Why is it important to screen potential buyers?
Screening of potential buyers is one of the most important tasks for an agent to undertake. Screening gives vital information about the client, which helps the agent in handling the client. It helps the agent know the status of the client and not waste time on people that have no interest in buying. The background information of a buyer helps the agent determine the seriousness of the client and build to avoid wasting time on people that are just asking for their own knowledge. It is a sieve that helps the agent separate the serious buyers from the ‘window shoppers’. It also helps in giving the agent the personal information of the client which is essential for in handling the client. From the client’s information, the agent can predict their attitude and the possible ways of creating a rapport with them. Having the knowledge about a certain client helps the agent relate with them easily and convince them to buy the property. It gives information on the possible motivation of the buyer and the needs of the buyer to match them with the property that matches their needs.
What questions might you ask? Give 5 examples
The process of screening should be carried out in a way that it does not scare away the buyers. The agent needs to ask the right questions that will give him the necessary information about the buyers and not scare them away. The questions should be deep enough to give information that will help in determining the seriousness of the buyer. Some of the sample questions include,
- Are you using another agent? If yes, who? This question will help determine whether the buyer has another agent and the probability that he might choose the other agent over you. Knowing the other agent will give you a glimpse of what to expect.
- What are your financial qualifications? This question acts as a sieve to determine differentiate the serious buyers from the window shoppers. It gives the agent the ability to find the property that suits the financial ability of a particular client.
- What are your expectations? This question helps determine the expectations of the client and acts as a guide to the property they need.
- Why do you want to move now? This question helps the agent to establish the probable amount of time they need to work on a client before the deal is complete.
- What are your past experiences with agents if any? This question helps establish the attitudes of the client towards agents. If a client has had good experiences with agents in the past, they’ll respond better than those with bad past experiences or none at all.
How would you establish appropriate rapport with potential buyers?
Creating a rapport is one of the most important achievements of the agent. A good rapport will help in completing the deal easily. One of the easiest ways to build a rapport is by establishing trust. Trust is established by being honest and genuine while dealing with the client. The agent should also show interest in the affairs of the client. By showing interest in the affairs of the client, it makes it easier to sell to them. For instance, if he is a family man, knowing the names of his children and mentioning them by name creates a more personal experience for buyers. The agent also needs to be warm and friendly. When the agent Is warm and friendly, he is likely to have a good relationship with the client. The agent should never be too desperate. Desperation might scare away potential buyers or give them excessive bargaining power. Many clients are turned off when the buyer is too needy. Give compliments but genuine compliments. If the agent gives too many compliments the buyer will turn off the buyer. The agent needs to spend time on breaking the ice before getting into business. The agent also needs to be flexible enough to fit different cultures of the client. Flexibility helps them cope with different clients.
You are going to charge a fee for your services. How will you approach this with the buyer?
Charging buyers is one of the trickiest parts of the negotiation process. Many agents are scared of telling the charges to the buyer so as not to scare them away. However, if the charging is made in the correct way, the probability of losing the client is reduced. The initial step is making sure that the client understands the services offered. Unless the client understands the services offered, they are likely to question the validity of the charges given. The buyer needs to understand the importance of using the agent and therefore the charges that apply to that account. When the buyer understands the role of the agent, he is likely to pay the charges without much conflict. The agent needs to explain various charges to the buyer and their necessity to help them make informed choices on the property they are buying. For instance, the agent needs to explain the importance of the retainer fee to the buyer and its importance. As an agent one needs to be firm on the pricing and give reasonable rates to the client. It is also important to ensure that all payments made are documented and signed to avoid future controversies.
An agency agreement needs to be signed. What would be the main reasons for doing this?
An agency agreement is a legal document that gives the agent authority to act on behalf of the buyer. The agreement must contain clauses that define this relationship and the role of each members of the party in making the deal. The agency agreement is a vital document which states the roles and the limits of each party. This document is the backbone of the relationship between an agent and the buyer. It states the scope of representation. The scope of representation is the limits of the agent’s authority in representing the buyer. It contains the term of representation which is a clause that gives the duration the agent represents the client. It contains information of the agent’s account and the legal accounts of dealing with the client. This gives accountability of all the funds paid by the client. This document is vital as It gives the direction of the relationship between the buyer and the agent. It is the binding legal tie between the agent and the buyer.
How are you going to gather information about the properties that may meet a buyer’s requirements?
After getting the requirements of the buyer it is important to find the property that matches the needs of this client. The agent should be keen to search for property that matches the client’s needs. There are various sources of such information which can help the agent get the right property. One of the major sources of information is property developers. As an agent one needs to get acquainted with many property developers. Property developers will give the agent ready information of property they have and even future projects. With this information the agent has a wider scope of information to give to the client. Alternatively, agents can get information from private owners of property. The agent should be a sociable person that can get information from members of a community about various properties being sold. He should also create a sense of confidence in a community so that the people in a society can trust him with their property and information. Another important source of information is real estate websites. These websites provide information on various properties which might meet the specifications of a buyer. The agent should also be keen to check for advertisements in newspapers and development magazines for information on property.
Why should you be careful when offering advice? When is it necessary to seek specialist opinions?
At times the agent will have to refer buyers to various professionals for various reasons. Some of the professionals include, building consultants, property developers, industry professionals, local government and industry associates. When doing these referrals, the agent needs to be careful because information from the professional will affect their interests in a property. The agents have to ensure that they send the clients to qualified clients who will offer quality and true information. If the client has any trust issues with the professional, the mistrust will be carried down to the agent. The agent has to ensure that the professional is qualified enough to offer quality information. The agent also has to ensure that the agent is trustworthy and will not lead the client to another agent. The agent has to run a background check on the professionals to ensure that their interests are protected.
Negotiations are regularly carried out with Real Estate Agents. Explain 3 reasons why these negotiations are often more difficult than when dealing with a “lay” person (someone who is not experienced, qualified or has knowledge of the real estate industry
Information is one of the vital elements of any negotiations. As a real estate agent, negotiations with people who have prior knowledge of the operations of the industry makes the process easier. When dealing with a person is not familiar with the process makes it difficult for the agent. In many cases these clients will be too anxious and will take time in every step. Some of the likely mistakes they will do include, asking to view the property before it is pre-approved, asking to view property outside their budget, checking various properties for a number of times and fail to make an offer, making an offer that is dependent on their ability to sell their property among many others. New buyers have very high expectations that might surpass the agent’s ability to find. They are quick to point out faults in the property and ask for discounts even when the mistakes were visible in the pre-inspection. An agent has to be wise when dealing with buyers without prior information of the property.
List 4 negotiation techniques that are used when dealing with the seller or their representative (agent). Briefly explain each.
- One of the most important techniques of negotiating with the seller is confirming the conditions of sale. Confirming the conditions of sale gives the agent the ability to negotiate with the seller and get better conditions. It is important for an agent to establish the reason the seller is selling the property.
- The agent also should have affective negotiation techniques which will help in getting a better deal from the seller. The ability of the agent to appeal to the seller helps them get good deals on products.
- The agent should place the value of the price on the property itself and not the home value. The home value will add the price of the property and therefore the agent should negotiate the property value.
- Inspect the building thoroughly to find any faults that would reduce the value of the house. Failure to find such faults could lead to a rapid fall of the value if the buyer finds them himself.
Why is communication important in the sales process?
Constant communication is important in the sale of the property as it keeps all parties in one accord. Communication helps bring transparency which is important in winning the trust of the client. Communication is vital in improving the relationship of the buyer and the agent and helps create a rapport between the client and the agent. Communication keeps the buyer updated on all issues and increases the chances of the agent to complete the deal. Constant communication is the key to sealing a deal as an agent.
ASSESSMENT PART 2
As an agent, the progress of the meetings with Peter will determine his ability to buy the property. Peter needs professional handling which will help him gain confidence in the agent and buy the property. The initial meeting is the most important meeting with Peter. The initial meeting helps shape his attitude towards the agent. The first meeting is an opportunity for the agent to create a lasting first impression to help retain peter as a client. The initial meeting is a day to get to know the client as well. On the first meeting it is important to determine the status of the client, his motivation to buy property, the kind of property to he wants and the timeline he wants to complete the deal. After one has created a rapport with the buyer, he has to establish facts about the client. Knowing the facts about the client will help the agent gauge the seriousness of the buyer. It is also vital to establish the buying criteria that will be used in the deal. The initial meeting is to set up the expectations which will be put in writing in subsequent meetings. As an agent, you have to make him understand the process of acquiring the property and the charges that are incurred. If the initial meeting is successful and gives all the necessary information, the probability of complexities arising in future meetings is reduced.
The most important part of the subsequent meeting is to put all the agreed conditions in writing and signing the agency agreement. The agency agreement should be signed in this meeting before the agent gets involved in the work of getting suitable property for Peter. The importance of this document is that it gives confidence to both parties of the commitment of either parties to completing the deal. The subsequent meeting should also give detailed information of the property Peter wants. The agent should help him choose from the choices available and make it easy for the agent to get the right property. The agent should keep Peter updated on all properties that meet his requirements. It is also important to establish the need for flexibility when looking for the property.
Searching for property that meets Peter’s needs is the most important prospect of the agent. The agent should have a large network of links to get information of the possible properties. One of the easiest places to get information of property that might match Peter’s needs is property developers. Property developers will give information of the newest unoccupied property. As an agent one should have links with several property developers who are likely to have the necessary information about the correct property. The agent should also check various realtor’s websites to find the property that match Peter’s needs. It is important to note that one might not necessarily get all the needs required but it is good to get something close to what he wants. One can bargain if the property is close to what Peter wants.
Assessment Task 3 – Case Study – Demonstration
From the requirements
that you gave us as an agency we have found property that might interest you.
There are strata titled home units in Jonesville. The area is one of the
quickest developing areas in the region and has an ever increasing population.
A shopping center is being built in the area to cater for the increasing
population in the area. In a few years the region will have developed
significantly and the prices of the houses increased. The house is located in a
safe neighborhood and has all the social amenities being constructed in the
region. Apart from the shopping center, there are schools and hospitals in the
region. The roads to the area have also been repaired and it is easily
accessible.
Despite all these developments, not many people have information about the
property in the region and so the prices have not increased. Despite the
increasing population of the region the prices have remained constant at the
moment. However, this trend will change in a short while. When the shopping
center is complete, then the demand for property in the area will definitely
increase and cause an increase of prices of the property in the region. Those
that will have property will enjoy better profits if they want or they can rent
it out. In a year’s time, the prices of the houses should have increased by
approximately fifty percent. This is an opportunity of a lifetime to take
advantage of the offer and make profits by investing in the region.
Assessment Task 4 – Case Study – Negotiation (1 page)
Peter has agreed but after discussions with his accountant, has indicated that he is only able to spend $325,000 not the $375,000 he originally thought. He also wants a gross return of 5.2%. This is disappointing as the property that you have in mind is currently rented for $350pw and the owner is looking for $360,000. This would have been the ideal property but it now appears to be out of his price range. There are no other suitable properties on the market. Discuss your options and what negotiation skills could you use to ensure that the sales proceeds?
In a such a state, the reaction of the agent to the problem will determine his ability to complete the deal. Since Peter has reduced his purchasing power, the agent is left with a hard task of linking Peters interest to the interests of the seller. The agent has several options, one of these options is to bargain for a better price from the owner. This would be a difficult task to do as the owner has a fixed expectation of interest in his mind. That implicates that one has to find a way to convince Peter to increase his price to the original buying price. One of the ways one can do that is by being transparent about the issues at hand. As an agent you have to explain to peter the fact that there is no other available property that matches his interest. You have to give facts about the property and the status of the market and advise him to verify them independently. Being transparent will help him reconsider his prices because of the competitive demand of the property. One has to concentrate on the value of the property to convince Peter to maintain his original buying price. The agent has to create the impression of a competitive nature of negotiation to a co-operative nature. He can achieve that by indicating that he cares for the interest of the client not just the seller. He should take all the buyers opinions and objections into consideration before and give satisfactory and timely responses to win him over.
The second option is to try to achieve an ‘all win’ situation by negotiating on both the buyers and the seller’s end. The agent can negotiate for price reduction, where he can give discounts from the original price. Alternatively, he may reduce the of his profit from $375000 to a figure close to $360000 to keep Peter’s Interest. The other option of an ‘all win’ situation is to negotiate the payment procedure. The payment procedure could help ease the load of payment for Peter and make him buy the price. The payment could be made in friendly instalments which would help both parties complete the deal.
References
Howell-Carey, C., & Carey, B. (2007). Make money as a buyer’s agent: Double your commissions by working with real estate buyers. Hoboken, NJ: John Wiley & Sons.
Spada, M. D. (2009). New York real estate for brokers. Mason, OH: Cengage Learning.