Shake Hands, Don’t Shake Down

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Do you remember when Julia Roberts dressed in her “street” clothes and shopped on Rodeo Drive, and she was snubbed? Then, she came back looking like “money” and they were all over themselves trying to get her business. She reminded them of her past treatment and said “HUGE MISTAKE, HUGE”. I have actually heard similar stories from customers recently who were very upset that their agent talked about money before they even had an opportunity to talk to the customer about their wants and needs. I agree with Julia: Huge mistake.

I think two things come into play here. First, we’ve been conditioned from real estate birth to find out if our prospect qualifies to purchase. Today’s customer is really quite offended by the money conversation right out of the gate. Today’s buyer wants to know if their agent cares about them and can give them the level of service they expect. There’s nothing wrong with having them qualified by a mortgage company, in fact it’s beneficial to everyone, but only after you’ve established a relationship with the customer. Give them a chance to see if the relationship is a good fit for them and for you.

Second, because of the recession and the rising cost of gas and other costs related to real estate, I think many agents tend to panic about how they can afford to work with a customer. You must make this decision prior to accepting a buyer as a new client. Asking for a retainer fee up front or complaining to the customer about how much working with them is going to cost you is really off putting. How would you feel if a waiter asked to check your credit card before you could order your food?

Having said that, there are circumstances where a discussion regarding fees is perfectly acceptable. If a customer wants to engage you to help them find a rental, fees for services rendered is acceptable. Just keep in mind that your conversation should cover what you’ll be doing for the customer and what fees you’d be willing to negotiate with them.

Another instance where you must discuss fees is when you want to refer a person to another broker (through our Relocation Department, of course). The law actually requires that you tell your customer that you will be receiving a referral fee from the referred broker. You don’t have to mention amounts, just that they are being referred and fees will be paid. Metro Brokers has a GAR form that the customer must sign saying they are aware that a referral fee will be paid to Metro Brokers.

The main thing to remember is that you want the customer’s first impression of you to be a positive one.

Photo from movieposter.com

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10 Responses to “Shake Hands, Don’t Shake Down”

  1. Sandi Rodrick Says:

    Kind of goes back to being a kid again listening to your mama’s advice , doesn’t it? – “Treat your new and potential clients the way you want to be treated- like a valuable, priceless gem!” You know the “ol’ honey & vinegar” theory. There may be new clients out there but the way they should be treated isn’t new. In fact it’s tried and true- try being kind and professional to them and your buyers, etc. will be true to you.

  2. Pat Viohl Says:

    I’m a little confused by this article. Because most offers [whether sellers are individuals, or banks owning property, or the ever popular short sale] require that we submit a pre-qual or pre-approval letter with the offer, and because desirable, well priced properties go under contract quickly, I generally include the financing conversation in our first meeting. Of course, I always discuss with them the specifics of what they are looking for, I pull listings to show them [to confirm I am on the right track in identifying what they want], and I do not mind taking them out, once, prior to knowing if they can obtain a loan. However, it is my intent that they be poised to move quickly if they see something they really like. Just a few hours or a day without a pre-qual to send with an offer can mean my buyer misses out. Perhaps I am just lucky, but I’ve never sensed that a prospective buyer was offended by my asking if they have talked to a lender yet to determine their purchasing power.

  3. Dana Says:

    Pat, I suspect from your comments that you are very good at the initial meeting with the customer. We are expected to be good counselors and educators in the home buying process and explaining what a buyer needs in order to buy a home in today’s market is smart. What my article says is that it is not smart to demand that they be pre-qualified before you can help them or asking for fees prior to some time spent getting to know the customer and finding out if you can help them with their real estate needs.

  4. Pat Viohl Says:

    Dana – thanks for clarifying that. I always learn something new reading these blogs!

  5. Valerie Fortier Says:

    Great title! This is to the point. No one likes the first discussion to be “how you will pay me”! But people appreciate great service and will pay for it.

  6. dornhomes Says:

    Two things I learned after reading this article – 1) Money talk while closing a real estate deal is inevitable. 2) Excellent service and customer relations come first before the “money talk”.

    – Dorn Homes, new Arizona home builder

  7. Loys White Says:

    Love it! People should come first in this business if we anticipate going the long haul. If it becomes all about you; then no one is truly interested. I do feel that once they are engaged and feel that you have their best interest at heart, then the conversation about money becomes appropriate. The market will sometime demand a request for a retainer when you evaluate the buyer/seller and realize the demands of the particular transaction will require extra effort, i.e. gas, time, professional expertise then I believe they will see the value of your worth and be willing to compromise on a reasonable retainer fee.

  8. Bob Morrison Says:

    It’s all about the bigger picture and the long term. Those first steps are critical to making sure your client feels comfortable and remains a client for life. Great article, boss!

  9. Deborah Gaither Realtor Delivering On The Promise Says:

    Dana
    Thanks for elaborating regarding fees and the rental client.
    I was a little confused initially working with them because they require just as much time as the buyer client, but there is no commitment on their part and tend not to value your service. Some initiate the search emotion driven, and quickly get over what caused their interest in renting, and then just walk away.

  10. Lynn Stephens Says:

    I think in a normal market I would totally agree. However, as a foreclosure listing agent, I find that I eliminate a lot of wasted time and gas by nicely asking buyers if they are prequalified since all banks require a prequal or proof of funds. I would say 75% of the people who call have no idea what I am talking about and usually have credit scores of 500 or less. Buyers who are prequalified or have cash usually say so up front or tell me pretty quickly. If they sound offended – which most do not – I just explain as nicely and professionally as I can that it is so important and keeps everyone from wasting time. With some of these lower end properties, we can get 20 calls a week and we have to have some way to weed through them.

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