Buyers Series - How To Get A Buyer Under Contract
Welcome to our "Buyer's Series"! We will be covering EVERTYHING you will need to know to represent a buyer - no rock will be unturned. If you don't know the start to finish play-by-play of getting a buyer under contract, it can keep you from going all in to represent them well. Listen as Kenny takes you from a Buyers Agreement to a Contract.
Hello my friends, Kenny Stephens here and welcome to Rookie Real Estate, where your road to success begins right here, and right now!
Whether you are looking to transition from your day-job to your dream-job or you are on the road to your first 50 transactions…..
Success is in the details my friends and we are going to unpack the fundamental principles required for you to thrive! Are you ready? Let’s do this!
I want to start out today by giving a “Shout Out” to my “little rat”. As some of you may know, I’ve got three kiddos. My Oldest is 13 and listens faithfully to my podcast. She is by far, my biggest fans! She laughs at my stupid jokes and she showers me with encouragement.
So, Sydney Claire… you darlin are my first born and stole my heart the moment I held you for the first time. I never knew it was possible to love so deeply. Your love for life and laughter brings me joy. Your hugs & kisses, playful spirit, kind heart and generous soul is a great reminder that there is a Loving God who holds perfect, unconditional love for His children…. Because I know how much I love YOU, I can’t comprehend how much our GOD loves us.
I love you darlin with all that I am, every fiber of my being… you are perfect exactly the way you are and I’m proud of the young lady you are growing into. No matter how big you get, you will always be, “my little rat”
How about that for a shout-out?!
Welcome back my friends to our “BUYER’s Series” So far, we’ve captured a buyer, and gotten under-contract. Today we will bring it all home, from Contract to CLOSE!
Guy, this is our very first series we are creating for Rookie Real Estate.
I listen to all kinds of pod-cast about different topics. Sometimes there isn’t a flow to the episodes. So, I have put together the entire buying process at a 500 foot view.
TODAY, we will cover from the time you capture the client, all the way to getting them under-contract.
Becasue it’s a 500 foot view, you will hear me say several times…. “we will dive deeper into some of the more complicated logistics of these steps”, in future podcast….. So, be on the lookout for those additional episodes.
Next week, I’ll get us from Contract to Close….
My friends, when we are done with this series, you should have the confidence to capture a buyer and actually know how to get them through the buying process successfully. I hope you enjoy this ride!
Let’s talk about buying a house today!
What are you going to do when you call a smoking hot lead that just hit your website, actually answers the phone??? Or somebody you know randomly calls you and says “hey Kenny, my wife and I are wanting to buy a house and were hoping you would help us”..... Really? Somebody actually wants to hire YOU to help them find a home! YES! Gently, slide off your shoes, climb up on the table and HAVE A DANCE PARTY!! It’s time! Let it all hang out my friends because you have arrived! Right! This is it! The moment of truth! Celebration time!!! SHOW ME THE MONEY! You my friend have captured a BUYER! Congratulations! See that wasn’t so hard…. now was it?
I remember being new and when I’d capture somebody, somehow…. I’d be bouncing off the walls. I couldn’t wait for my wife to pick up the phone and tell her that I had just captured 12 Thousand Dollars….. BOOM! Now, my wife… who had already been in the business for many years would quickly remind me that you never count your commissions before closing….. Oh, not me my friends. I can calculate 3% faster than you can blink. Just call me RAINMAN! You ever want to know what 3% of 699 thousand 999 dollars is??? Call me! I’ll be like $20,999.97 BOOM! This is how I get paid. It put weight behind the momentum. Let’s let gravity kick in and do it’s thing… we are buying a house!!!!
If you can’t get excited about $21K, you have gotten into the wrong profession. Now look, I don’t know what the commissions are in your area, I don’t know what splits you’ve agreed to with your Broker. I only know that getting to serve a family wanting to buy a home is rewarding and pays well and it’s a WIN/WIN for everybody. Assuming, you can get it across the finish line. My wife has never been a “Debbie Downer” and my excitement cracks her up. I’m pretty sure, I’ve actually done a “happy dance” for her….. Her point and my point today is to get the deal closed. How are you going to get this buyer what they want and in turn, get paid for your services?
I’m going to systematically walk you through the 500 foot view of the buying process and what each stage will look like. I will eventually walk you through a buyer’s presentation and how you can present this information to your clients. But first, you’ve got to understand the process yourself. See it from start to finish.
Going through the buying process will eventually become second nature to you. However, it’s going to seem like the most stressful event you’ve ever been through, the first few times. Eventually you will constantly carry 6-10 buyers at any given time.
“BUY or Die” us what my mentor used to always say. Once you capture them, NEVER let them go! Agent for life! 67% of our business is past-clients and past-client referrals!! So, “BUY or DIE”, until death do us part!
I’m going to blow through this list and then break them down for you. Many of these will eventually have their own podcast because I can’t dive deep enough today to get you up to speed.
Your job description when it comes to helping a buyer purchase a home:
Lending - Pre-Qual vs. Pre-Approval
Reviews & Referrals
Earnest Money/Trust Money
Clear to close
Day of Closing
Handing over the keys
What’s my home worth Drip
Past clients events
Selling in 3-5 years
Repeat these steps 40-50 times a year
Alright, Let’s rock & roll my friends and dive into each one!
Our primary goal is to get the client into our office to conduct a Buyer’s Presentation. Call it a Strategy session or a Huddle to create a game plan. It doesn’t matter if the client is a friend, family member or a complete stranger….. Set an appointment. Sit down together. Have the heart of a teacher and walk your client through the entire buying process.
It’s called a Buyer’s Presentation!
It doesn’t matter if they have bought/sold 50 homes in their lifetime or if they are a first-time home buyer. This is a critical step. This is where we bond. This is where we create our value. This is where we get a Buyer’s Representation Agreement signed.
Experienced buyer’s likely haven’t bought in a long period of time and therefore need to be updated on the current state of the market. Call it a Real Estate Update…. Whatever you want to title the meeting, get it set, preferably in your office and definitely in person. If you have a client flying into town to look at homes, pick them up at the airport and drive straight to your office. There is tons of data showing that if you can get them in to the office and a buyer’s rep signed, you will get them to closing.
Soon, I will release a podcast on my buyer’s presentation. You will be able to see what that process looks like.
Let’s state the obvious, our buying adventure always starts with the MONEY. How is your client going to pay for their dream home? You and I now know this is the first step, however…. Take a gentle approach when you start talking about money. Ask them what price range they would like to start looking at.
***Let me help you learn a hard lesson the easy way….. Never assume anything about your client’s ability to purchase in ANY price range.
If you are able to get them in contact with your trusted & proven lender-of-choice BEFORE you sit down together, it gives complete clarity to expectations and where to start searching.
FUTURE PODCAST: I will have a lender on here soon to give us a deep dive into their processes and what each loan type means. What kind of down payments are required and how long it takes to get the each loan through the process. You are not a lender. Your license does not allow for you to recommend which direction your client should go…. BUT, you do need to understand each one so that you apply that information to the Purchase and Sales Contract. Here in Tennessee, that’s information we put in the contract AND we provide a Pre-qual letter with the offer for strength. My preferred lender, Michael Brown @ Churchill Mortgage actually makes himself available to call the listing agent personally and discuss the strength of my buyer…. That my friends can tip the scale when you are in a multiple offer situation. FHA, VA, Conv, Rural Development, Land loans, Construction loans, Manufactured Foundation Loans.
Develop a relationship with a lender and have them give you a Mortgage 101 training class. If they aren’t willing, find another lender.
Depending on the CRM you use, you may already know what part of town your client desires but if not…. You will definitely want to narrow the search. I cover the Middle Tennessee area, which is about a 100 mile circle of where our office is, which is in Franklin. Depending on your area, you may only cover a three mile radius….. I consider myself an “equal opportunity agent”, meaning… if you want to buy a house, I’ll get in my truck and unlock the door and get it done. However, I’d prefer not to drive all over the state trying to find a home. Rarely does this happen but recently I had a buyer who literally looked North, South and West of Nashville…. We were all over the place. He was from this area and was just looking for the biggest bang for his buck. It happens sometimes. However we don’t want this to be the norm.
Usually, I can ask a client where they plan to work, where their children might be going to school, what they like to do in their spare time…. Questions like these help narrow the search. Price range helps narrow the search. Necessary commute might be a factor. Most of the time, the buyer is already familiar with the area and has their heart set on a desired location. But, if they are not local, it’s great to give them some “homework” to drive around areas when they arrive. Hopefully they are in town for a few days and can really devote the time necessary to get a feel for the community. As you know, we can not “steer” clents to or from areas. We can provide information on what’s available and then direct the client to conduct their due diligence. You might be asked “is this a safe neighborhood for a single lady”..... Our reply needs to be a resource where the client can view crimes stats issued from the local authorities. Be careful how you respond. I’ve had clients ask about the sex offender registry. This information is posted on-line and is accessible to them. Recommend they research what is important to them. Your job is to facilitate a real estate transaction. Don’t blow them off and make sure you know the areas you sell…. Things like sales stats for a given area, what the trends are doing in a new “hip” area. If you ever feel the need to “whisper” something…. Or start a sentence with “you didn’t hear this from me”..... Stop talking. Provide a resource and recommend the client dives deep into what matters to them most. It’s likely your association has lots of information to share. If you are not sure about how to address a question that may be sensitive, ask your broker. Tell the client you will get back to them.
Also, on a side note… if a huge development is coming to an area and the person is looking at a home that has a beautiful green pasture with cows eating and turkey flocking around….. With you having the knowledge of a strip mall breaking ground in 6 months…. Make sure you disclose that information. Sometimes agents get in trouble for what they SHOULD have known….. You likely covered this when getting your license. I remember this being beat into our head.
I’ll dive deeper into the searching process, how to set up showings, how to tour a home, how to narrow down a list, how to question listing agents about the property, how to maximise your client’s exposure to the available market for them and not spend 6 months looking. Just remember, there is no such thing as a perfect home BUT, there is a perfect home for your client.
What do you do when your client wants to know if a home is priced right and what they should start their bidding price at. This my friends is a critical step. I let my clients know from the first time we sit down, in a buyer’s appointment that we are going to focus on a home that meets their needs, in the price range they desire and can afford. In a Seller’s market, don’t go around showing $350K homes to a client who qualifies for a maximum $300K home. Do not send a client a home for a penny more than what they tell you their max is….. You set up the search to their max and not a penny more. If they chose to “search” higher, which they almost always do…. That’s on them. But, when they want to go look at a home priced more than what they qualify for, you politely recommend they speak to their lender to see if they can qualify for more. Remember, you have a pre-qual letter for $350K. Homes are not used cars…. You don’t necessarly go in and fall in love with a $375K home with a $350K budget.
I let me buyer’s know from the start. Once then fall in love with a home, that’s when we dive into the values. I go and pull comps. Looking at what has sold in the neighborhood really answers most of the questions but, when the home is in a more rural area, you may need to venture out a few miles. My MLS allows me to do a search based on miles. Check with your local appraisers to see how far they are allowed to search for similar home values. Look my friends, there are three factors that determine market value. 1.) Seller’s oponion on the value 2.) Buyer’s opinion of the value 3.) Appraiser’s ability to prove the first two….. That’s how we get to market value. The appraiser is the last line of defense in keeping our home values from being strictly based on emotion. In a seller’s market, you need to prep your buyer for what they may have to do in order to sometimes “win” the home…. Keeping in mind that the appraised value will be a part of the contingency in purchasing the home. Lenders will not lend money above appraised value. The mortgage industry learned that lesson the hard way.
So, my point here… you don’t have to pull comps on every home a client wants to see. You can always go home after the showing and pull values to discuss if the home is priced correctly and where you should start with your offer.
I will have a podcast based on how to pull comps. Where to start, what to look for, how to narrow down between a lot of homes, how to find more homes if you are in a rural area, how to compare upgrades, what it looks like to consider acreages vs. Sq. Ft, what to look at if the home is perked for a 3 bedroom but has 5 rooms that have windows and closets….. This is an art form and some pick it up quicker than others. The key is, your ability to “prove” what you find. In a perfect world…. The last 5 homes in the subdivision that sold were just like the one your client wants to buy. But, we don’t live in a perfect world. Hence the need for this podcast.