Title & Escrow


How to Win Over Buyers

No matter how well educated your buyers are, they still need information on how a real estate transaction works. Use consultation appointments to inform them and become a trusted resource in the process.

May 2011 | By Rich Levin
 
Buyers are more educated in today’s market. They have more access to information regarding properties and their value. Plus there are practically unlimited real estate resources online for practitioners.

These combined factors should make the real estate professional’s job easier, but for many, they don’t. Why? There are two problems:

  • The information may not be accurate or relevant to a specific market.
  • The information is almost certainly incomplete.

“An Educated Consumer Is Our Best Customer”

Two adages speak to today’s buyer:

Whether the real estate pro finds buyers easier or more difficult to work with depends on whether that practitioner respects and completes the buyers’ education.

Have the buyers obtained a copy of the contract and paperwork online? Probably not, and most paperwork has many pages plus addenda. Do the buyers know what real estate trends apply to their market? Do they know what to do when the inspection reveals a problem?

Contracts, inspections, financing, negotiation — there are far too many steps in the transaction process for most buyers to pick up on their own.

A Simple and Powerful Process

The most successful buyer’s agents learn to ask a few simple questions (adjust to the circumstances of you and your buyer accordingly):

“The purchase documents in our area are six pages, plus disclosures and addenda. Has anyone given you a copy of the latest documents and reviewed with you the parts that are going to be relevant for your purchase? I find it helps a lot to be familiar with the documents so you aren’t seeing them for the first time when you’re making that $200,000 decision. Would you like to get a copy and take a look at those together?”

“There are inspectors, appraisers, attorneys, title companies, lenders, and real estate agents involved in the transaction. Would it be helpful to go through the process step-by-step so you know what to expect and get some idea of what might come up? It often reduces some pressure and allows you to enjoy the process with greater confidence. Would that be helpful to you?”

These simple questions lead buyers to make a consultation appointment, which can establish enormous confidence and trust in you, the agent. Buyers subsequently go along more easily with your recommendations through the negotiations, which actually can reduce the number of homes they need to view. They find the experience so valuable that they begin to refer you to friends and relatives.

At the consultation appointment, review each step of the process, educating and preparing buyers. Do they understand the type of financing they’re trying to get? Do they have any questions about it? Even if you don’t have the answers, you can take the lead getting a clarification and making sure buyers are aware of what’s included in their closing costs and their payments, and in reducing cash needed with seller contributions.

You also should explain what buyers can expect: Describe problems that could arise and how you’ve solved them and protected buyers’ interests in the past.

As you conduct these presentations, you’ll quickly discover two things: how much buyers don’t know — even the educated ones — and how much they misunderstand. As you realize the value and power of these consultations, you’ll learn to go into deep detail, continuously confirming buyers’ understanding.

Changing laws and financing situations — such as explaining short sales and foreclosure procedures — are just a few reasons that the time you spend preparing buyers works to everyone’s benefit.

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Survey: Sellers Are Happy, But Why Aren’t Buyers?

Daily Real Estate News | Tuesday, August 02, 2011

 

Home sellers are more satisfied with real estate company services compared to last year, but buyers are less satisfied, according to the 2011 Home Buyer/Seller Study by J.D. Power and Associates, which gauged customer satisfaction of more than 3,500 buyers and sellers among the nation's largest real estate companies.

So what has buyers unhappy — in a “buyer’s market” no less? Buyers showed less satisfaction with the agent/salesperson, in particular, which was found to be the most influential aspect of buyer satisfaction with a real estate company.

“Although the current real estate market—with the confluence of low home prices and historically low interest rates—creates the perception of a buyers’ market, there are still traditional barriers to purchase in place, which could be negatively affecting buyer satisfaction with their agent,” Jim Howland, senior director of the real estate and construction practice at J.D. Power and Associates, said in a statement. “Agents who properly manage client expectations around the home buying process and communicate with clients about potential challenges—such as higher requirements for down payments, tighter loan standards and additional costs on top of the monthly mortgage—may be better able to keep clients satisfied.”

Meanwhile, sellers love their agents. They showed higher marks this year for marketing, office, and the “variety of additional services” real estate companies are providing, Howland says.

Source: “Despite ‘Buyers’ Market’ Conditions, Real Estate Company Satisfaction Improves among Sellers, but Declines among Buyers,” J.D. Power & Associates (July 27, 2011)

Read more:
How to Win Over Buyers

Buyers Rejected for Loans Can Now Find Out Why

Daily Real Estate News | Thursday, July 21, 2011
A provision in the Dodd-Frank financial reform law, which took effect this week, is requiring lenders to provide consumers with a free credit score, which will help provide new insights into why they may have been rejected for a loan or did not qualify for the best, lowest rate.

While borrowers can access their credit scores from the credit bureaus, the credit score that a lender uses isn’t always the same one that the credit bureau provides you. According to a report by the Consumer Financial Protection Bureau, some credit bureaus sell consumers “educational” scores that aren’t the same ones used by lenders, or these bureaus may base the score on a different model than the one lenders use.

Now, borrowers for the first time will get a more accurate view of what credit score lenders are using to base their mortgage on.

Under the new provision, lenders will be required to provide potential borrowers with a free credit score whenever they reject an application for a loan. Lenders must provide borrowers with an “adverse action” notice, which will include their credit scores as well as an explanation of why they were rejected for a loan.

Lenders will also be required to provide a free credit score and an explanation whenever they approve a loan but at a higher rate than what is given to their best customers.

Mark Greene, CEO of FICO, says that many borrowers may be surprised to learn that they didn’t qualify for a lender’s lowest rate when applying for a loan.

Source: “Turned Down for a Loan? Now You Can Find Out Why; Consumers Can Also Get Free Credit Scores if Loan Rate Isn’t Best Available,” USA Today (July 21, 2011)

Where Closing Costs Are the Highest, Lowest

Daily Real Estate News | Wednesday, July 20, 2011 
 
Closing costs on mortgages have increased dramatically nationwide, increasing on average 8.8 percent from one year ago, according to a new survey from Bankrate. Origination, title, and third-party fees on a $200,000 loan, for example, averaged $4,070 — that’s up from $3,741 from Bankrate survey in June 2010.

Why the increase? Analysts say it’s because lenders have to do extra work in approving mortgage applications due to increased scrutiny and tighter lending regulations.

The survey found that it can pay off for borrowers to shop around for a mortgage. In New York, for example, lender origination fees were found to vary anywhere from $700 to more than $4,000.

Most-Expensive States for Closing Costs

1. New York: $6,183

2. Texas: $4,944

3. Utah: $4,906

4. California/San Francisco: $4,832

5. Idaho: $4,643

Least-Expensive States for Closing Costs

1. Arkansas: $3,378

2. North Carolina: $3,410

3. Indiana: $3,430

4. Iowa: $3,474

5. Alabama: $3,501