Agents Decoded: Reality check! How to help clients cope with the new market
Even with ample market data at their fingertips, some clients are stuck in the past. J. Philip Faranda offers tips for providing a dose of reality.
The direction of your business depends on decisions you make every day. Agents Decoded can help you by presenting the perspectives of seasoned pros who have been there, made mistakes, and found success.
After founding my brokerage in 2005, I had a front row seat to watch the irrational exuberance of the early 2000s real estate bubble evolve into the Great Recession.
As those old enough will recall, values cratered, inventory was overwhelmed with cascades of foreclosed properties, and agents were learning to walk their seller clients through the five stages of grief. How else could they cope with a $400,000 offer on a property with a $450,000 mortgage and a previous appraisal for $600,000?
As the new normal gave way to 2011 and 2012, a funny thing happened: The difficult talks we'd had with unhappy sellers flipped into discussions with buyers who thought they could still bid low on property like they had in the depths of the crash.
It begged the question — with the news of the world at our fingertips, why weren't consumers up to date on the market shifts?
I don't have that answer. But I did come up with a strategy for dealing with the calendar-challenged consumer who couldn't bring themselves to accept changing market conditions.
Part of it goes back to the way we deal with grief: Time. Eventually, they get there. If you're dealing with the current shift, you might wish they'd get there… sooner.
The only problem with consumers "getting it" is that time in this industry isn't just measured in hours and months, but in agents. I lost my share of clients over the years, and I gained a few of my competitor's former clients. Clearly, time is never on an agent's side. Addressing this calls for different strategies depending on what side of the transaction one is on.
For sellers, the answer to riding it out is in supplying them with data and ample amounts of empathy, and staying on message. That often accelerates the process of the seller coming to grips with reality.
For example, if a seller insists that their $600,000 property is worth $700,000, the following steps are highly effective:
Acknowledge that their valuation is heartfelt and understandable, but biased.
Give sellers the market data to back up your professional opinion, and take the step of showing them properties under contract at their desired price. Ideally, this is done in person, not simply online. They'll see the difference.
Offering to do it their way first can help ease them into reality. Make an agreement that their price will be on the listing for the first 21 or 30 days, but then your recommended price would be the plan thereafter if there is no joy.
Sellers need to know, from the start, that time costs money and money costs time. Simply put, the lower the price, the faster the sale. The higher the ask, the longer it will take to find someone willing to pay. The more money they want, the longer the listing contract should be. Let speculative sellers know that you'll ask for, and earn, listing extensions.
You can use this phrase royalty free: All things being equal, the high bidder gets the property.
With all of these approaches, it's important to stay on message. When sellers don't follow your pricing advice, they can end up chasing the market and often selling for less than they could have.
Buyers are more straightforward, but tact and diplomacy still remain crucial. When a buyer loses a potential dream home because they didn't listen to their agent's advice, they usually come around — but it still stings.
Buyers are already on an emotional roller coaster, often get conflicting advice from well-meaning but out-of-touch non-professionals, and have to cope with the stress of the largest expense of most peoples' lives.
You as their agent have to be there for them and not make it about how "you told them so." They know. Focus on what needs to change going forward.
The stress and complexity of transactions can make even the most intelligent people slow learners. It is not just the agent's job to give advice and counsel, but to guide the client with respect, solid data and empathy as you help them through their learning curve.
The wise agent knows that the relationship trumps raw tactics, so how you deliver the message is often more important than the details themselves.
J. Philip Faranda is a manager and associate broker at Howard Hanna | Rand Realty serving Westchester and Putnam Counties, just north of New York City. He was previously a broker-owner at J. Philip Real Estate, the top independent brokerage in the two counties by transaction sides, which he founded in 2005. He also writes a real estate blog which has been cited by major media outlets. The views expressed in this column are solely those of the author.