I like working with most buyers. First-time homebuyers, empty-nesters, parents looking for a home for their college-aged children. Out of towners, relocating.
It’s pretty clear, at first contact, whether or not the client is going to be a buyer. It really is. I don’t think I’ve ever been surprised at how things worked out.
70 80 percent (whoops, math) of people I work with are truly interested in buying, are easy to work with, and are happy with my services. Some buy within a week or two of our first contact; with most we work together for three to six months.
I’d say 10-15 percent of people I work with are the kicking-tires type, wishing they could buy a home, but not really focused on it. The woman I worked with who wanted to buy a $6 million mansion on Commonwealth Ave is an example of this. I knew and she knew she wouldn’t be buying it. A waste of my time? A little bit. But, I was just as interested in seeing the mansion as she was. And, maybe she’d end up being a real client, in the future.
I’d say 5% of my buyers end up working with someone else, for various reasons. We’re both happy that they end up working with someone else.
Why do I bring this up?
There’s a story in today’s Real Estate Journal about a guy (and his wife) who were looking to buy a home in Boston. They didn’t know the area very well, being that they were relocating from London. They started working with an agent from ZipRealty, and eventually bought a home in Acton, after looking in Carlisle and Lexington.
From the very beginning of the article, I could see trouble.
1) The buyers didn’t know Boston. This wasn’t their fault, of course, and I do work with many relocations. However, most people I work with are looking to live within the city of Boston, so they’ve at least narrowed down their search. Within a day or so of our first meeting, they know which neighborhood they want to live in (mostly based on price). People looking in the suburbs must be a tougher client. I mean, they could look anywhere (or not, depending on their price range), north, south, east (?) or west.
The buyer (also the author of the article) does a good job of educating himself, by doing research online, but I feel as though he wasn’t involved enough in finding a neighborhood or town he liked. There’s no way you can find the right place online, you know? You have to actually visit a town, in person, to find out whether or not it will work for you.
Working with a relocation takes a lot of time and effort, on the part of the agent. You need a good agent, and you need to have a great working relationship. Which brings me to #2.
2) The buyer used a “discount” broker. The buyer signed up with ZipRealty, apparently because ZipRealty offers a rebate on commissions, and the buyer wanted to save a couple bucks. Nothing wrong with that, right?
Well, I don’t think you should get involved with doing anything “unusual” when you are a relocation. It’s too risky. In fact, I think you might want to only use an agent from a large real estate company (or, me). The large firms have lots of agents, are successful in their neighborhoods, and are concerned that they keep their good reputation.
While we’re on the subject, I think you should also use someone who practices real estate full-time, not someone doing it as a hobby. And, use someone who’s been in real estate for at least half a year – and, while we’re at it – use someone who has lived in the town or city for at least a year.
I think if your agent has to discount the commission, he or she might work less for you. There’s less of a payoff for them. ZipRealty says they offer rebates because their costs are less, but, really, be serious – they charge less because they want to undercut the competition to get more business.
Another problem I have with ZipRealty: “Traditional brokers usually show only a few homes, while ZipRealty lets buyers pick among hundreds of local listings online” says their VP of Strategy. That’s a stupid statement and a lie.
A “traditional” agent may only show (meaning drive by and visit) several homes, but that’s because the agent has narrowed down the choices, based on interviews and feedback from their clients. If you choose what properties to see based solely on their online listings, you are in for a HUGE disappointment when you go out to see them. Your agent knows the properties, and knows what won’t work for you.
3) From the article: “We had picked out around a dozen homes to see and spent the next two days driving around with Jack, who had printed out directions off his home computer.”
Huh? Jack, the real estate agent, apparently didn’t know these properties very well. He had a map to guide him. Oy. This was necessary because the buyers weren’t able to narrow down the towns they were interested in living, and then saw stuff all over the place. Ugh. But, this is what you’ll get if you use one real estate agent to cover many towns. Don’t do this. Use one agent per town. Really. Otherwise, your agent isn’t fulfilling his or her obligations.
Thinking about this more, I think I’d recommend the buyer not buy, at all! They should rent for six months, get settled in their jobs, and then look. They don’t know anything about Massachusetts, and need to get acclimated to the area. So many things could go wrong. First, the guy could lose his job (unlikely) or quit if it doesn’t work out. Then what will he do? Second, they may be end up hating their commute, something they may not realize until they’ve driven down Route 128 during a snowstorm.
Here’s the really bad thing about the buyers:
4) Since I had no contract with Jack and was under time pressure, I started looking at old-fashioned newspaper real-estate listings and “for sale by owner,” or “Fizbo,” Internet sites, where property sellers try to avoid using brokers altogether.
We went to see a “Fizbo” property in nearby Carlisle, without Jack.
Apparently, they didn’t even tell Jack. This is ridiculous! If I was Jack, I’d politely wish my clients a good day and then terminate our relationship.
You should work with just one agent in each town, one agent, and the relationship needs to be based on trust.
There is often room for a buyer’s agent in a FSBO deal – the seller just has to agree to pay the commission. Or, the buyers have the option, of course, of adding a commission on to the purchase price, and paying it themselves.
It doesn’t appear that the buyers were going to do either.
If the buyers ended up buying a FSBO, on their own, then, of course, Jack would be due nothing, right?
However, he has done a lot of work. He’s been in contact with the buyers for months, provided them with information on the neighborhoods, probably given them comparable sales data and past sales data for the neighborhoods they were interested in, and counseled them on just about everything.
And now the buyers will end up buying something on their own. “Because we weren’t under contract” doesn’t cut it.
I never have contracts with my buyers, because I think it’s a bad way to start out a relationship. Most downtown agents don’t get contracts, but there are a good number of agents in the suburbs who won’t walk out the door without one.
And this story illustrates why there should be a contract.
What does a contract say? It might say nothing more than, if the agent shows you a property you are interested in, and you end up buying it, then the agent will be due a commission. It’s because the agent was the one who introduced you to the property. The agent is paid by the seller, so you aren’t committing to anything, unless something odd happens and the seller doesn’t pay the commission.
The contract may also say that the agent is due a commission, no matter what, if you end up buying a home, with or without him or her. That’s a slippery slope, and most people wouldn’t sign it, because they don’t want to be tied down.
So, that’s it. The buyers in this case did end up buying, and everyone seems happy. If I had terminated the relationship, I would have talked myself out of a nice commission.
As always, it comes down to communication, I guess.
Complete article: From Cyberspace to Living Space: Using the Web to Buy a Home – By Steve Stecklow, The Real Estate Journal