Real estate transactions and jigsaw puzzles are very alike. No transaction in real estate comes without multiple parties, motives, challenges and timelines. One of the many responsibilities of a real estate agent is to organize all the competing interests of a transaction all in the hopes of reaching a successfully closed deal. “Coordinating the chaos” is a very important part of the role of a real estate agent in a transaction. Although it may sound quick and easy, that really is not the case, in reality agents struggle to properly set and manage their client’s expectations of how the chaos is going to set forth.
Despite being critical, client expectations are often overlooked as a part of the agent/client relationship. “You never told me to expect any of this.” I is one of the few things that makes it to the list of worst things a client can say but the sound of “You completely prepared us for this whole process.” Is so reassuring and there is surely nothing better than hearing this.
Setting and Managing Client Expectations for Your Real Estate Transactions:
These are the four basic client expectations that you should try addressing:
Expectation 1: The Scope of the Overall Process:
Most of what the general public knows about real estate is probably from social media, the internet and real estate shows they see on TV. Most clients also believe that the whole process is as easy as picking 1 out of the 3 houses at a viewing, negotiating a favourable sales price and boom! Sold, and all of that in the span of a day, just like on TV. As agents, we know better than that.
Agents should walk their clients through what a typical transaction entails for the properties they are looking for.
And you may wonder how? Firstly, ask your client how their experience with real estate transactions has been previously. Secondly, ask them if they have any concerns. Thirdly, ask them if they mind you sharing a broad level overview of what they might expect. Finally, have a presentation ready to show them so you can walk them through a typical transaction from A-Z.
You also have to decide how detailed you want your overview to be. Consider topics like communication during the transaction, condition of the property, marketing, negotiation process, timelines, transfer of ownership etc. Customize your presentation to fit the concerns of the clients. Include property access, financial outcomes and other obstacles that might come your way right from contract to closing.
Expectation 2: Property Access:
Sellers and buyers need to have a clear understanding of who can and will have access to the property in question.
Sellers need a clear understanding of showings, open houses and inspections could entail. Sellers need to understand the proper protocol for preparing a property for viewing as well as the surveillance rules, vacating the premises in certain circumstances, and preparing the property for ownership transfer. On the other hand, buyers need a clean understanding of booking showings and the implied commitment of time that appointments have. Buyers also need to know how often they will be allowed to inspect a property, who can make visits and what can be done to a property prior to closing.
Access to the property is a common sticking point between seller and buyers during a transaction. The clearer you can describe what both parties can expect, the smoother the transaction will go.
Expectation 3: Financial Outcomes:
Expectations from sellers and buyers are endless, a major expectation that buyers and sellers share is the potential financial outcomes. For most people, their homes are their largest investments. Therefore, both the seller and buyer need to have a clear expectation of how their financial situation will be impacted by the deal.
As an agent, you should prepare a full seller-net sheet for their sellers. Seller-net sheets should include any and all anticipated costs is will take to sell their property against the backdrop of anticipated market value. It is true that all costs may not be anticipated but there are certain expenses that are standard to all sellers and they will encounter them. We should be able to prepare a list of these expenditures.
Likewise, agents should also prepare their buyers for all expenses that they will incur. They should be educated on loan costs, contract fees, inspection expenses etc. Buyers should be advised to not do anything leading up to the closing of the contract which may negatively affect their ability to perform on the contract from a financial standpoint. Advise your buyer to be in consultation with their lender and to get financial advice before making any decisions that may impact their credit or the loan process.
Expectation 4: Potential Roadblocks From Contract to Closing:
The last expectation I would highly recommend that you include in your presentation is preparing sellers and buyers for the potential roadblocks that can exist between signing a purchase contract and getting to the closing table.
I used to get excited when I got a property under contract as a new real estate agent. I quickly learned, however, that it was far more exciting to actually take that contract and successfully make it to the closing table.
Agents would be wise to prepare sellers and buyers for the minefield that exists between contract and closing. Most transactions that do not make it to closing are the result of inspections, the loan process, repair negotiations, appraisals, and legal research—all the things that can happen after a property is under contract.
Preparing sellers and buyers for potential roadblocks may not prevent the issues from happening, but it may give you a fighting chance to deal with level-headed parties. Human nature tells us that people typically handle stress and troublesome circumstances they are prepared for far better than things that catch them off guard.
The more you can prepare your clients and manage their expectations, the more success you are going to have as an agent in your real estate transactions.