Wednesday, June 21, 2006
Three Houses And You're Out
For those who think Real Estate is a piece of cake, we offer this commentary without comment from Mortgage News Daily:
You have probably seen an ad in a current series being run on behalf of the Century 21 franchise. The series is promoting how hard their agents work for each and every client and, while a bit sappy in this reporters mind, are probably pretty effective.
The specific ad we are addressing here is one in which a young woman, presumably a single parent, is thanking her agent for "not giving up." While the real estate agent fusses over the clients small child the client talks about her limited budget and how hard the agent worked to find a house she could afford. "You must," she exclaims, "have shown me 20 houses."
The agent ducks her head modestly and says, "Well, it was more like 34."
Well 34 is a lot of houses and if the customer's budget was truly limited, the payoff at the end was probably not a large one. Still, some sales take a long time, some never happen, and sometimes a buyer will walk into an office and buy the first home he or she is shown. Those last kind of customers are called "blue birds," and may heaven bless their hearts and bring them happiness, success, and the burning desire to buy another house from the same agent.
It's called real estate.
No, actually it is the heart and soul of selling anything. Ask any car dealer, retail clerk, door to door salesman, or politician. You will spend a lot of time and energy on people who are "just looking," and even more on people who really want to buy but are incapable of making a decision in less than half a life time.
So it was a little disconcerting to read a column on a national website this past week decrying the message of the Century 21 ad on the basis that, while the ad is advertising that the franchise does not stint on how hard they work to serve their customers, it sends a second message is that they don't "have a clue how to take control of a buyer or how to qualify one."
This particular writer was playing to an audience of real estate agents, urging them to evaluate their selling techniques to reduce the time, energy, and out of pocket expense, especially given the cost of gas, involved in selling or not selling to any given customer. No problem with that. As we have said here several times, real estate agents are occasionally abused and frequently taken advantage of by indecisive, disloyal, or even deceptive customers and need to draw a firm line in the sand or at least in their own minds as to how far they will be pushed.
However, the author of this article goes a little further, quoting a top producer of his acquaintance who "will not show a prospect more than three homes. If they want to see more than that he refers them to a new agent who is willing to 'play taxi'."
This is not the first time I have heard of this approach to real estate sales. Customers have told me about agents who have verbally abused them when they failed to make an offer after looking at a grand total of four or five houses. One customer said that none of the homes bore any resemblance to the specifications they had given the agent. Another said that not a one was in their price range.
The crazy thing was that these agents were all legendary in their local market for their high sales level. So maybe it works, at least for them. I suspect, however, that these are agents that are not particularly interested in working with buyers; that they view themselves primarily as listing agents. However, these agents take on buyers because when they pass their uncooperative, slow or unresponsive buyers off to another agent willing to "play taxi" they will ultimately collect 20 to 25 percent of that willing agent's commission as a referral fee. Talk about a deal!
However, from a customer service level it is a pretty selfish way to do business. First of all, the customer has an investment in the transaction too. The real estate agent may be spending money on gas and spending time setting up appointments, but the buyer has invested time in establishing a relationship with someone they hoped to work with over a period of time. To be told after viewing only a handful of houses that they will be passed on to another agent can be disappointing and will require time and effort to establish a new relationship but it could also kill the desire to continue looking. An insecure buyer, particularly a first timer, may be shaken to the core by such an attitude and made to feel that they do not understand the process or that they are not behaving appropriately.
Real estate agents are forever advised to qualify their customers. Are they seriously interested in buying a house? Can they afford to do so? Is their timetable a reasonable one or might they be still looking long after the agent retires? These are not inappropriate questions and no one disputes that an agent's time is money and that at $3.00 per gallon so is the gas it takes to show properties. But, in light of the article referenced above, buyers need step up their efforts to qualify agents as well.
The old conventional wisdom was to interview an agent to make sure he understood agency, had sufficient experience to guide the buyer through the transaction, and was capable of driving from point A to Point B without killing his passengers. The intangibles that make an agent one you will return to for every transaction will only emerge over time.
However, perhaps it is now necessary to interrogate a potential agent about his or her work ethic. Does he put a time limit (or house limit) on his commitment to a buyer? How does he feel about educating a buyer, particularly a first time buyer? Harder to determine at a first meeting is whether the agent trusts his judgment more than yours. In other words, does the fact the agent views a home as perfect for you outrank your own opinion on the subject?
Don't allow yourself to be courted then jilted. An imperious agent is not working on behalf of the buyer; he is working on behalf of himself. He doesn't want to waste time on a loser. And neither do you.