Lack of Benefit - 2nd E-mail

So, the Prospective Buyer from the last post responded that he still didn't think he'd be interested in having an agent represent him. Ultimately, by doing this, he is putting himself in a place in which an unknown, trained, professional agent is going to be working against him in contract negotiation. Since this choice makes so little sense to me, and since I'm always one for a challenge, I wrote the below e-mail, expanding my views. So, enjoy!

Peace,
Greg


Hey, Prospective Buyer,

Thanks for your honesty and for the quick reply to my e-mail from this morning. You obviously have a remarkable attention to detail, and I can appreciate that (I tell all of my clients that they will find me a little OCD about some things, but that this actually makes me a better agent for them).

Anyway, Prospective Buyer, you are kind of an anomaly to me, which is probably the biggest reason that I am replying here (I am intrigued by what I don’t understand :) ). Since I became a Realtor, I’ve met many people that felt strongly that a buyer’s agent added little to zero value in a real estate transaction. However, only a handful of these people that I’ve seen have actually acted on this belief in avoiding the services of a buyers’ agent when starting the process of buying a house. Out of these, the others accented to working with a Realtor (me) once they spoke with an agent (me) that actually proved competent and even the slightest bit valuable (again, me). In your case, you seem as convinced as one could possibly be that working with an agent would be nothing but a waste of your time and (indirectly through purchase price) money, to the point that I want to read what you’ve read and hear what you’ve heard to make sure that I understand things correctly! So, seriously, if you don’t mind, pass on whatever you’ve got if it’s readily “pass-on-able.” :)

Still, while I am always open to correction, I do understand things a certain way from my experience and training as a real estate professional, and I wanted to take this opportunity to flesh out the strongest case for using a Realtor when buying a home that I could from the most practical level. Hopefully, you will be intrigued enough to follow along, but I understand if this exercise is more for me than it is for you. :)

BEST CASE SCENARIO FOR NOT HAVING A BUYER’S AGENT:

So, Prospective Buyer, say you met with me at 306 South Mount St., and you decided that you had to have it. Unlike most agents, I would not try to double-end this deal, and would instead attempt to call up a colleague of mine so that you could be represented (I don’t ever want to deal with the potential liability issues of being the only agent in a transaction when I am representing the seller; the extra money isn’t worth it in my mind). You, being you, would have likely stopped me from calling my colleague. At that point, I would have had you sign a document stating that you are fully aware that I work for the seller and against you and I would have given you the 30-40 pages of MAR contract paperwork to fill out without any guidance from me. The seller would be happy that they were saving 3% on the transaction (I wouldn’t want any of it…again, unlike most agents), but who knows how your contract would come out (by representing the seller, I am prohibited by law from giving you any “magisterial” advice). But, let’s assume you fill the contract out appropriately and with your best interests fully protected, and the sellers ratify it, who’s to say that they’d be willing to drop the whole $7,500 off the sales price? (For instance, maybe they’d prefer you’d be represented for the sake of making sure the transaction is on the up-and-up and that everything is done appropriately and, as a result, will only drop the sales price $6,000.) Also, you are going to have to give the deposit directly to the broker of the seller, as opposed to your own broker…how’s that going to feel?

Well, let’s say the sellers were feeling generous and you are fine with giving me the deposit check. Great!, but now what do you do? As a good buyer’s agent, two-thirds to three-quarters of my job happens post-ratified contract (anyone can find a house; only a good agent can appropriately direct a transaction). Are you expecting me, as the seller’s agent to help you every step of the way from here on out? Who’s going to network with the lender, the appraiser, the title agent, the termite inspector, the home inspector, and the seller? Any names I give you are going to be referral partners of mine…is this going to be okay with you? Well, let’s assume all this works itself out…so, what have you saved? You saved $7,500 (maybe…read on), which is roughly $50-$75 on a monthly payment, depending on your credit and your loan program. A good buyer’s agent could have helped you save that same $7,500 on the sales price (if not more) but, this way, you had to spend all the extra time, money, and effort representing yourself. (Even if the agent couldn’t save you the full $7,500, I feel like I could easily argue that this expenditure of time, money, and effort is as costly, if not more costly, as the $50-$75 on the monthly payment.)

So, best case scenario: YOU SAVE $nothing at all (if not costing yourself money) - $75/month in owning your home, and have earned $nothing at all (if not costing yourself money) to $7,500 for when you sell the home.

WORST CASE SCENARIO:

Man, I don’t know where to start…

-Not working with contracts on a daily basis, where will you be at in terms of seller’s help and whatnot? Don’t you run the risk of costing yourself the money you might save on the sale’s price in other areas like seller’s help?

-Do you have the pre-approval letter from your bank appropriately written to put you in a strong negotiating position?

-What happens if there is a competing offer (and don’t think this doesn’t happen all the time in this market in the under $300K range, because good homes have multiple offers more often than you would think…I’ve helped half of my buyers get their homes in competing situations this year)? Are you going to be able to make the terms attractive enough to win you that home? Do you know how to appropriately use an escalation clause?

-With a large number of foreclosures on the market, it is somewhat likely that you may stumble across a foreclosure that you want to buy. Well, most (if not all) foreclosures have AS IS sale contingencies. Are you going to be able to craft modified property inspection contingencies for the termite and home inspection that will enable you to have the inspections you need to have while still having the ability to break the contract should you find something wrong – AND get your deposit back?

-What about when the listing agent and seller are very slow in responding to an offer on a property? Every time you call to follow up you look more and more “desperate” and lose any negotiating edge you might have had, while a good agent can call 3-4 times a day and do nothing but strengthen the seller’s urgency to respond to your offer.

So, worst case scenario: you cost yourself hundreds (if not thousands) of dollars, lots of time, and the best home on the market for you (and I belief that this is far from being “over-dramatic,” because I can go there if you want).

CONCLUDING THOUGHTS: :)

Perspective Buyer, I could have gone on with the worst case scenario stuff, but I think (hope) I’ve proved my point. If nothing else, I hope you can see that there might be a ton of value in having a buyers’ agent, even if you still feel that having a buyer’s agent is not for you. I am the first to say that today’s buyers’ agents are not as vital as they were before in knowing the market, because the internet has given buyers the power to study and learn the market for themselves. Still, I would argue that the way a good agent helps their clients get through the growing mountains of paperwork and bs in this industry, as well as the way that a good agent ensures that the clients’ best interests are always looked after from the very beginning to the very end of a transaction, makes a good buyers’ agent more indispensable now that every before.

So, that’s where I’m coming from. I’ll e-mail you next week if I don’t hear from you first to see if you have any sort of thoughts in response (and, seriously, any links to some solid counter points that I should read through to potentially grow a more balanced viewpoint), and then I promise to leave you alone if I don’t hear from you after that. I am just an agent that is passionate about my job and takes it very seriously, and I feel like I can do more for you as you buy your home than you give any buyers’ agent credit.

Have a great night, Perspective Buyer, and hopefully I’ll hear from you before I send that one last e-mail next week.

Peace,
Greg

The Lack of Benefit to Being Unrepresented

I never even heard of the Renaissance Festival until I got married. Then, the first Renaissance Festival that I went to included lots of me looking at my wife (Sara is a complete Renn Fest junkie) and saying, “What the heck have you gotten me into?” Then I learned that my wife was not alone in her peculiar love for this somewhat strange event. Fortunately, over the years, I have grown to appreciate the extravaganza known as the Renaissance Festival. Still, when I sent out an e-mail to my business contacts asking for people to vote whether they wanted me to host an event at the Renaissance Festival, at a bowling alley, or at a miniature golf course, I never expected the later to only account for 3 votes total, while the former just destroyed the vote! So, September 8th at the Renaissance Festival with 75 clients, friends, and business contacts it is. :)

Meanwhile, I guess I milked that last post for as long as I could, although I really wish there was a simple way to have that post remain always visible on this blog, because I think it defines the core of how I think about this industry. Related to that is some thoughts I have about agency related to buyers who have this strange inclination to prefer to be unrepresented in a transaction. Don't get me wrong...I understand the reasoning that most of these type of buyers go through, but the beginning points of the reasoning seems odd to me. Anyway, check out this e-mail that I wrote to a potential client yesterday:

Potential Client,

It was a pleasure speaking with on Saturday, and I hope I was somewhat helpful at the very least.

As I said on the phone, I don’t believe that the average buyer (no matter how experienced in any aspect of buying a home) has any advantage in working without an agent, as the average listing agent will just pocket more in commissions and now that buyer is unrepresented. A good buyer’s agent provides a high degree of consumer protection while also saving their clients time, money, and stress – period. Furthermore, a good buyer’s agent also helps you get a better grasp in regards to all of your options in the way of areas and price ranges.

I work very hard for my clients and, despite only two years in the industry, have built up to the point that I have picked up 17 new buyer clients in the last two months alone, spanning the entire metro Baltimore area (most of them in the same exact price range that you are in). I am also one of the few agents that is willing to invest time, money, and energy into trying to find homes for sale that no one else knows about (I send out letters to homeowners in specific areas that my clients are interested in trying to find people that are preparing to sell their homes, but who haven’t yet listed them)...

Well, that’s about it for now, Potential Client. If I don’t hear from you, I’ll drop you a line next week. In the meantime, if there are any questions that...you have that I can be at all helpful in answering, don’t hesitate to e-mail me or call me at any time.

Thanks, Potential Client.

Peace,
Greg

I don't know...sometimes I think I should start a business selling packs of e-mail templates for Realtors that can be used in different situations. :)

Well, thanks for reading.

Peace,
Greg