Are you open for business? Are you sure?

OK I understand both side.  But Sunday I got a call on one of my listing, not to the 800 number but to me.   So I talked and told them I would have one of my buyers agents give them a call in a few minutes and set an appointment.  She did and showed them the house the next day, but of course they didn't like so they looked up some more homes and headed to see them in the same neighborhood.  Found one they liked and have since decided to make an offer.  Guess what, his college buddy just got his real estate license and is going to make the offer for them. Now my buyers agent should of had them sign an agreement once they decided to look more,  but you think we are connected and they will do business with me?  But now this is up in the air,  the wife if hot, she wants to work with us,  husband wants to use his buddy.  We offered a 25% referral fee to no avail.   So now we might or might not get this deal.  Our state is who has the buyers agreement has the deal. 

so.............

Everyone is different and you should treat it that way.  Your post show polar opposites of what really happens, but...

A few thoughts on your post.

1. If you have no business coming in, you'll meet with ANYONE.  You'll get a few that are great and you'll get some that aren't.  Requiring a buyer agreement is simply professional.  You don't get your car worked on without signing something, you don't get your teeth cleaned... ect.  This decision to purchase is a bigger one than just fixing your car.  A consultation is usually in order for all these professions, why should ours be any different.  -- do you just meet anyone that wants to see a home?  A brokerage agreement is your opportunity to show people how professional you are and how you handle contracts and negotiations.  It's great that you are likable, and we all know that people won't use you because of your SKILL, but it's nice to show how skillful you are upfront.
   
2. On Pre-Qualification - I wouldn't require a letter, but you've got to do your due diligence.  If they aren't answering the questions the right way, your wasting your time, their time and the seller's and the listing agent's time. You can do with what you want with your time.  The client may want to look at homes.  The listing agent may be a competitor and you can "write" that one off.  But the sellers...  You're putting people out of their homes and getting their hopes up for nothing, because...
   
3. It's weak.  I'm sorry, but if you're too weak to protect your time then don't be surprised if you're time is also not respected.
   

It all comes down to your "pre-qual" phone call though.   If you can establish a decent rapport with them and they answer all the right questions then it's your call.  I'd disagree with you still, but I wouldn't be real upset about it.  If this was a broad stroke, "I don't believe in agreement" post, then ... Yes, it's wrong.         

While I rarely ask for  a buyer brokerage signed at the initial meeting, I do require a prequal for 2 reasons:

1.  80% of the calls I get from ready and willing buyers are not able

2.  I want some kind of research done on them before I trust my safety meeting a stranger out and about.  Will a pre-qual stop an attack?  probably not but I wouldn't think a criminal would go to that extent to get an agent out alone.

I get the bb agreement signed as we write a contract.

If you aren't able to provide a prequal then I am sorry, I am unable to find time in my schedule to meet with you

Nope ya ain't getting me to agree. Pushy is one thing, but I've learned that if they don't answer the right questions with the right answers we aren't going anywhere. Preapproval is mandatory - why waste your time. In fact if you pressed those buyers they already knew that & would tell you so.  Too many hours wasted I wished I'd had back to bring back the good 'ole days which were not "good" just for this reason. Did you see the recent post where buyers called the listing agent to show a house & when he got there they said they had no intention of moving, they just didn't have anything to do for the afternoon! He kicked them out of the house & went back home to his family - I side with him.

Absolutley correct.  We have to spend some time and genuinly care about our clients.  If we get this message across then no paperwork is needed to get them to be "your clients".

Cheers.

We are having some serious conversations in my office about this subject. 3 agents this week have spent time with clients only to find they are not qualified or have to sell a home first. In talking with them (agents) I'm finding that they never asked some crucial questions before putting them in their car and hauling them around. I would like to avoid wasting so much time.

People in my office take different sides of this issue.  Some automatically insist on the prequal letter and a buyer agreement, while others are horrified at the idea.  It is a good idea to get buyers qualified when they are agreeable to it, if for no other reason than the fact that then they know what their budget actually is, rather than what they guess it is (many folks overestimate what they can buy).  As for a buyer agreement, it sounds good, but it does make many people feel like you are somehow trying to trap them into doing something they don't want to do, and holding them hostage.  It may be mostly in how you present it, but I would approach these issues very gingerly.

I feel it's incredibly important to ask if the customer has had themselves preapproved and for what amount.  It's INTEGRAL to the process.  Somehow when I ask, it is not an imposition, but positioned and perceived as a necessity. 

ALSO, I AM WORKING ON GETTING ALL BUYERS TO SIGN AN EXCLUSIVE BUYERS AGREEMENT....THAT IS SO IMPERATIVE!!!! 

Drive around for months all over God's green (and not so green) earth only to lose out on a sale over a buyer's idiosyncracy and then argue the point with me again.

BUYERS AGREEMENTS ARE THE NEXT WAVE.  RESPECT YOUR TIME...PUT IT IN A CONTRACT... WTH ARE YOU DOING OTHERWISE????

I have never been burned because I did not ask for these documents .. You are so right you have to take your chances and let your questions and conversation with that buyer find whether they can buy a home or not.  Talk to them and learn from there.  Demanding paper is insulting and could cost you future business that would have came through them.

Stan Stepak

Realty One -  Avon Lake Ohio

I agree with Jessica Horton 's post. I work primarily by referral. I have no problems getting a buyer to sign a buyers brokerage agreement. Of course I don't say, Hi my name is Sam. Here, sign this. You do need to know how to approch people and you must establish at least a good initial relationship. But since it's a referral, you already have your foot in the door. Sit down and talk with them. Find out about their needs and wants. Ask them what questions they have about you? After they have told you their wants and needs, had a chance to ask questions about you, then you just say, Afrter talking with you today, I feel that I can help you and would like to work with you. So if you don't have any more questions, are you ready to get started? If they say say, then your in. Explain the form and your off. No big deal!!!!!

Of course, the next questions is, How do you plan on paying for the home? Will you be paying cash or will you need a mortgage? If they say they need a mortgage, then ask them if they have been pre-qualified. If no, then you say that the first thing we need to do is get you pre-qualified so I'm not waisting your time showing you property out of your price range. Do you need a referral to a good lender? Again, no big deal.

How can you do a good job and provide the best service if you don't have clear picture of what you have to work with? A buyers agreement doesn't just protect you, IT PROTECTS THEM!!!! It clearly spells out your obligation and responsibility to them. If you don't get a buyers agreement and a pre-qualification, your doing your clients a huge disservice.

Don't feel comfortable asking them to sign? Maybe it's because you don't really know what the form says? Here's an idea. Study it. And then get someone to role play with you until you are comfortable.

Really, guys... it's no big deal. Be a professional.

Hi Kelli,

While I agree that we can't afford to scare off ready and willing buyers, I think it's in the buyer's best interest to ensure that the process is followed - because some buyers might not have any idea about where to begin with the pre-qualification.

Although I'm not strict about it (and I should be), I like to propose this approach when working with a new buyer:  1. Meet at the office to discuss the buying process and answer any general questions that they might have - if not the office, then we meet at the first house spend a little extra time discussing the overall buying process.  2. Ask if they are planning to pay cash or use a mortgage - if it's a mortgage, as a service of mine, I connect them with a mortgage lender, "who I trust," to make sure that they are getting the best rate/ program available - this connection is made with the buyer's permission after our first meeting.  3. Visit property to get an idea of what they like / dislike and determine if the buyer is a client who I would like to work with.  In total, we see 2 or 3 properties, get to know each other, and address the pre-qualification question.

I encourage them to ask my lender any question that they have about the mortgage business.  I have him explain the closing costs and try to make it as much of a learning process as possible.  This way it's not a demand, it's a value add service.  On our 2^nd meeting, we focus on properties that fit their budget and search criteria.

Best regards,
Mike

I continue to watch the back and forth on this particular post - and in response I have posted a blog asking  agents share how they are working within the buyer agency laws of their State. Business is harder and harder - many of the posts here reflect a notion that professionally establishing your working relationship with a potential buyer will scare them off. The contrary is true. So if any of you are interested in sharing your methods please go to my blog post on Being a professional agent

Perhaps through educating ourselves and our clients we can actually help our industry.

I'm torn on this one as I just lost my first buyer to a new home purchase through the sellers agent and I have to wonder if I would have been a little more thorough in my discussions with them early on, they may have signed with me and I would have been submitting the offer for them...but on the other hand, I also believe that maybe this deal just wasn't meant for me and I should learn from it and be better equipped down the road. Thanks

I don't completely agree with format of the current Exclusive Buyer Brokerage agreement used in Alberta, but it has some good fundamentals.  I will usually bring it up with clients I don't know well if I get a feeling that their loyalty may already be elsewhere. It must absolutely be done tactfully though and not "demanded".

Pre-qualification is mandatory for me. I wouldn't want any of my sellers being kicked out for a showing only to later find out that the potentials buyers couldn't get mortgage approval. I pay that same courtesy back to my fellow colleagues as well. Most smart, dilligent and "ready to buy" clients have already done this long before they contact me anyways.  I always say to potential clients "I don't want you to fall in love with something you might not be able to have, so let's find out our price range and look within it." Sometimes I lose a client, but it is usually because they went for mortgage appoval and couldn't get it. The one's that are serious call back and we start looking.

In my opinion, prequalification is not about securing a paycheck... it's about respecting a seller's rights and feelings and educating our buyers about the proper steps necessary to buy a house.

Good post!

 I use the Buyer's Agency as a tool to inform my Buyers, and to guage their level of commitment to working with me.  In all likelihood, if someone signed with me and then bought with another agent I would not pursue the paycheck--for me, that is not the point. 

If I don't explain to Buyers that this agreement commits me to working on their behalf, then I'm not giving them assurance that I take them seriously.  I'm also not giving them the opportunity to treat me well.

I don't think that using a Buyers Agreement is in any way rude or harmful to clients.  When we talk about the agreement, I let them know that at any time prior to purchasing a home, if they feel that we're not a good fit to work together, they can let me --or my broker--know that they want to tear it up, and we'll tear it up right away!  On to the next one!

We use a listing agreement to legally secure the listing.  I see the Buyer's agreement as a parallel document.

I get referrals from Buyer's who have worked with me, so using the Buyers' agreement hasn't offended those clients!

Kelli,

Way to go! These days you have to "take your chances" with your clients and hope that they have better things to do with their time than waste yours. Best of luck to you and keep giving your clients the type of service they deserve!

great article...got us thinking but we're with you...people have to be prequalified and know ahead of time what they can afford before they go get their hopes up.

If I were your brother I would have run out of the office where they said I had to use their lender. What is in it for the agent is he getting a kickback?!? I don't trust agents that steer you to a specific mortgage company. I have several lenders that I work with and each has different programs. So I may suggest they contact one of the lenders I know. But I would NEVER force someone to a lender before showing a home. That is just bad form. I hope your brother found the right agent and home.

Betina

Wow! There are a lot of comments on this topic.  Like many of you, I can see it from both points of view.  I personally, am more like Kelli.  I never ask my buyers to sign the agency agreement on the first, second or even the third visit.  Not only do I want to make sure that I develop a relationship with my clients and that they want to work with me, I want to make sure that I want to work for them.  I have never lost a client as a result of not having them sign the agency agreement right away.   I do, however, worry that I don't have them sign it soon enough just to establish that "bond."  I recently got a new client who is moving here from MO.  I did not have them sign an agreement and still haven't.  I've only been out with them twice but I have a ton of correspondence with them.  They went out and looked at open homes one weekend and, surprisingly, they told an agent that they had an agent (me).  That agent called me to let me know they came to her open house.  This just proved my clients loyalty to me and I'm now glad that I haven't been pushy.  There is a happy medium if you can find it.  I think my clients appreciate that there is no pressure.  They are under enough stress as it is trying to sell a home and relocate. Thanks for the blog.

We had a client that called us daily, and wanted to see houses at the drop of a hat, we probably showed her at least 8, and then she started to slip up and talk about houses we had not shown her and when confronted about it, lied several times and then came clean that she was calling whoever was available IMMEDIATELY to show her houses.  I can't tell you how much time we invested in this woman and her family with the phone calls,numerous questions regarding repairs on REO's etc. Once this happened we wanted her to sign with us and she refused.  This is when gas was over $4.00 a gallon.  We should have gone with our gut about her.

Time=Money $$$$$$$

GO WITH YOUR GUT!!!!!