Keep Their Expectations in Line
Is there a mismatch between your clients’ expectations and the reality of your local market? It’s your job to bring them back to reality.
BY KELLE SPARTA
I’m hearing it everywhere: Unreasonable buyers and sellers are on the loose! Buyers read about the weak housing market and assume they’ll find a major bargain, while sellers are still unwilling to accept that inventory is up and their ideal asking price is too high.
But I’m not here to hold your hand and commiserate about how hard it is to deal with unrealistic clients. In fact, it’s my view that if your clients are being unreasonable, it’s your job as their real estate practitioner to bring them back to reality.
How Expectations Are Set
First you must acknowledge that your “unreasonable” buyers and sellers are that way for a reason. They got their expectations from somewhere.
Buyers are inundated with negative coverage of the national housing market from their trusted media outlets, and are often overwhelmed with their choices. Sellers, meanwhile, might be stuck on the selling price of their neighbor’s house three years ago, and can’t come to terms with today’s market realities.
Both buyers and sellers base their expectations on what they believe to be good information; they don’t intend to be unreasonable. Rather, they believe they are being entirely reasonable based on the information they have.
Therefore, in the initial meeting with the clients you need to address their expectations of the market and their expectations of you. Don’t wait until they start to get upset or frustrated with you; it’s too late then. You have to deal with it up front. Here’s how.
Get Buyers to Get Real
It’s your job to explain to buyers that while there are a lot of houses on the market right now, they don’t need to see all of them to make a good choice. They need to know that you have been previewing the properties in their price range and will show them the houses that meet their needs.
Tell them that if you understand what they’re looking for, you should be able to find their house within six showings — and you’ll probably find it before then. Inform them that if you haven’t found their house after six houses, then you would like to arrange another meeting to discuss their search criteria in detail to make sure that something hasn’t changed.
No one wants to waste time. If you can convince buyers that they’re going to find a great house with very little hassle and time wasted, they should be happy to follow your plans. If you can’t convince them, you must accept the fact that you’ll be showing lots and lots of homes before your clients make a purchasing decision.
Get Sellers to Get Real
Sellers may be happier with their heads in the sand, but it’s practically impossible for them to have missed news and commentary on the softer housing market. Although some markets are exceptions, home owners probably aren’t going to be able to sell their property for as much as they could have sold it five years ago. However, they still will be tempted to “test” the market with a price that’s not going to garner very much buying activity. That’s why it’s so important that you’re prepared to address their assumptions.
What’s the best way to bring sellers back to reality? Show them the numbers. Gather the evidence from your local MLS and REALTOR® association to show that a home priced too high will languish on the market. Calculate the local absorption rate, and explain that pricing real estate is based on supply and demand, just like in other industries.
You also can show the sellers examples of local properties that have stood on the market for six or more months. Do a market analysis of comparable sold homes. Nothing gets sellers more serious, more quickly than seeing the market in action.
Give the sellers a reasonable expectation of when the house should sell, and tell them that they shouldn’t even think about worrying until after that date. Write that date on a calendar in their home or have them put it in their PDA. Then give them something else to focus on. Walk in with a list of things that they can be doing to improve the value of their home or to help in the marketing. If they’re focusing on a “To Do” list, then they don’t have as much time to sit and wonder why the home hasn’t sold yet.
Prepare Them to Be Mad at You
Yes, that’s right. In your meetings with sellers, you have to prepare them for the fact that at some point, they may become frustrated or mad at you. When things aren’t going well, people naturally look for a scapegoat, and that scapegoat is often you.
If you prepare them for the fact that this is likely going to happen — even though you’ve been doing your job well — then they can be alert to avoid it. And, if it does happen, you can acknowledge that you prepared them for it, which can help to diffuse the situation.
You also can diffuse the situation by validating their feelings. This is not the same as agreeing with them; it’s a way to sympathize with their feelings while also correcting their assumptions. For example, say:
“I know that you need $400,000, and I’d love to be able to honestly tell you that I can get that for you. Unfortunately, the market will give you only what is fair based on what other sellers are taking. I’d rather tell you the truth now than have you be angry at me later.”
As you can see, I started by validating the sellers’ feelings. I would like to get them $400,000. No one wants to tell sellers that they aren’t going to get what they had hoped for. It costs you nothing to share that with them, and it goes a long way for improving their outlook.
When you validate their feelings, they can then listen to what you have to say about the facts. If you ignore their feelings, then they will argue with you until the cows come home.
Stuck In Unreasonable Mode?
If you have clients who won’t budge from unreasonable thinking, then you may have failed to validate their feelings. It sounds mushy but it usually works. Restate how it is that you think they are feeling, and let them know you understand their point of view.
If that doesn’t work, there is another possibility — They want you to be a miracle worker. It is often useful at this time to throw the decisions back to them. For example:
“I’d love to get you the $400,000 that you need, but now that you’ve seen the numbers, I think you can see that this is not likely to happen in the market as it stands. After all, if you were a buyer looking for a house now, would you pay $400,000 for this house when all the others are going for $350,000?”
The answer to this question will tell you whether they’re living in denial or not. If they stick to their guns, they are still living in denial. Offer them the option to sleep on it and review the numbers on their own, and then meet again tomorrow when they’ve had a chance to really take in the information.
If they don’t get real, don’t take the listing. The fastest way to have a roster full of unreasonable clients is to take on listings from sellers who are in denial.
It’s in Your Hands
As a real estate professional, you’re the authority on your local housing market. That’s one of the most important values you bring to your clients. You must use your communication skills and your ability to interpret real estate data to convey current market conditions and help them make an informed, rational decision.
When you have clients or prospects that are being unreasonable, it’s your job to help them revise their expectations based on the market reality. If you’re clear about what they can expect, and you do a good job of communicating it, you will be well on your way to a business full of completely reasonable clients.