Andrew Wetzel's Musings

January 15, 2018

3 Signs that Buyer Remorse is Possible

Filed under: Uncategorized — awetzel @ 4:15 PM

In the “ideal world”, a Buyer will make an offer that either “seals the deal” or, at the very least, generates a fruitful negotiation.  Even if a Buyer and Seller cannot agree to terms, both should rest easy knowing they did their best.  The “ideal” does not always happen, leaving one party (or both) to wonder what happened.  This can affect their future planning (how soon will they resume doing what they were doing?) and even cause a client to wonder if their agent did their best.

Focusing on the Buyer, let’s assume that they have been financially pre-qualified and that they have spent time and effort really thinking about where they want to live and what they need and want in their first or next home.  In situations involving more than one Buyer this can get a little more complicated as the parties work to arrive at something that pleases everyone involved.  Knowing their financials puts a Buyer in a stronger negotiating position and provides parameters for their search.  Knowing where they want to live and what they need and/ or want in a house will help them focus their search on real “possibilities”.  That being said, there will still be “gray area” to discuss.

The reality of a Real Estate search is that sometimes the “best” or “perfect” property is unattainable OR the Seller is hard to negotiate with (this includes the Seller having a listing agent who makes the process more difficult than it needs to be).  If a Buyer finds it difficult to “check all of the boxes” when deciding which house to pursue, do they continue looking (maybe something better will come on the market later) or do they make on offer on the “best” of what is available?  Let’s look at “3 signs” of potential problems down the road.

(1) A Buyer keeps looking and looking, finding it hard to commit to a specific house.  For whatever reason, none seem to fit exactly what they are looking for.  Perhaps they feel that “the search” is NOT uncovering all of the possibilities.  Frankly, I often find incorrect information in the MLS and online:  too many entries are sloppy or incomplete, leaving someone who views the information unsure about what a house has.  This could mean that possible “matches” will not come out in the search results.  The best/ worst example of this is the listing without pictures or those that have no “remarks” as well as those that have the wrong features uploaded.  This happens!  An agent can help by making sure that a Buyer has realistic expectations as far as their financials, where they are looking and what they expect to find in the houses that are generated in their search results.  On a more basic level, an agent MUST know the limits of an online search so that they can  find properties others could not!

I have a time-tested process (the information is available on my web site under the Buying tab) that can put a Buyer in the best position as far as searching, evaluating and making a choice.  A haphazard process, which typically occurs when a Buyer is strong-willed and their agent is not assertive (I know the Buyer is the boss but a good agent is more than someone who opens doors!), will put a Buyer in the untenable position of finding something they like but fear pursuing because so many choices remain which have not been shown or perhaps even found.

Over time a Buyer should have seen enough to either “fall in love” with a specific house OR be able to decide which is the best even if not ideal.  Of course, some Buyers may delay taking action which is better than making a bad decision.  Sometimes Buyers have to plan to make a house into their very own “dream house” and that requires knowing what is possible when they see something that falls a little short.  Bringing a reliable contractor on a showing can provide insight (including the potential expense to address a concern) and go a long way towards knowing what to offer.  On the other hand, some Buyers seem to like multiple houses which really means that none of them may be “the one”.

Over time, which is more likely:  will something really nice come on the market or will those houses that interests a Buyer sold to others?  What happens to the Buyer who may have a house “under contract” or a lease expiring?  They need to find a new home.

(2) A Buyer is told that their offer was accepted and they do NOT seem thrilled!  I once had a Buyer cancel an offer before the Seller responded.  I never learned what changed their mind but was happy that that happened rather than dragging the process out only to be terminated later.  The residential Buying/ Selling process can emotional (generally speaking, investors tend to focus more on “making the numbers work”).  I compare it to “playing poker” in that the parties typically do not know what the other is thinking. Offering “full price” is no guarantee that tour offer will be accepted and you often have no way to know if there is any competition.

In terms of managing the process, when I write a purchase offer for a Buyer I want them to be able to sleep well that night, knowing that they are comfortable with their proposal. Buyers will NOT always be offered a chance to change their offer so, in some markets, they need to start with their “highest and best” and some will refuse to do that.  If/ when a Buyer ends up thinking they went too high, they may be able to walk that back a bit if the inspection results suggest that there were unknown issues with a house.  The thinking behind this is beyond this post but I would add that, if a Seller accepts another Buyer’s offer, you have to move on unless you want to wait to see if that one falls through.

(3) This is the most frustrating one:  the Buyer has had a house inspected and gotten “mixed results”.  While the “clock is ticking” as far as the time frame during which the Buyer has to decide if they will offer the Seller a chance to address “material” concerns or, unfortunately, to terminate a sale, some Buyers want to see more houses!  When this has happened to me, I ask what the Buyer what they are thinking. The obvious answer is that they are concerned about the inspection results however, there are times when a seemingly nice new listing has become available (Buyers can easily still search the Internet regardless of the state of a sale).  When this happens there is usually a specific house that interests them so I ask why they want to see that one.  During the conversation I review the inspection results and discuss how to handle them and the related costs and specifically remind them about the process we used to identify the house they bid on.  I remind them that no house is perfect and I tell them that, while a newly found house “appears” very nice, they do not know what the Seller expects as far as the selling price, we do not know if there is or will be any competition and, most importantly, we do not know how an inspection of that house will go.  In my experience, if we have done a thorough job identifying the house now under contract with my Buyer, they will usually stick with it.  However, when that process has been haphazard, there is no solid foundation and it should be expected that a Buyer will question how we got to this point and they may well have their eyes and mind drawn to what seems a better option for them.

There is far more to buying a house (or investment property) than looking on the Internet and writing an offer.  The cost to acquire a house, meaning the “closing costs”, is not cheap.  Buying a house that quickly turns out to be inadequate can be costly, meaning that you may not recover the closing costs, will have more costs if you buy something else and the price you paid may NOT be what the market thinks reasonable for what you are now trying to sell.

Looking at house is undoubtedly the fun part of the process because, at least at the outset, all things seem possible.  However, the best way to ensure a good outcome starts with preparation, sometimes well in advance of seeing inside any houses.  The Internet, both in terms of being able to access listing information 24/7 AND the ability to access what appears to be valuable guidance for buying/ selling, is too often a distraction rather than a benefit.  An agent’s job, in addition to providing guidance and support, now includes helping their client work through the overwhelming barrage of information too often presented as factual.  In and of itself, that can add to their being problems with the journey and how the agent and client interact.

Please visit my web site (AndrewWetzel.com) for a wealth of valuable content!

HIRE WISELY! 

 

Advertisements

January 10, 2018

Teams in Real Estate: Who Benefits?

Filed under: Uncategorized — awetzel @ 4:11 PM

“Teams”, meaning groups of two or more licensed agents working together within an office, have been around for as long as I have been an agent. Unfortunately, most of my experiences with teams have been very frustrating. In fact, several prospective clients have asked me if I was on a “team” before deciding to hire me. NONE of them wanted to hear “YES I AM”! They all had had similar bad experiences that influenced their plans going forward.

Real Estate teams are allowed although industry leaders have recognized that the practice, while making sense for some agents, may add potential risks for their clients. Regulations are being revised to ensure that a “client” is not adversely affected by working with a team. Frankly, poor representation can harm clients and poorly run teams can magnify the potential for problems.

Working in Real Estate is like driving on a multi-lane highway: we have many ways of reaching our destination with guard rails to keep us on track. The “lanes” represent different “business models” we can use to run our businesses while the “guard rails” represent the different layers of regulation. These include the Code of Ethics, RELRA (the PA real estate licensing and registration act) and the law itself. Newer agents, poorly trained/ poorly supervised agents and some who should not be representing others at all can all run afoul of the rules if they do not understand, care or lose sight of WHO IS THE BOSS (hint: it is the CLIENT!).

In my college years and beyond I extensively studied management and teams (Together Everyone Achieves More and there is “No I in team”!) and understand how partnering with others can have its benefits. Teamwork is essential to operating many businesses such as in sports. However, Real Estate is unique. We work for (as opposed to with) clients who expect us to “protect and promote their interests above all others”. They are likely making their biggest purchase or selling their biggest asset and depend on us to oversee, direct and lead the process. The “client” relationship is “special”, making “sharing” them with others them a challenge.

Briefly stated, here are a few of my experiences:

1) some 2-agent teams advertise that the client is hiring “two agents for the price of one”, so you can always reach one or the other. Interesting slogan but does it work? Suppose the team is a married or “involved” couple? I have found both agents on a team unresponsive or “busy”.

2) I have had both agents representing the same buyer call to schedule a showing of my same listing. The team concept only works if everyone involved is kept informed. Who is in charge?

3) I received an offer on a listing, discussed it with my seller-client and called the buyer-agent to provide a “counter-offer”. A different agent answered the phone and advised me that they were on a “team” with the agent I called but they were unaware of the offer. They asked me to tell them what my client said so they could relay the information. Later that day I received a call from the original agent, unaware that I had spoken to their “partner”. They asked to me repeat what I told the other agent since the second agent was not available. I told them I would do this ONCE and that, going forward, they had to decide who would be my contact.

4) I had a sale fall through which involved a buyer-agent who failed to terminate a sale within the property inspection time frame, resulting in the contingency expiring unresolved. As a result, their buyers had to forfeit their deposit. In trying to keep the sale going, I sent an email to the agent and their broker. The broker took more than a day to respond, told me that the agent was on a team and that the “team leader” would call me. That took another day. The agent never told me they were on a team and the broker in charge of the office did not seem to want to get involved. In the end nothing changed but terminating the sale took longer than it should have.

5) I had another sale fall through due to a buyer “defaulting” on the contract terms. In this case I knew the agent was on a team so I included the “team leader” in emails trying to keep the sale moving forward. Rather than taking charge, the team leader responded in a very unprofessional manner, asking why I needed to include them in an email since they met with their agent daily. I used email to keep my client involved while documenting the process. I advised the team leader that we apparently had different ideas about how a team should be run. My best guess is that team leader was preoccupied with “bigger fish” and the buyer agent had little or no supervision. I wonder how the buyer felt when they learned they lost the sale?

Several sellers have told me that they would never work with someone on a team again. They all told me basically the same thing: they got tired of talking to different people every time they called. Most thought they were hiring one specific agent only to learn that someone else was “their contact”. They felt uncomfortable NOT having an ongoing relationship with ONE SPECIFIC AGENT. This is a “service business”: can you imagine how that feels? I really have to wonder about the confidentiality aspect of their business relationship: who knew what?

While some agents form teams with people they like, many seem to do this when they are too busy to personally handle their own leads. I respect that. Clients may not be able to wait and referring them to other agents costs the lead-generating agent money so they build teams. As long as client-service is NOT sacrificed and the client agrees, there should be no problem! They may bring on experienced agents looking to grow their business or new agents learning the business. The team leader may focus primarily on generating business/ leads while delegating the details to others, perhaps doing little to supervise their group which can be problematic.

I understand that some brokers may like the team concept in the hope that the “team leaders” will properly hire, train, develop and supervise their own team members, making the broker’s job easier especially if they actively list and sell Real Estate. However, each office has ONE PERSON ultimately responsible for making sure that their staff, regardless if affiliated with a team or not, is PROPERLY SUPERVISED. As I learned years ago, “delegation without follow-up is abdication” and giving someone else a job to do does NOT relieve the person in charge of making sure that rules and regulations are followed.

Working with buyers and sellers requires creating an environment of trust which typically involves learning confidential information. Buyers do not want to share how much they like a property or are willing to pay for it; sellers do not want to share how much they want or need to sell a property or how much they are willing to accept to sell it. It is hard enough for many of us to share confidential information with one person. What happens with a team? Whether a team has agents acting as both listing and buyer agents or agents acting exclusively as one or the other, what assurances are there that any individual client’s confidences are PROTECTED AND PROMOTED ABOVE ALL ELSE??? The team concept would seem to allow a greater opportunity to inadvertently share otherwise confidential information, requiring added diligence.

As stated earlier, “teams” are perfectly legal as long as they are properly run and managed. They should not be an excuse for brokers or team leaders to abdicate their authority or responsibility. I have seen and heard of enough situations to make me wary of them and, apparently, so have some members of the public.

HIRE WISELY!

Create a free website or blog at WordPress.com.