What to Do When the Homeowner Does Not Have a Clue
There’s a lot of competition out there, to be sure. Brand-new agents have to compete with experienced veterans, and that can be doubly difficult in a crowded real estate market. Remember the old 80/20 rule? Twenty percent of the people in any given industry account for 80% of the sales? I’ve got some bad news. In real estate, that’s gone up to 90/10. In my first year as a real estate agent, I was putting up a directional sign for a listing and a young couple came up to me and the wife said, “We were thinking of buying a house. Do you think you can help us?” “Certainly!” I said and handed them my card. “How long have you been a real estate agent?” the wife continued. “About six months,” I said. The smile faded from her face and she said, “Oh, well, we were looking for a more experienced agent. Thanks anyway.”
The mistake that this young woman made was not in asking questions, but in asking the wrong questions. I know new agents who are genius real estate marketers and salespersons. On the other hand, I know 30-year veterans who should have been run out of town on a rail long ago. The truth is, the number of years you have been in the business has little to do with the success that you can achieve for your clients. What you bring to the table from past experiences is a much better indicator of success than the number of years you have been selling real estate. For example, that young wife who brushed me aside should have understood that I had just spent six years running a successful $3 million company where I learned how to negotiate and how to market; two crucial skills for a successful real estate agent. It didn’t matter to her that I made $101,000 in my first year as a real estate agent, suggesting not only that other buyers and sellers had taken a chance on me, but that the faith they placed in me was well founded, because I had closed every one of those transactions.
All real estate agents, and particularly new real estate agents, should see themselves as educators. One of the main reasons why homeowners are reluctant to use new agents is that they have a fundamental misunderstanding of how agency works. If you can educate a potential client and explain to them the mistake they are making (without calling it a mistake; never call the client wrong!), then you will be able to get them to list their property with you.
Many homeowners who want to sell their homes follow a line of reasoning like this: “I’ll get a more experienced agent to list my house and then this agent, who already knows that I am selling my house, will bring me a buyer. Right?”
Wrong. Here’s how a new agent might handle that:
Homeowner: “I want to list with a more experienced agent. But you can bring me a buyer.”
You: “Sorry, I can’t.”
“What do you mean?”
“Just that. You have refused to sign a listing agreement with me, which is a promise to market your property. Do you agree that in order to attract a buyer, I first must have something to sell?”
“Ok. In order to bring you a buyer, I must have your written authorization in the form of a listing agreement. Will shoppers be attracted to an empty store?”
“No, I guess not.”
“Not only have you not given me the authorization to bring you a buyer, you have given that exclusive right to someone else.”
“Why can’t you just tell your buyers about my house?”
“That would be marketing it, and I’ve already told you that I can’t do that without your written authorization. To do so would be a violation of state law and the Realtor Code of Ethics.”
“Why is it a violation?”
“Because if I have a written agreement with my buyers, then I am promising them that I will represent only their interests. If I market a property to them that they haven’t asked to see, I would be placing your interests above theirs and would be in violation of my fiduciary duties to them. What’s worse, is it’s likely they would see that, and it probably would prompt them to look for another agent. So I would not only fail to get your listing sold but I would lose my buyers, too. The only way I can sell your property as a buyer’s agent is if it meets all or most of my buyers’ search criteria AND they ask to see it AND they decide to buy it AND you accept their offer. The chances of all those things happening are next to zero.”
“Why would it be zero?”
“How many active listings are there in this area?”
“I don’t know.”
“Right now, there are about 850. So at best, you would have a roughly 1 in 850 chance that one of my buyers would be looking to buy your exact house. Those are much worse odds than drawing a full house in poker, which is about 1 in 700. Are you sure you want to gamble like that with the most important investment that you have?”
Do I convert every seller, or even succeed in explaining agency to them? No. Do I have to? Not at all. I don’t need to convert them all; not even most of them. I only need about 12 sales a year to make a six figure income in real estate. That’s just one closing per month on average. Don’t be upset if a homeowner uses another agent because that house will sit unsold while you use it to sell your listing. Monitor those properties where the homeowner refused to list with you. Then wait for the property to expire. Once it has expired, you can approach the homeowners again. Send them a list of the properties you sold while they were trying to sell their house, even if it’s only one property. If your listing is only under contract, still send it to those homeowners who have expired. They may not decide to list with you, but you will have at least proven to them that they made the wrong choice of picking another agent.
By Mark Forror