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Existing home inventories have been at record lows since the start of the pandemic. So, with markets around the nation continuing to experience that challenge, it’s a real estate professional’s top priority to prepare buyers for steep competition and what they may need for a strong offer.
I’ve outlined three ways agents can guide clients throughout this stressful process and help them come out on top — without assuming too much risk.
1. Stick to the budget
Setting an absolute maximum budget is an essential part of the homebuying process. As of late, buyers have been submitting offers way over the listing price in fear of getting outbid or not being able to find another property that fits their needs in the near future.
We always encourage our clients to speak to a financial adviser for an in-depth analysis on how to best proceed with this kind of investment and to stick to the outlined budget from day one.
An agent should coach clients to not get caught up in the market frenzy that surrounds them and stick to their bottom line. Going over numbers from the very start helps keep everyone on track, especially during this highly competitive period.
2. Help manage expectations
You never want your buyers to overspend, buy a property they later regret or lose earnest money because of an unforeseen complication. It is crucial to navigate client expectations throughout each step of the process.
By doing this, clients will be more prepared if their offer isn’t accepted, and if they have to negotiate on terms, pricing and other factors.
In addition to sitting down to discuss finances and budget, I also provide clients a full download on the latest market conditions, recent buying and selling trends, and other pertinent information.
I recommend continuing to share the latest market data and reports as well as brand new listings as they hit the market, both in person and through your digital platforms. This will keep clients fully educated throughout their search and manage their expectations as to what they might experience during the buying process.
3. Advise on the terms
When your client is prepared to make an offer on a home, agents should go over all the terms of the deal and guide clients to submit the strongest offer possible.
Take time to explain some of the terms competing offers might include, such as escalation causes, earnest deposits and the waving of contingencies. Share recent experiences and recommendations for their particular situation, and make sure your client understands all aspects of the terms.
Agents should advise clients on the advantages and disadvantages of the various negotiating strategies and approaches to submitting an offer. For example, this is highly advantageous to prequalifying clients, which can make a big difference in securing a sale and speeding up the process.
For sellers, this helps them know the prospective buyer can afford the property. It also helps make the negotiation process easier if the client’s offer is accepted.
When negotiating, agents have to remain confident but also identify value-creating moves. In today’s market, both buyers and sellers need to be flexible and open to new ideas.
In an ideal world, a client won’t have to offer concessions, but if necessary, an agent can advise on less expensive ones that create extra value for sellers. Before a client considers these, make sure it won’t lead to a costly mistake down the line.
Remind clients you are their go-to resource as they navigate the final steps to secure their dream home. While negotiating can be competitive, make sure to keep a positive attitude.
After helping your client agree on all the details, help all parties feel like they’ve arrived at the best outcome for the transaction. Finally, always welcome questions. This reassures clients you are there to help make a sale as smooth as possible.
Mauricio Umansky is the founder and CEO of The Agency in Los Angeles. Connect with him on Instagram.