter. They are wrong for two big reasons:
  1. No seller will take their home off the market and put it under contract for 60 days with a mystery buyer.
  2. No seller will take an offer seriously that is not completely and professionally furnished. 
The logic behind point #1 is self evident. Regarding the second point any dope knows that a low offer stands a better chance of being taken seriously if it is presented seriously: proof of funds, a solid pre approval, clear terms, and assurance of being able to perform

Some people will in fact trade a higher price for certainly. Certainty is compelling. Mystery buyers are not compelling, they are an irritant. Your "privacy" ceases to be your privacy if it precludes getting into the bed of business with a stranger. In other words, what you have in the bank absolutely is their business if you are proposing business. Once you are a buyer with an offer, your financials are absolutely the seller's business. 

If you want to do business, confidentiality has limits, and you have to be forthcoming with details that concern the other party, or you never get packing.
 

 

Comments (124)

Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

This is when you teach the agent to tell the prospect/client that they may actually not be the best person to help the prospect/client, and then refer them to someone who is better experienced in handling the laundry list of objections.

Or, explain to the agent that a seasoned agent wouldn't put up with 1/2 the things on the list and could work through the other half with the prospect. Sometimes the person soliciting your services is testing you to see what you are made of.

Guts.

The new agent may just need to learn how to have guts.

Learning that lesson now will serve them well throughout their career.

Feb 24, 2011 11:28 AM
Brenda, Ron, Lee Cunningham & Tara Keator
West USA Realty - Phoenix, AZ
Realtors, Homes for Sale - Phoenix Metro

It doesn't take a year to find a property in this price range in our area.  Maybe experienced agents have dropped them.  Something isn't right.  Making offers $200K less on a milion dollar home is agressive but it depends on how it is priced in the first place.  The agent is going to have to know the down payment if he is going to write a contract anyway so I am not sure why the buyer is trying to be in the slealth mode for his own agent??

Feb 24, 2011 12:03 PM
Sylvie Stuart
Realty One Group Mountain Desert 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagsta

I smell something fishy! Yes, totally agreed, no email in this day and age, and no-preapproval? Why all the secrecy? I would walk away and let them waste someone else's time.

Feb 24, 2011 03:02 PM
Paula Burt
REALTOR , SFR, RECS
Thanks for this post. Very interesting! My experience with this type of buyer was nowhere near the million dollar range, but I had a similar one, on a smaller scale. He just wanted to buy a piece of land on which to build a house. The "vibes" I got from him were what I considered to be dishonest. So I too wrote a blog about it, and also got a huge response from my fellow AR colleagues. If you're interested, you can read it here: http://actvra.in/5Qm. Please keep us updated on how this plays out with your rookie agent.
Feb 24, 2011 03:22 PM
Anonymous
Peter Michelbach

JP -- thanks for a great post, good comments, and please keep us updated -- most of all, and I'm sure you will...don't forget the Newbie agent...he/she will need all your support and all of your guidance on all levels. Good luck!!

Feb 24, 2011 11:29 PM
#109
Jack Fleming
Weichert, Realtors - West Chester, PA

To quote Monty Python "Run away run away."

This is the kind of buyer who will run you ragged and move on to the next realtor.

Feb 25, 2011 01:48 AM
SentriLock Blogger
SentriLock, LLC - Cincinnati, OH

Great post! I'll be tweeting/facebooking this out today!

Feb 25, 2011 01:59 AM
Jennifer Kirby
Kirby Fine Homes - Minneapolis, MN
The Luxury Agent

I work with million dollar clients and if they cannot show proof that they can afford the home, then they don't get to see it. Here in the Twin Cities, to get access to luxury homes, the buyer pretty much has to show that they are pre-approved. Sounds like a couple of looky-loos to me.

Feb 25, 2011 02:07 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Sad to say for this newer agent but these people are not buyers. Actually they are 800K buyers posing as 1M$ buyers based on their offer.  Maybe they should stay in that price range?  No pre-qual or mortgage details - they don't see my car.

Feb 25, 2011 03:25 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Phillip, these buyers aren't likely to be "real".  I would ditch them and focus on serious buyers who are willing to do what it takes to purchase a home.

Feb 25, 2011 05:05 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

There is something not right with this situation.  I suspect they are lookie lous who will never buy or the type that listen to late night infomercials about how to buy and flip property.

Feb 25, 2011 06:39 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

At the first sign of resistance (not often encountered) from a buyer or rentor that they "do not want to disclose" their financial information to me, I'm gone. 

In my greetings package is a financial information sheet that help ME HELP THEM.  Without that, we're just looking at real estate and while I love to do that, I want to do it where it's most beneficial for my business, not window shopping.

 

Feb 25, 2011 09:30 PM
Anonymous
Malcolm Carter

Phil, you are right on the money!  As always.

Feb 26, 2011 03:10 AM
#117
Liane Thomas, Top Listing Agent
Professional Realty Services® - Corona, CA
Bringing you Home!

Phil,

so glad this new agent came to you when he started seeing those red flags. How many of us wasted our time when we were new driving around unqualified leads???

The best advice I ever got from my broker was to learn when to "let go" of a client. 

Feb 26, 2011 06:26 AM
Pete Buckley
Independent Broker/Realtor, North San Diego County CA. - Del Mar, CA
This is an easy one. That Buyer is hiding. I've never met a bona fide buyer or seller who is vague and unwilling to provude to their Broker the tools needed to get the job done. What may seem like walking away from a million dollar buyer is actually, walking towards something that has a chance of being productive. I'd simply tell the buyer that any seller will simply call BS to an offer without approved financing and, there is no "I'm not sure" option when it comes to writing down the down payment. If they balk, walk!
Feb 26, 2011 11:37 AM
Ric Mills
Keller Williams Southern Az - Tucson, AZ
Integrity, Honesty, and Vast Real Estate Knowledge

This calls for a "come to the party conversation".  You want the sellers to to take you seriously, then you need to come to the party.  They are not going to even consider the offer without certain things and one of those things is a recent pre-qualification.  I am a professional and you have hired me(buyer broker agreement) to represent you and guide you.  I do this for a living and take each client and their purchases very seriously.  I need and want your trust on what you need to do.  I need your information and can help get the things you need to do to put in a serious offer on this home.  If you are unwilling to trust me and provide the necessary documentation then I can not submit your offer until it is complete.  So what would you like me to get into negotiatioons on this home for you?  NOW JUST LISTEN, don't get the right answer then they are scamming you and wasting your time and it is time to FIRE this client.

Feb 27, 2011 09:43 AM
Anonymous
Aneta Ivanova
I do not think that is a good idea for new agent to start with all that crap covered under"client confidentiality". The rules are made for reason. I am curious, is this deal come thru?
Feb 27, 2011 11:55 AM
#121
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Many cash buyers are sensitive to showing their financials.  In the past, I have asked buyers to think about how they would feel if they were in the seller's shoes.  If they are serious and qualified buyers, they will usually find a way to verify their financial ability to purchase. 

Feb 27, 2011 04:01 PM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Your reasoning is flawless and those clients are a waste of time.

Feb 28, 2011 03:23 PM
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

All great points indeed.  We are not asking for a business profit and loss statement, or for their entire net worth.  We just need to see an approval letter for 1MM+ and a proof of funds statement from your bank stating you have the down payment on deposit.  If you can't provide it, you're not a serious buyer.

Sep 26, 2011 05:50 AM