Over the past several months, real estate has become a popular career-switch goal for those who have left their previous jobs as part of the Great Resignation. New agents who are just starting out on their first transactions will need to present a polished demeanor and a value-added approach, even while still trying to find their footing in their new profession.
The procedure for guiding a client through the complexities of buying a home differs widely in different parts of the country, but here are some basics. Check with your manager for the specifics in your area.
Make sure buyers are pre-approved by a bank
Make sure buyers are not just pre-qualified but pre-approved. A seller will not look with favor on a buyer who wants to finance but whose qualifications haven’t been vetted by a bank.
Help them to lawyer up, if needed
In some parts of the country, a lawyer is considered essential. In others, this is not the case. If your buyer needs a lawyer, make sure they find an actual real estate lawyer and not somebody’s brother-in-law, who’s a personal injury specialist and will do them a favor. If they’re planning to buy a co-op or condo, they should have a lawyer read the board minutes and review the financials and prospectus — more about this below.
Ask the brokers in your office for recommendations for lawyers. Give your buyers a list of at least three to choose from. Tell them to make sure whomever they pick isn’t going on vacation in the next few months.
Get buyers ready to submit a financial statement
This financial statement goes with the offer in some parts of the country. It should show assets and liabilities and what the buyer’s cash flow will look like after closing. Also, ensure they have funds available for the contract deposit, which is negotiable but usually 10 percent to 20 percent of the purchase price.
All of the above should be in place before, or at least at the same time as you’re showing them properties so that they’re prepared to move quickly when you find them their dream home. If a house is perfect for your buyer, chances are it’ll be just as perfect for somebody else’s buyer.
Help buyers search smart
Now you’re ready to start looking at houses or apartments. Don’t show a buyer more than five at a time, or the properties will begin to blur. Pull up a map and put a star on the location of everything you’re going to show, so you can make sure your itinerary makes geographic sense.
Try to schedule properties in the same neighborhood on the same day so you can walk from one to the next.
If you’re showing properties that are far apart, you may want a car service or at least an assistant to help with driving so you won’t have to waste time finding a parking space. This may be pricey, but it will save time and keep your customers loyal. Don’t stand around waiting for a taxi.
If their eyes are bigger than their wallets, schedule at least two or three properties that are in their price range, but also show them what they could get for a few more dollars. You don’t want them to be too depressed at the end of the day.
Help buyers rethink their wishlist, if needed
If you’ve shown your buyer more than fifteen properties, and they still aren’t ready to make an offer, it’s time for a conversation.
Maybe they should consider a different location where their dollars will go further. Perhaps they should reconsider their priorities. Is a third bedroom really necessary? Would they consider a home that needs work?
Talk with your broker or mentor before the offer
Here’s where you need to check with your manager to see exactly what to do next because the procedure is different from one state to the next, even from one town to the next. But some things are universal.
I strongly recommend getting the buyer, or buyers, into the apartment or house at least twice before they sign the contract. Your buyers may find that on a second look, the light is not as great as they remembered. Or that the place seems to have shrunk.
Find as many recent comparable sales as possible to make sure the property’s worth somewhere close to the asking price, and to help them decide what to offer.
If it’s a co-op or condo, get the building’s most recent financial statements from the seller’s broker or the managing agent, and check to see if it appears to be in good financial shape. (Your manager can help you figure out the financial statement.) The buyer’s lawyer will go over the financials with a microscope once an offer is accepted, but you should be able to spot any red flags – pending litigation, for example.
Alert the seller’s broker that you will have an offer for them, and ask if there are any already on the table. If there are other offers, your buyer should bid as aggressively as their comfort level will allow. But even if there are none, their offer should probably be at least 90 percent of the asking price, assuming the comparable sales show it’s priced correctly.
Put together the offer. In some parts of the country, the buyer’s broker fills in the blanks in a standard form letter. In other areas, the buyer’s broker generates the letter. In some places, it may be an actual contract.
Here’s the basic information it should include: the buyer’s name(s) and address, the amount of the offer when they want to close, whether they’re planning to finance, and if so, the amount of financing, whether the contract will be contingent on financing, and any other contingencies.
It may or may not also include the financial statement the buyer prepared and their lawyer’s name and contact information.
Know how to get contract-ready
But this is only the beginning.
A deal is most vulnerable between the accepted offer and the finalizing and signing of the contract. If the property is a condo or co-op, ensure the seller’s broker sends the financials and prospectus to the buyer’s attorney immediately. (Prospectuses for most buildings are now available on the web, so it may not be necessary for the seller’s broker to send one.)
The buyer and their lawyer now do their due diligence — that is, for an apartment, reading the financial statement, the prospectus and going to the managing agent’s office to read the minutes of the board meetings. If there is to be a home inspection, that has to happen right away. In some areas, this period is specifically allowed for this. But the contract needs to be signed as soon as possible.
Lay out buyer financing options
If the purchase of an apartment is to be financed, check with the buyer’s bank or mortgage broker to make sure the bank will finance in the chosen building.
Most banks will not begin the process of putting the loan in place until the contract is fully executed, but you need this information in advance in case it’s necessary to find another bank. Once the contract is signed, occasionally check with the bank or mortgage broker to see where they are in the process.
Put together a winning application package
Today, condos, as well as co-ops, ask for extensive application packages. They include tax returns, personal and professional reference letters, pay stubs, and bank statements, among other things. Ask the seller’s broker for a copy of the package, so your buyer can start putting the information together.
Then wait for the contract to be signed. Transaction management is a skill that agents will constantly need to refine and practice. Helping your clients navigate to the closing table requires follow up, but with careful attention you can create a professional and seamless experience for them.
Confidence Stimpson is a licensed associate real estate broker with Coldwell Banker Warburg in New York. Connect with her on LinkedIn.