This market has been buzzing at awing paces, to the point that it seems like everyone is a real estate expert. And unfortunately, one of the skills all agents need to master is combating the misinformation spread by the armchair experts of the world.
Every buyer and seller you encounter is likely to have numerous opinions on their purchase or sale — family, friends, co-workers, neighbors, in-laws, outlaws and even strangers.
Although having a trusted ally by your client’s side can be comforting, the truth is, the collection of opinions and unvetted information clients are absorbing from others can make the transaction more difficult when reality doesn’t match with what they’ve heard.
Knowing how to combat misguided viewpoints with vetted knowledge and confidence is vital. Here are eight scenarios you are likely to encounter and how to contend with them.
Beginning the homebuying process is where a lot of misperceptions start, which in turn can create unrealistic expectations. Buyers might be given a false sense of market conditions and come into the process believing that they are in the driver’s seat, that they can take their time making a decision, or that there is negotiating room when making an offer.
Markets wax and wane, and even in slower markets, buyers may overestimate their ability to make a lowball offer and think they won’t have to come up much to get it accepted.
To head this off, have an in-depth discussion with the buyers upfront and ask them lots of questions to determine their sense of the process. Help set and manage expectations by using this time to educate the buyer about the realities of your specific market.
Show them hardcore data about the average days on the market before a home goes under contract as well as a typical closing timeline, the percentage of asking prices homes are selling for, and how many homes are typically on the market when you are meeting with them.
Also, explain things like absorption rates to show how fast new listings that hit the market are selling and how that translates into X months of supply.
Explain the timing from when they see a house to when they will need to make an offer (currently, like, immediately), and if they are not local to your area, establish the best way to manage their search and offer process remotely.
Real-world examples that a buyer can relate to are always helpful in illustrating takeaways from other transactions.
If you are a new agent and don’t have any, reach out to more experienced agents in your brokerage and ask for help developing some talking points based on transactions they’ve handled. Seasoned agents have plenty of war stories to share that newer agents can use as learning experiences.
Along with the general homebuying process, buyers get a lot of bad advice about making an offer. Armchair experts often tell them never to offer near or at the asking price. Instead, start low enough to give themselves plenty of room.
The “experts” in their tribe can lead them to ask for all sorts of concessions that simply aren’t realistic given market conditions. Whether that is for closing costs, asking for some of the seller’s furniture, televisions, or specific closing time frames based on the buyer’s needs, an agent needs to provide an honest picture of what it will take to make a successful offer.
In a low-inventory, high-demand market, an agent needs to mentally prepare their buyers to put in several offers to secure a home. In practice, this means allowing plenty of time ahead of the buyer’s desired time frame to buy a home because it could take a few months for something to work out.
An agent should educate the buyers upfront on the required forms and clauses that often come into play to help them understand what they might need to incorporate into their offers, such as escalatory addendums or contingency waivers.
Again, real-world examples help illustrate what a winning offer looks like. Show the buyer copies of past contracts if you have them (with important client information redacted) to give buyers a visual.
Pull three to six months of closed sales of MLS listings in the areas the buyers are looking to show what properties were listed and what they ended up selling for as well as whether any concessions. Spell out what concessions are common in your market. Highlight and circle all relevant information on the MLS sheets, and review everything with the buyers.
This is where the buyer’s “expert entourage” loves to come out to play home inspector. It doesn’t matter if a team of professional inspectors has already been hired, armchair experts are going to tire-kick the heck out of the house.
Too much advice from outsiders can cause buyers to think a home “passes” or “fails” an inspection. The entourage might want to direct the show, interrupting the inspector’s workflow, asking them to check this or that. They might engage in distracting chatter about various things they want to ask.
The armchair expert loves to turn on every faucet and flush every toilet. They often can make false assumptions about something not working or incorrectly assess a component’s condition.
Educate buyers on how the inspection will work before it happens, and let them know that inspectors will not give a home a pass or failing grade — this is not a test.
Discuss details, like where the inspection will typically start and approximately how long it will take. Explain that getting an inspection is simply an assessment of the home’s condition, very much like going to the doctor for an annual physical, and that the inspector might recommend specialists to further evaluate certain things.
Also, explain the scope and nature of the inspections. Ask the buyers if they plan to have anyone else attend with them or on their behalf (if they are out of the area). Create some road rules for allowing inspectors to conduct their inspection, and then explain that they will make time for a debrief and questions once they are finished.
Because buyers will invariably forget all of this once they go under contract on a home, have a conversation with the inspector the buyer chooses before the inspection. Have them set the stage so everyone knows what to expect.
When inspectors meet buyers (and anyone else there), they should review all of this, explaining what their inspection does and doesn’t entail (i.e. they cannot open up walls or conduct any intrusive testing, etc.)
What’s more, buyers and family members need to be prepped about what they can and can’t touch in the home for safety and liability reasons. Climbing a roof and going into the attic is best left to an inspector. Ditto for taking off an electrical panel and testing electrical outlets. Sometimes, “handier than a handyman” family members may think this is an invitation to bring their toolbox and ladder along for the ride.
There may be some situations where buyers want to bring in their Uncle Bob, the contractor, to conduct the inspection. Uncle Bob may understand homes, but he built them 30 years ago and does not have an active general contractor’s license.
Discuss with the buyer what the contract requires regarding who may inspect the home and explain the reasoning behind that, especially when dealing with any potential repair issues that may arise.
With inspections come repairs, and there can often be a huge disconnect between things a buyer has been told a seller should fix versus what actually happens in real life.
Armchair advice may have a buyer believing that a seller has to fix everything or that this is an opportunity to renegotiate the purchase price entirely. This is where an agent needs to educate the buyer before the inspection process about what kinds of things are considered fair game to request and what aren’t.
For example, if a component in a home is functioning, but noted as being near the end of its life and should be replaced in the future, that does not mean a seller will replace it or provide a credit to the buyer.
An agent needs to counsel their buyers from the get-go that they are not buying a new home. Every property has issues that are identified during an inspection — even when it comes to new construction.
The entourage can go into major protection mode during the inspection and scoff at everything crops up, making the buyer feel that they are buying a lemon. This may come from an unrealistic understanding of home repair and improvement costs — and that little bit of bad information can derail a deal.
Consult with appropriate contractors and other specialists to get a ballpark idea of what it will cost to fix the items found. Separate what may be considered minor versus major and who would be the appropriate contractor to tackle the items.
Guide the buyers through which items they can request the sellers to address. Give the buyers examples of how you worked through other repair negotiations so they understand how these kinds of situations are resolved.
Prep for sale
Bad advice is not just limited to buying — it also happens when it comes to selling. Sometimes, well-meaning family or friend “experts” can muddy the process for a seller when they start giving them advice about what they should or shouldn’t do while getting their home ready for sale.
Why should they paint one neutral color throughout and make it look boring? After all, a buyer will come in and want to change it anyway. Or why fix anything that’s obviously broken or clean up anything that looks dirty, because after all, in this market, everything is selling, and it won’t matter. Well, think again.
What a seller chooses not to do may result in leaving money on the table. Yes, even in this market. If a home has any obvious flaws, whether structural or cosmetic, it may make more sense for a seller to tackle these items instead of leaving it to a buyer to figure what fixing them might cost.
Agents need to explain all of this to sellers. Show them photos from listings that have recently sold that were and weren’t properly prepped for sale. Explain what they listed and sold for so they can see how these investments paid off.
Along with prep for sale comes a discussion of pricing. Although we continue to be in a crazy, pie-in-the-sky kind of market, sellers may have unrealistic expectations based on what others tell them.
Review realistic comparables with them that are most like their home. Explain what properties can or cannot be considered in determining the valuation and why.
Enlighten the seller about what properties are actually selling for and how many offers they may see. While multiple offers are common, sellers may expect an unrealistic number of offers — which could result in disappointment when they end up receiving just a few.
Reach out to other agents who had similar listings that are under contract or recently sold to find out how many offers they received. Get a sense of the kinds of offers that were made to help align expectations with reality.
Neighbors are famous for spreading information that may not be entirely accurate about how many offers the house down the street got or what people were willing to pay. This often makes sellers think the same should happen for them.
Many love to cite particular websites (that are also brokerages) that give a valuation of the home. It’s important to point out that none of these portals have actually walked through a buyer’s home, so they can’t provide a more accurate value.
It’s also important to have an appraisal discussion with the seller, based on the price range they are in, as to whether the likely buyer pool for their home would be able or willing to waive an appraisal contingency. For example, if the home would most likely appeal to first-time buyers, they may simply not be able to make whole on crazy prices they offered to seal the deal.
Showing buyers comparables on listings that sold and getting details on those transactions (such as if an appraisal contingency came into play or was waived) is helpful information to share with the seller.
This is another area where armchair experts surrounding a buyer or seller often get it plain wrong. Most haven’t read a current real estate contract and related forms in use, and have a lot of misperceptions about how things work.
They may be referencing things from their last real estate sale, which happened 10 or more years ago in a completely different state. Some buyers are told they don’t have to show how much money they are putting down and can just put a deposit down to show good faith. Unfortunately, an offer cannot be evaluated based on the escrow deposit alone.
Many buyers are told they can cancel the contract in a certain number of days, almost like an infomercial advertising a product. Sellers may have been told they can get out of their contract if they don’t like what a buyer is doing and find another buyer. Not so fast.
This is where an agent needs to review the contract and what the rights and obligations are required of the buyer and seller. Buyers need to understand what provisions allow them to get out of the contract and what the time frames are for doing so.
Buyers also need to make sure they understand that once they move past contingencies, their ability to cancel a contract at that point would not come without financial consequences (as it relates to their escrow deposit). Coach buyers to direct all contract questions and interpretations to you — not their well-meaning friends or relatives.
The state of the real estate market
Nearly everyone has an opinion on this one. Depending on the state of the market, buyers may be told that the market is about to crash and that they shouldn’t buy or overpay for a property right now.
Buyers may also be told that it’s a buyer’s market and they can get a deal, or they may be told to hold out because a wave of foreclosures is likely coming. All of this armchair advice is typically based on opinion, not facts, and can have damaging consequences.
Sellers may have a false sense about how much their home is really worth and what terms they can dictate to buyers. Just because one home in the neighborhood got a crazy asking price and terms doesn’t mean that every house in the neighborhood is going to sell in the same way.
An agent needs to combat this by not only having a strong understanding of their market, but also the broader real estate market on a national level. Absorb all of the information you can by staying on top of your local market statistics as well as stats on the national level.
Keep current on the latest real estate information and economic updates, and be a voracious consumer of all things real estate by reading, attending conferences and webinars, and just talking to agents, appraisers, builders and lenders.
This way, you will be full of talking points to tackle unfounded perceptions, and you’ll be able to refute various opinions with substance and facts.
An agent will always have to combat bad advice and misperceptions about the buying and selling process. Agents who have a command of market data and insight will be the ones best equipped to dispel misinformation, and aptly guide buyers and sellers to make good decisions with the information they have.
Cara Ameer is a broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. You can follow her on Facebook or Twitter.