After having laid down the scenarios in my previous article when you need to cut someone loose; there are situations where you can turn things around and have a good positive and profitable outcome for you and your client. As in the lyrics to Kenny Rogers song, The Gambler, goes; real estate reminds me of a big gamble or a vicious poker game when taking a buyer or seller case on a contingency basis where you are literally betting your own funds and personal resources that you'll get a commission check out of it in the end. If you're good at "the game" you can walk away from the [settlement] table with something to count; if you're not, you can literally end up loosing the shirt off your own back.
Here are some strategies for turning those clients with unreasonable expectations or your "bad hands" your dealt from the deck of clients into winning hands if you know how to play them correctly:
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 and for them to get real.
Recognize 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 can be inundated with negative coverage of the national housing market from the media or internet outlets, and are often overwhelmed with their choices. Sellers, meanwhile, might be stuck on the selling price of their neighbor’s house a couple of years ago, and can’t come to terms with today’s market realities.
Both buyers and sellers base their expectations on what they believe is good, reliable information; they don’t necessarily intend to be unreasonable. Rather, they believe they are being entirely reasonable based on the information they have. Sometimes that information comes from a family member, a "friend" or an "adviser" who is pumping them with invalid or incorrect information; but who they inexplicably trust more than you, the licensed real estate professional with a proven track record of success.
Therefore, in the initial meeting with the clients you need to address their expectations of the market and your expectations of them working WITH you, not against you. Don’t wait until they start to get upset or frustrated with you, or you with them; it’s too late by then if that happens. You have to deal with it right up front.
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 them ALL to make a good choice. They need to know that you have been spending time filtering, culling, and carefully selecting properties for them to see based on a clear understanding of their search criteria and parameters and budget.
If you understand what they’re looking for, you should be able to find their house within generally a few outings, or within under 30 or so showings. Some situations are different, of course, but generally if you're buyer expects you to show them 50 or more, possible hundreds of properties something is seriously wrong which needs to be addressed up front. If they want to pay you to be a "tour guide" indefinitely or per outing that's one thing; but if it's a contingency basis where you're getting paid the commission from the Seller at closing there should be some reasonable expectations on how long the process will take and the extents to which you will go to make sure they are happy. Again, if they're paying you or financing that proverbial poker game that's one thing; but if they're not then that's a completely different hand you're being dealt and they need to understand how you work and what your limitations are.
No one wants to waste time. You should be able to convince buyers that they’re going to find a great house with very little hassle and time wasted, and they should be happy to follow your plans. If you can’t convince them of that, you must accept the fact that you’ll be showing lots and lots of homes before your clients make a purchasing decision. But again all this needs to addressed or discussed up front in your initial buyer meeting consultation to avoid problems and conflicts down the road together.
Get Sellers to Get Real
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. They might still 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. Also, you need to know what their absolute bottom line is up front and deal with those expectations. As I tell seller clients, the more money I can sell your home for, the more commission I am going to make, so I am motivated by that and understand and respect their financial conditions or what they might expect or NEED to get out of the property and I am not trying to undersell or undermine them in any way. However, we BOTH must get real about what the market is doing and what our hopes and expectations are. This will all be based on good factual, objective market data and research you can show them. You should also discuss or address a plan whereby if the property is not sold within XX days or months, what the plan will be for adjusting or lowering the price.
Gather the evidence from your local MLS to show that a home priced too high will languish on the market and the adverse effect of it becoming a stale or stigmatized listing that no one wants. Remember that even if you take this listing off of MLS, then put it right back back in with a "new pricing or marketing plan" the audit trail or total number of DOMP (days on market property) can be seen and not just the new DOMM (days on market MLS under the new listing number). Also, calculate the absorption rate and explain that pricing real estate is based on supply and demand, just like in other industries. You also can show a seller examples of local properties that have stood on the market for six or more months.
There's nothing worse than working with a seller who is not amenable to flexibility in their pricing and marketing plan; or one who, when is convinced to lower the price, does so too late and is constantly "chasing" the market to stay or be competitive with other homes on the market. I would tell such a client something to this effect, “I’d love to get you the $500,000 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 $500,000 for this house when all the others in similar or better condition are going for $450,000?” The answer to this question will tell you whether they’re living in denial or not. If they stick to their guns, they are likely still living in denial. Offer them the option to sleep on it and carefully and objectively review the numbers on their own, then meet again tomorrow when they’ve had a chance to really evaluate the comps data with them. 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.
Also, whether they have much or any equity in the property makes a HUGE difference too. Ask to see their most recent mortgage statement balance and don't just take their word for it how much they owe on the property. I've had cases were a Seller has flat out lied and misrepresented how much was owed on the property or the existence of any tax liens, divorce situation or existence of a property settlement agreement, owner(s) might be going into bankruptcy, or any other encumbrance on the property which can and will affect the sale. You need to make sure that you do not ratify a contract and attempt to go to settlement on a property unless you know the whole truth and nothing but the truth regarding that property. You don't need to get that call from the settlement agent saying your seller client will need to bring a check for $XX,XXX to the settlement table or encounter any other "surprises."
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 wall calendar in their home or have them put it in their Outlook, BlackBerry, iPad, iPhone, Droid or whatever they use. 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 Frustrated or Unhappy With You
Yes, that’s right. In your meetings with sellers (or buyers), you have to prepare them for the fact that at some point, they may become frustrated or unhappy with you. When things aren’t going well or the way they expect it, people naturally look for a scapegoat; and that scapegoat is often you. Don't kill the messenger because you do not like the news.
If you prepare them for the fact that this is can happen — even though you’ve been doing your job exceptionally 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. and refocus the effort.
Stuck In Unreasonable Mode?
If you have clients who won’t budge from unreasonable thinking, then you may have either failed in your objective to educate them on the facts and reality (pun intended) of the situation and to enable them to get real (pun also intended) LOL. Or....you could have one of those clients or hands in poker that you just need to fold on and walk away from. Remember that Kenny Rogers song....
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