In yesterday’s blog, New Agent? Beware of Developing a Starvation Mentality, I comment briefly on the importance of qualifying a prospective client. Our customers are our life’s blood, for without them, we don’t get paid, period. Evaluating and knowing your client is crucial to your business whether you are selling real estate or “widgets”. You should be in the habit of interviewing them just as you may expect they are interviewing other agents.
If yours is a referral-based business, the task is likely to be easier, simply because a referred client is already coming to you upon recommendation and is far enough along in their process to justify seeking agent recommendations. Still, the same rules apply.
When working with buyers, these are some important considerations:
· Establish whether or not the client is working with another agent and especially if they have entered into any kind of buyer’s agency agreement. If they are under agreement, stop! Depending on your state’s regulations, you may be violating local laws, be subject to significant fines and possibly loss of your license.
· Be direct. Explain that your business practice is to work exclusively with your clients.
· If the client is not under contract but has been working with someone else, take a moment to consider how you would wish your colleagues to treat you. While you may be on safe legal ground to pursue the business, is the scenario such that doing so is ethical? If not, is being unethical the reputation you really want to develop amongst your peers?
· Ask why they are considering hiring a new agent. Doing so both builds trust and gives you the opportunity to gain a better understanding of their needs and expectations.
· Are they preapproved? If not, great! Now you may ask questions about the lender/mortgage consultant and gauge if their purchasing power matches their tastes and goals. If they are not, then refer them to lenders you trust; professionals you know will deliver an on-time, trouble-free, successful closing.
· Confirm they have sufficient funds to cover earnest money and settlement cost expenses.
· If they are renters, be certain to ascertain if they are subject to any lease restrictions. Often times, though the intention is genuine, the timing may not be as it appears. Beware putting a lot of effort into showings only to discover they can’t move for the next six months.
· Probe into the clients’ understanding or your market’s conditions. Are they “looking for a deal?” Do you have the time to help them find one? Is the market primed for deals? Are their expectations realistic?
· Ask them if they are deliberative or decisive. I find this one of my most valuable questions. A deliberative client will take time to come to a decision. One who is decisive acts quickly, possibly impulsively. I can then counsel them that, should they find themselves in a multiple offer situation (which we still have in Seattle), being decisive may aid them where as being deliberative might take them out of the running. Conversely, a buyer’s market is well suited for deliberative personalities.
· If you clients are perhaps younger, first time buyers, ask if their parents, family members or friends will both be accompanying them on showings and involved in their decision making. Having someone close come along can be either productive or counter-productive. A parent who is knowledgeable about the local market and an experienced home owner can provide valuable support and information during crucial decision making times. Conversely, poor advice may be offered by someone who has not been in the housing market for a long time or lacks familiarity with your specific market. For instance, a home owner from Kansas City who bought their house twenty years ago may experience severe sticker shock looking at properties in San Francisco.
· Take them on an educational tour – show them a half dozen or so homes which you believe meet the criteria they’ve set forth for you. Doing so helps verify you’re hearing what they want and they are meaning what they’re telling you. It’s not uncommon for that “two story with basement Craftsman” buyer to end up in a mid-century rambler.
· When you take them out on tour, ask them if, should they see the house they’ve described for you as the one they want, they are prepared proceed with an offer. Factor a “no” answer into all the other information you’ve gathered. It will help you determine whether or not this is the right client for you.
In my next posting, I’ll lay what I believe are some important questions to ask potential sellers.