Mary Beth Klatt is a freelance writer with a passion for architecture and home design.
5 Things You Didn’t Learn in Real Estate Class
The courses you took to get your license probably didn’t cover these common pitfalls. Here, we’ll teach you how to be better prepared.
November 2, 2015
Once you’ve obtained your real estate license and you’re actually in the field, you’ll probably have many moments when you say to yourself, “Why didn’t I learn that in class before I started?” You got the basics of the business down in introductory courses, but situations involving clients, contracts, or how to manage your time always arise that require deeper knowledge and skill to solve.
The National Association of REALTORS® offers continuing education courses and designation and certification programs that can help you develop more expertise. But for new agents, various scenarios could present themselves that you’ll want to be better prepared for from the start. We asked a few real estate professionals — ranging from those with as little as a year’s experience to as much as 30 years — what they wish they learned when getting their license and how they handled the situations.
Guiding Lowball Offers
The problem: You have a buyer who really wants the house but refuses to pay what the seller is asking. Aside from negotiating the offer itself, the most common time during a transaction when this becomes an issue is when negotiating home-inspection repairs, says Ed Kaminsky, an agent with Shorewood, REALTORS®, in Manhattan Beach, Calif. “Most buyers think the sellers should fix everything, but most sellers think they’ve sold for too low a price and don’t want to fix anything,” he says. “It becomes an emotional, stressful situation. You have to learn to detach from your clients and be the calm in the storm, and offer real solutions.”
The solution: While you want to defend your buyer’s best interest, you don’t want to get into an unwieldy back-and-forth with the seller. Don’t be afraid to lay out some hard truths. “At some point, you’re going to have to explain to your buyer that they either have to walk away from the home or offer more money,” Kaminsky says. Impress upon them that it’s not the home they’ve always wanted if the price isn’t right. “Stay calm and be clear that it’s OK if the sale doesn’t happen,” he adds. There are other houses out there.
Don’t Automatically Accept ‘As Is’
The problem: A property such as a foreclosure is listed “as is,” and the buyer must accept responsibility for repairing any defects — usually major and costly — as a condition of purchase. With bank-owned properties, the banks can be particularly tough to negotiate with. “We always make sure to tell our clients that going into a deal,” says Kristen Shedor, a broker with Century 21 Pride Realty in Mokena, Ill. “But with one of our last foreclosures, our client insisted that we ask for a $4,000 credit since there was no air conditioner or hot water heater.”
The solution: The wrangling involved in this kind of endeavor can be time-consuming, and there’s no guarantee it’ll work. But before accepting an as-is contract, have your clients consult with a real estate attorney to see what leverage they have to ask for a credit on the purchase. Shedor says after some back-and-forth between attorneys, other agents, and the bank, her clients won a $2,000 credit. “We are actually trying to do the same for another client right now with another foreclosure,” she says. “We sent the inspection report and got an estimate to fix the problem. We are still waiting for a reply from the bank.”
Ask for a Better Mentor
The problem: Your company pairs you with a mentor to learn the business, but the person you get is someone who isn’t actively selling real estate. “I often have heard, ‘They stuck me with an office manager and sent me to open houses by myself, and I don’t have the training,’” says Shawn Clayton, broker-owner of Clayton & Clayton Inc. in Bay Head, N.J. “What you want is a mentor that sells, negotiates, and closes.”
The solution: You’re not obligated to stick with your assigned mentor, though you don’t want to offend anyone either. Have a candid conversation with your broker about what your goals are in the business and who you think you can best learn from. “In my experience, you need to be assertive — but, of course, respectful — with your supervisor and let them know you want to learn from true sales agents or brokers,” Clayton says. “It’s critical to learn the tips and tricks only pros know from years of experience working with buyers and sellers.” If your assigned mentor doesn’t fit that profile, don’t just disregard them. Ask if you can also work with additional mentors, building a team of advisers to guide you. If necessary, you can also hire a professional sales coach for targeted training.
Don’t Get Burnt Out
The problem: Trying to keep your head above water, you focus too much on handling the small day-to-day complications rather than planning your future success. As a result, you haven’t made time to develop a marketing and prospecting plan that will sustain your business. “One of the hardest things to learn is how to effectively manage your time,” says Jenelle Isaacson, broker-owner of Living Room Realty in Portland, Ore. “There is always a fire to put out, and calls, texts, and e-mails rapid-fire at you all day. Time-blocking for things like marketing and prospecting are often the first things new agents throw out the window when they get busy. That leaves you vulnerable to high peaks and valleys in your business that are hard to manage.”
The solution: Block out time each week or month when you can focus solely on business planning, and let your clients know upfront you’re unavailable during that time. No one can be on call 24/7, and by enforcing your own schedule, your clients will learn when to expect that you’re busy. “My voicemail includes the hours I work and the two times a day I get back to messages,” Isaacson says. “In busy times, I update it daily so my clients know when I will be available. That lowers anxiety so I am prepared when I speak to my clients. I also block out once a month from 11:30 a.m. to 4:30 p.m., taking no phone calls, to solely work on my goals, check my progress, look at my profitability [and] pipeline, track where my business came from, and decide on that month’s marketing. In this time, I might evaluate whether I need to hire more agents, outsource, or innovate. This ensures I’m in control of my business versus letting my business take control of me.”
Exclusions in the Sales Contract
The problem: Your seller wants to take an item with them when they move, but the buyer sees it as something that should come with the house. “Say it’s a beautiful light fixture that the seller purchased overseas,” says Tigi Tasso, a broker with John Greene, REALTOR®, in Naperville, Ill. Light fixtures are generally thought of as items that will stay behind for the new owner, just like appliances. You may have indicated in the listing feature sheet that the seller keeps the fixture, Tasso adds, “but when a sale contract is accepted, you forget to transfer the exclusion to the sale contract. The buyer wants the light fixture, but during the final walk-through, it’s removed.” Now you’ve got a situation that pits buyer against seller, and the entire deal is called into question.
The solution: You have to make sure that you fully disclose details such as these from the beginning, and double- and triple-check that you transferred any exclusions indicated on the feature sheet to the sale contract — or else. Tasso learned this lesson on her very first listing, which involved the light fixture mentioned above. “Like a good agent, I had a very detailed feature sheet,” she says. “It mentioned the dining room light fixture was to be removed and replaced with a comparable one before closing. Well, at the walk-through, the buyers were very unhappy that the fixture was changed. I ended up paying $500 at closing for a lighting credit. Lesson learned.”