Blanche Evans is a writer/editor and CEO of evansEmedia. Formerly, she was a senior editor with Realty Times, where she was named by REALTOR® Magazine as one of the most influential people in the real estate industry.
How to Handle the Unfaithful Buyer
Show buyers the benefits of working exclusively with one practitioner—you.
July 1, 2004
You've found out your buyer is also working with other real estate salespeople. While it’s easy to feel betrayed, it is also wise not to overreact. With the right attitude, you could save your potential sale.
So, what should you do? First, understand that until your buyers sign a representation agreement with you, they are not clients—even if you have been treating them as if they were. You can't blame customers for shopping other 'stores' when they want to buy, especially if you haven't educated them that this isn't OK. Instead, examine why your buyer used another practitioner. Was it out of ignorance or contempt for your time? Either one doesn't work for you, so your job is to nip faithlessness in the bud.
The First-Time Homebuyer
A lot can be forgiven of the first-time homebuyer, but ignorance will help you go broke as fast as maliciousness. The first-time homebuyer, according to the NATIONAL ASSOCIATION OF REALTORS® , is 32 years old with a household income of $54,800. The majority use the Internet to shop for a home, where it stands to reason they will meet lots of other salespeople. Homebuyers also told NAR that their top priority in finding a home was the right neighborhood. Again, it stands to reason that those buyers tour neighborhoods and meet real estate professionals that way.
But the statistic you should really pay attention to is that while 75 percent of buyers will use a practitioner, one in four won’t. It's your job to get the buyer to understand the importance of being represented. You want to be the one who buyers choose to represent them.
To accomplish this, honesty is the best policy. Simply sit the buyer down and explain that in the real estate industry, buyers can get better service if they stick with one practitioner to help them find a home.
Explain to buyers that if they tour a home with another real estate practitioner, but prefer to have you sell them the home, you won't be able to because the other practitioner is entitled to take your commission. And if buyers are working with multiple practitioners, it’s simply too difficult to sort out which homes they have viewed with which salesperson, and avoid showing them the same listings. With hundreds or thousands of real estate professionals in your MLS, surely the buyer will see your point.
That's why many buyers' representatives require their customers to sign agreements. Tell your buyer that you would be happy to tailor a representation agreement that he or she would be comfortable signing and that you would be comfortable operating within—for a period of time or for certain neighborhoods or homes—but explain you won't be able to go forward without a contract.
At this point, there is nothing wrong with pointing out the economic reality that only one practitioner is going to get paid when the buyer finally finds the right home. You simply can't afford to spend your time on the hope of getting paid.
Sometimes the buyer is simply trying to see which practitioner he or she likes best before choosing one. That's fine, but if you’ve already met with the buyer and shown some homes, it's time for a decision. Again, you can't move forward without a buyer's representation agreement.
The ‘It's-All-About-Me’ Homebuyer
Then there are some buyers who feel finding a home is a 'may-the-best-salesperson-win' scenario. They don't particularly respect practitioners or their time, and view them as a necessary means to an end. If one real estate professional is helpful, then working with many must be even better, they reason.
These are buyers who have no empathy for your point of view because all they care about is getting the home they want at the best price. You may notice that you already have spent a lot of time on buyers like this, as they are the type that want to see everything on the market, regardless of whether it’s right for them or not.
These buyers also are the type to cut you out of the deal if there is any possible way to do it. They’ll go behind your back to try to negotiate directly with the seller or the builder—all the while thinking they are saving money.
In a situation like that, you can use their ruthlessness to your advantage. Because of their 'by-any-means-necessary' mentality, these buyers will respond well to having access to what they see as the inside track. Casually explain that the homes they see on the Internet or with other practitioners are not the only ones for sale. A lot of homes are sold through a professional network or word of mouth before ever having a chance to appear in the MLS. Tell your buyers you belong to such a network, and if they are really serious about finding a home you need to have them under contract. Otherwise, you have no incentive but to tell your contracted clients about the homes first. This a particularly effective strategy in a sellers' market when buyers see homes snapped up quickly.
If your buyers still haven’t signed an exclusive agreement, you have no other choice but to tell them you feel they have had plenty of time to see how you work and ask if they would like you to continue working on their behalf. If so, you simply can't proceed without a contract. If they say no, be pleasant and thank them for the opportunity of serving them. Then walk away, and don't look back. The next time they call you and want to look at homes, just say you regret that you can no longer be of any assistance.
This is tough for most real estate practitioners to do, but you won't regret it. It’s better to work with someone who wants to work with you.
The reason most practitioners get into situations with unfaithful buyers is that they don't lay down the ground rules from the beginning. The first thing to do is ask buyers if they are working with other real estate professionals. Most will be honest, not realizing the implications of your question.
Use this opportunity to explain how real estate works, especially the advantages of becoming a client: They have the right to be told about every property you can find that meets their perimeters, including foreclosures and homes for sale by owners. If your buyer wants to work with multiple practitioners, those salespeople are under no obligation to show that buyer anything other than what they want him or her to see. The buyer will actually see or hear about fewer homes than if working with just one professional.
Explain to buyers that you will gladly show them any homes they want to see, but you need reasonable perimeters. For that reason, it is your policy that you only take buyers who have been preapproved for a loan and are under contract with you.
If buyers are reluctant to sign a contract because they just don’t like contracts, you can suggest they pay for a consultation with you, which includes buyer education and showing a limited number of homes or neighborhoods. After that, the buyers should have a better idea of whether you are the practitioner for them.
And you'll have a better idea whether they are the clients for you.
(c) Copyright 2004 Realty Times. Reprinted with permission.
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