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Managing expectations is often a nuanced endeavor but vital to the client management process. But the mastery of this soft skill is a requirement for the most effective real estate agents, especially in highly competitive markets and among first-time home buyers.
The most effective client management strategy is preparation. This means having market data on hand showing why a certain listing price will yield more offers, even when it may be lower than what they expect. Or maybe it’s explaining to eager buyers how to strategize a bid over asking price.
Homebuying is often one of the most important financial and emotional decisions a person can make, and it’s all too common for agents to let their clients lead the strategy.
It’s important for agents to level-set with clients and allow us to guide a seamless home sale or purchase process with their best interests in mind. Here are a few tips I use with clients of all levels of experience.
Set the stage
When you meet with a new client, schedule an in-person meeting for at least one hour. The point is to learn their objectives and goals, then build a strategy on how they can realistically achieve them. Ask them if they’re paying cash or financing. Discuss if they’ve created a reasonable budget that accounts for earnest money, down payments, and bidding wars.
If they’re financing, encourage them to shop around for the right lender and terms for their situation and get preapproved. Then, it’s level-setting time.
For first-time buyers, it’s especially important to discuss the current challenges in the market.
- Do they know the average cost of their dream home in the neighborhood they’re looking at?
- Was there a recent sale in that neighborhood that may increase the value of neighboring homes?
- Is there a backup neighborhood that better matches their budget and desire?
- How fast are they willing to move to purchase a home?
While not the conversation they’re likely to want, it’s important to let them know how challenging purchasing a dream home in today’s market can be.
Sellers also have their own unique expectations. Have conversations about the number of offers they might receive. Make sure to point out manufacturing a bidding war may take a thoughtful strategy. Encourage them to invest in their sale with staging services and make updates to improve the curb appeal. If you expect the home to receive multiple competitive offers, what demands will they want to include from sellers?
Develop a positive process
If your buyer client’s offers were rejected, propose a new strategy and thoroughly explain how modifying their approach will have a higher likelihood of success. Alternatively, if you’re submitting bids over the asking price, run a bid over asking analysis to show buyers when they might see a positive ROI with the estimated market appreciation.
Structuring offers to include appraisal waivers, quick closings, or waiving low-cost items in an inspection can result in acceptance.
Speak openly and honestly with your clients about balancing these types of concessions, especially when their offer is significantly over the asking price. Remind buyers there will be new opportunities to find their rightful home when managing the disappointment of a rejected offer.
Having these conversations not only sets their expectations, but you fulfill your duties as an experienced adviser.
Expectations can sour in a limited inventory market, but you can manage this dynamic with transparency, trust and preparation. Invest upfront in setting the expectations for clients and your partnership is far likelier to be more successful, effective and enjoyable experience.
Jenny Usaj is the employing broker and owner of Usaj Realty, a Denver real estate brokerage, and a member of the Denver Metro Association of Realtors Market Trends Committee.
