Dear First Time Buyer: We can help but please listen to our advice

By
Real Estate Agent with Alain Pinel BRE 01367196
https://activerain.com/droplet/4cpw

A colleague had a conversation about some shared buyers who are experiencing "teachable moments" as they continue to lose out to higher offers.

My colleague said “Our message to them right now: If everyone really used comparables all the time as a guide for what to offer, prices would be the same today as they were 40 years ago.”

TEACHING MOMENT

It's challenging to teach people anything unless they have a willingness to learn or listen. 

 

FIRST TIME BUYER SKEPTICISM

I am experiencing a similar challenge, trying to provide guidance to first time buyers who rely purely on numbers and statistics, but are somewhat unbelieving when told that certain properties will likely sell for more than list price, or more than recent comps.

In any open market, supply and demand will dictate price. Right now, we have very low inventory of homes for sale and very many homebuyers. (For example, my recent open house had over 150 groups of people go through. We received nearly a dozen offers, with the winning offer at significantly over list price.)

 

WRITE OFFER OVER LIST PRICE

Some buyers are reluctant to listen to their realtors when they are being advised to write a higher offer.

There are numerous articles about, and actual cases where there are bidding wars among buyers. Several publications like Forbes write about “Bidding Wars Are Back: 10 Tips to Win The War for Your Dream Home”. And yet, some buyers actually still think they can get a property by writing an offer for less than list price. 

We try to educate them to focus on actual cash outlay, not the list price.

We want buyers to win so that they can get the home they want. We provide guidance to enable them to write a strong and competitive offer that has a good chance of being accepted. 

 

COMMISSION 

And then, there are some buyers also think that the realtor wants a higher price because they get a higher commission. 

To this day, buyers still think that agents get a 6% commission on a sale. They don’t understand that the commission is split 4 ways:  the listing agent side splits the commission between the agent and the broker; and the buyer agent side splits it the same way.  

 

There is a need for consumer education. We just hope that clients trust their agents to provide that guidance.

 

RELATED POSTS

 

·      Homebuyers: compare cash outlay/monthly outlay, not just list price

·      Why write an offer for over list price on a regular sale? Why? Why not?

·      "Buyer's agent gets paid? Why? I found the place to buy!"

 

·      General public doesn't understand real estate sales commission splits

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Rainmaker
1,958,680
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Yikes, bag that commission split four ways pie slivering. Every market is so so different. When you list, what you sell the sale process is streamlined and less explaining to buyers, sellers, other's wearing the blue and gold R chit chat has to happen.

Feb 25, 2014 09:04 PM #11
Rainmaker
456,391
Shannon Milligan, Richmond VA Real Estate Agent/Associate Broker
RVA Home Team - Richmond, VA
RVA Home Team - Winning with Integrity.

I explain the comps, but use my knowledge to give examples of how a past client didn't listen and when ended up in multiple bid they were crying. (We won that property but probably paid more as if we offered on the day they said they loved it, we wouldn't have had competition)

I also explain how commission works upfront when we sign the buyer's agency agreement. I don't want them getting to the closing table thinking I get the entire amount that is written!

Feb 25, 2014 09:19 PM #12
Rainmaker
103,096
Jim Sinnott
Bedard Realty - North Attleboro, MA
Realtor, GRI Licensed in MA and RI

Sometimes buyers are so intent on "winning" with their low offers that they lose out on the right home for them. Sometimes it takes a few of these losses to convince them to put forth a strong offer in the future.

As for our commissions, Ithink we need to do a better job of explaining how and when we get paid.

 

Feb 25, 2014 09:49 PM #13
Rainmaker
1,384,827
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Pacita, buyers need to be educated as to market conditions so they make realistic offers in a sellers market. I don't think buyers will ever understand how and what an agent gets paid.

Feb 25, 2014 09:54 PM #14
Rainmaker
2,487,555
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

If my client says...I want that house...I get it for them...I just do. That's all I know

Feb 25, 2014 10:03 PM #15
Ambassador
1,207,759
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Good stuff here!  Every first time home buyer should read this.  Thanks for sharing!        

Feb 25, 2014 10:09 PM #16
Ambassador
779,827
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

I allow one "teachable" offer per buyer. After that, they either listen, or find someone else to waste time with.

Feb 25, 2014 11:18 PM #17
Ambassador
2,568,254
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

All buyers want the most for the least and it's our job to teach them that we can only get the best we can for them for their particular abilities.

Feb 25, 2014 11:22 PM #18
Rainmaker
548,367
Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

Pacita, that was really good, thanks.

Eve

Feb 25, 2014 11:35 PM #19
Rainer
154,163
Deb Espinoza
Stage Presence Homes, San Diego Real Estate - Ramona, CA
GRI, Broker, SRS,ABR ePro, SFR, CNE

and sometimes it takes a buyer 'trying' a lowball a time or two before they believe your advice! LOL

Feb 25, 2014 11:41 PM #20
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

For first-time home buyers listening to their agent's advice is crucial to whether or not they will buy a home. 

Feb 26, 2014 01:06 AM #21
Ambassador
712,044
Karen Crowson
Coldwell Banker Residential Brokerage - Rancho Bernardo, CA
Your Agent for Change

The days of getting a 'deal' are behind us, unless we redefine 'deal'. Getting a home you can enjoy for many years at price you can afford is a good thing. We shouldn't undervalue that aspect because the low price market is gone. Some of these buyers are the ones who sat on the sidelines waiting for things to bottom out. 

Feb 26, 2014 01:06 AM #22
Rainer
15,862
Bob Cosby
One Source Realty - Shaw AFB, SC

Most of the time it's because they are watching the TV shows and in Sumter SC we are starting to see full price offers again. Try to find a home for someone that bought 30 years ago. They do not like to see all the paper work it takes today

Feb 26, 2014 01:19 AM #23
Rainmaker
3,221,084
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

One thing I've learned after decades of doing this and trying to always give my clients the best advice possible, is that in the end some will iisten and some won't. Some only start listening once they've run into a problem because they didn't listen to me in the first place. It's the old... you can lead that horse to water, but you can't make it drink! All we can do is keep trying.

Feb 26, 2014 01:36 AM #24
Rainer
265,764
Richard Arnold
Keller Williams Realty East Valley - Tempe, AZ
Realtor - Tempe, Chandler, Mesa, Gilbert, Phoenix

When a client wants to give a lowball offer, I ask them why they want someone ELSE to live in THEIR house?  

People love to say they want a "deal".  If their profession is trading in investments, I can see how making "deals" all the time could be attractive.

I ask them, what's more important, getting the house you want, or getting a "deal" you can tell a story about over a barbecue?

Feb 26, 2014 02:34 AM #25
Rainmaker
131,486
Shelley Rowton
Move To Realty - Austin, TX
ABR, RSPS - (512) 507-5779 MoveToRealty of Austin

Great points!  I still see people trying to get a "deal" here in Austin, which is carrying less than 2 months of inventory.  We don't get paid as much as the public thinks, but we DO get paid to give advice.  Now if only, they would take it!

Feb 26, 2014 02:40 AM #26
Rainmaker
657,672
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

The world is ever changing. Nice to see a first time buyer be successful in their dream home purchase.

Feb 26, 2014 07:59 AM #27
Rainer
103,157
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX

It can be frustrating when buyers don't heed the price advice of their agent. Honesty should be the foundation of any relationship.  Buyers need to trust their agent is working in their best interest. 

Feb 26, 2014 02:59 PM #28
Rainer
52,166
John Jonas
ReplaceMyself - Virtual Assistants - Highland, UT
John Jonas

It's very important to establish trust with the buyers and let them know that your advise is something that would benefit them. Some people just don't listen though.

Mar 03, 2014 02:40 PM #29
Rainmaker
264,191
Dan Edwards 425-276-7008
Keller Williams Realty - Bellevue - Bellevue, WA

A good read for first time buyers.

Sep 05, 2014 08:49 AM #30
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Rainmaker
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Pacita Dimacali

Alameda/Contra Costa Counties CA
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