G.M. Filisko is a Chicago area freelance and former editor for REALTOR® Magazine.
Are Those Buyers Worth Your Time?
Even at a time when buyers are sparse, some experts say you should be choosey when taking on new clients.
July 1, 2010
Even with home prices at their most affordable level in years, many real estate practitioners are finding that their biggest business challenge is a scarcity of buyers. Given this, you may not think that now’s the best time to be picky about whom you choose as clients. But that’s the smartest thing you can do.
"You must have buyer standards," says Robert Jenson, a sales associate at RE/MAX Central in Las Vegas. In today’s tight credit environment, "buyers need to be qualified, motivated, realistic, and willing to work with you on your terms." Time is money, he says.
Whether you choose to prequalify buyers—and what standards you decide they must meet—depends largely on your business goals.
Some practitioners, like Jenson, go through a checklist of sorts to uncover the financial and emotional readiness of his prospects. "I ask why they’re moving and how soon they need to be in their new home," he says. "Are they in a lease? Do they need to sell before they buy? Are they paying cash? If they’re getting a loan, have they talked to a lender yet? All of their answers give me a sense of their motivation. I’m looking for people who want to buy within months."
Buyers, however, can resist even basic information gathering. To overcome this hurdle, Jenson educates prospects on market conditions. "If buyers say they don’t need to talk to a lender yet, I explain that the majority of sales in Las Vegas today are bank-owned properties or short sales, so they should get prepared to deal with financing early," he says. "I let them know that just because they have money and good credit doesn’t mean they’ll be qualified, nor does it mean they’ll be happy with their loan terms."
Janice Leis, an associate broker at Prudential Fox & Roach in Philadelphia and Prudential Florida WCI Realty in Boca Raton, Fla., also takes a hard-line approach. She asks buyers to get prequalified with a lender before she’ll show them any properties. "I want to hear from the lender that they are solid buyers and confirm their price range and cap," Leis says.
Not all practitioners subscribe to such strict guidelines, however. "I ask buyers to get preapproved, but I don’t have a hard-and-fast rule," says Sam DeBord, a sales associate at RE/MAX Connected in Seattle. He says he’s most demanding of first-time buyers; if they don’t get preapproved, DeBord tries hard to convince them otherwise. But he’s unlikely to show them properties if they won’t meet with a lender. With repeat buyers, DeBord will show them properties even if they aren’t approved, but he still explains the benefits of preapproval in the new lending environment.
At the far end of the spectrum is Eric Jolliff, an associate at Investors Alliance Real Estate Investment Services in St. Louis. Joliff, who has been in the real estate business just one year, says any buyer—preapproved or not—gives him an opportunity to practice his skills and expand his sphere. "Any contacts I make are advantageous," he says. "The more time I spend with clients, the more experience I’ll gain. Even if buyers aren’t qualified to buy, my work could lead to other business."
Jolliff says he’s already received two solid referrals from prospects who weren’t quite ready to buy. "That’s a pretty good return on my time," he says.
Whatever your method, don’t choose it by default. Consider all of the business advantages and drawbacks of your plan, and stick to it, Jenson says. "Most associates are too chicken to qualify buyers because they’re afraid to lose them," he says. "But you’re better off with two qualified and motivated buyers than 40 who’ll run you ragged and then not buy."