Agent2Agent in Allen>Question Details

Jacqueline S…, Real Estate Pro in 75070

What is the best way to handle buyers who keep wanting to look at homes above their qualification level?

Asked by Jacqueline Schrock, 75070 Tue Sep 20, 2011

Buyers think that a "good agent" can negotiate houses that are considerably above their buying level....down to a price they can afford.

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I've had these folks before and normally if they are too stubborn you just have to let them go. To me you can blame our own industry for this notion. As the idea of a good agent gets tied to people getting a better deal. When in actuality a good agent is merely someone educated and responsive to their clients needs. For one last ditch effort you can show them the solds at the prices they keep asking and show that the % of lp they are selling for is in no way in the range they are looking.
2 votes Thank Flag Link Tue Sep 20, 2011
This is an old question but is still valid. In today's hot sellers market most sellers are receiving multiple offers and above list price offers. Both your buyers and you will be wasting your time big time if your buyers think they can get the home at the price they want. You can tell them about current market condition or if you have the time and patience, let them experience their technique and see how it hits them in the face. Some buyers will not listen to you and will only listen after they have experienced it themselves. Another way is to ask them a question, what will they do if they were the sellers? Of course, there are clients (buyers or sellers) who never learn and these are clients that you need to let go.
1 vote Thank Flag Link Tue Mar 3, 2015
I think you either have to cut them loose now or you might loose them later. If you do show them and write offers that are "low ball" and never get anything accepted they will most likely decided not to work with you thinking that you just can negotiate well. Either way you loose, but the first way is with a lot less expense.
1 vote Thank Flag Link Fri Sep 23, 2011
Wow. They sound like very unrealistic buyers. I would show them stats of what is selling and at what % of list price. If they aren't open to hearing it I would just end the relationship. It's not worth spinning your wheels with buyers that aren't really buyers. Good luck!
1 vote Thank Flag Link Fri Sep 23, 2011
I feel the best answer is the one from Angel. Sellers and their agents want to know that your buyers are qualified before opening up they listings. We all want to find the perfect home for our buyers but driving all over showing properties they are not qualified to buy will never get them to the closing table; and quite possibly they could loose the opportunity to buy the right house because they were too busy touring property. We know the market but cannot read the minds of the sellers. Stand strong, be sure you have the pre-qual in hand or Proof of funds and go from there.
1 vote Thank Flag Link Wed Sep 21, 2011
Personally I do not show properties to buyers without a pre-approval letter or proof of funds. I preffer to spent some time with the buyer in my office or somewhere else as part of the education process or preparedness pryor to start searching and showing. Believe me, that when the realtor work that way, the buyer appreciates more seriously our efforts.
1 vote Thank Flag Link Wed Sep 21, 2011
Great question I have had this happen several times with clients that are moving from the Midwest to S. California.
Ehat I do is send them everything in that price range and explain this is what the market is bearing right now for this price range. Once thay causally glance online I up the price range a little higher to where there taste is and ask if they are able to get a gift letter (after they are intrested in a property).

Good Luck
http://www.buyandsellpropertyonline.com
1 vote Thank Flag Link Tue Sep 20, 2011
I educate my buyers PRIOR EVEN STARTING TO LOOK therefore I DON'T exhaust time .
Web Reference: http://www.lynn911.com
1 vote Thank Flag Link Tue Sep 20, 2011
Tell them as long as they only want to look at houses within their qual range you pay for the gas. But as soon as they go above the range they pay for a tank of gas ever trip you go out.

Good luck .. Bruce
1 vote Thank Flag Link Tue Sep 20, 2011
Let them know it's not worth your time, their time or the imposition of having the sellers be away from their home for a potential buyer that can't even qualify. I wouldn't cut them loose, I would just try to make them understand.
0 votes Thank Flag Link Sun Mar 1, 2015
Whatever happened to "just say no?". One of my questions that I ask every buyer is what price are you trying to stay under? That gives me the parameters I need to set up their searches.

When the buyer "finds" a home that did not fall within those parameters, we discuss why it did not meet their needs, budgetary, size, style or whatever. Then we as a team can decide to adjust the search, see the home or move on.

The 97% rule is good, although it doesn't fit in every case. It really depends on how hard you are willing to work for an unreasonable client. If it is one house that is overpriced, stagnant on the market I might have a word with the listing agent to see what I could learn about the sellers motivation. That said, I sure wouldn't exceed my clients budget on a regular basis,.

What is your limit? How far above their price point are you willing to show them? Do they want to risk falling in love with a home only to find that the seller will not negotiate to meet their price?
0 votes Thank Flag Link Fri Sep 23, 2011
The best way to handle this is to tell them the truth. If the homes are 10k or less above the prince range, ok maybe is a reason to show. A "good agent" will do a lot of things for their clients. Show them the facts i.e. the comps of the homes above their qualifications that usually have higher taxes as well, thus increasing the monthly payment.
0 votes Thank Flag Link Fri Sep 23, 2011
Pull your hair out, take a Xanex, Yoga? Seriously, these Buyers need a sitdown and a reality check!
0 votes Thank Flag Link Fri Sep 23, 2011
A good agent can move the price down for a buyer but the reverse holds true for the sellers agent. I only deal with investors and I tend not to run into this issue. Having said that, I would show them one, possibly two homes and that would be it. If they want to low ball, let them do that a few times but do what the investors do. Submit offers sight unseen and then visit the homes that counter at a decent price. Other than that, I wouldn't do it since real estate is my livelihood, not a hobby.

Jeffrey Sklar
Broker
Property Manager
Southern Nevada Property Management
0 votes Thank Flag Link Thu Sep 22, 2011
Show them the comps.....
Typically from what I've seen is somewhere in the 97% Sale to List price ratio.

You might also do a seller net sheet for them....
I've done this to show buyers how much the seller will net after it is all said and done.
Then look up what they owe.
I think in most cases here it is unusually for a seller to bring a check to $10,000 or $20,000 or $30,000 to help a buyer get in a home. Some can, but ask your buyer if they could do that to help the next buyer?

They probably just don't understand the process.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Thu Sep 22, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Hi Jacqueline. I'm not local to your area but I found your question interesting. Where I am (New York City) it's usually the opposite as prices here are very high. I suspect one could purchase a four bed/4 bath home with every amenity in your area for the price of a studio Coop here. I've not had your problem crop up as most buyers here tend to stay in their price comfort zone.

I would agree with Akhila about being blunt and courteous at the same time. This is of course based on the buyers pre-qual, assets, credit and time on the job. It can be daunting as some buyers feel they can or should be able to negotiate a purchase for ridiculous lowball numbers. The concept of a "buyers market" is sometimes unrealistic but we try our best and we always earn our commission through hard work. I wish you all the best.
0 votes Thank Flag Link Wed Sep 21, 2011
You didn't say how far above their approved level. My company has a great feature called Trend Graphics that shows listing price vs selling price and usually it is somehwere around 97%. Maybe if you can find those statistics that would help. I agree with below you need to be blunt and tell them not only it is a waste of your time but theirs as well. Bless their little hearts these types of buyers seem to feel that there is always a deal out there for them, like maybe the seller will think they are such great buyers they will drop the price just for them!
0 votes Thank Flag Link Wed Sep 21, 2011
I think this is one of the aspects of the job. Being blunt and diplomatic at the same time so that the other person gets the message. And if they don't then do give one last shot before moving on.
0 votes Thank Flag Link Wed Sep 21, 2011
It is necessary to be as blunt as possible. I am sure you don't have time to waste.
0 votes Thank Flag Link Wed Sep 21, 2011
Hi, I love when this situation arises. Our job is to find the client/customer a home that meets their needs and negotiate a fair market price for them. Many buyers don't seem to understand the "fair market price" part. If I feel I can get my buyers to eventually come down to earth I will keep working with them. I always tell my clients we need to make an educated offer based on the sold comps and what they really feel it's worth. If we go in blindly and can't back-up how we came to our offer number then we look like we are just shooting wildly. Most likely the seller won't take us seriously and that sets the stage for further negotiation. Sometimes buyers have to lose a property or two to get it and then there are the chance occurances that they will succeed with a seller in duress.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
0 votes Thank Flag Link Wed Sep 21, 2011
Jacqueline,
Are the buyers coming with their preapprovals? If so let them know that the sellers are asking for copies of the preapproval before making their homes available. That is what I would do as a seller in this market. HUD, FNMA & FHLMC REO requires this, so if the majority of your sellers don't show only REO and explain to them why you must show preapprovals. The preapproval show the maximum they can get a mortgage for. So if the buyer has a preapproval for $150,000, they cannot view REOs for $300,000.
0 votes Thank Flag Link Wed Sep 21, 2011
It's important to discuss the the market with them. Sure there are many homes that are overpriced and the list price for a home is not a good determination of the homes actual value. When your clients show you homes you know are out of their price range I would shoe them other homes that were similar and what they have sold for.

While this is a buyer's market there are not many seller's who are willing to give the home away and potential serious buyers need to understand the market. Take the time to educate them upfront and they will have the knowledge to make good informed choices and not waste their time or yours.

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
listings@dongroff.com
0 votes Thank Flag Link Wed Sep 21, 2011
Like Lynn, I have a discussion before seeing the first home.
A real important role play involves acknowledging they are looking for a deal. Yes, I want to find them a deal, I don't want to be forever looking.

Assume we find the home listed above their price point at XXXXX. We do the research and the value of the home is XXXX. The buyers offers XX. The counter is XXXX. What will you do next dear buyer? Ah, perhaps you should be looking at REO and short sales. However, if they respond to the counter with X, the previous suggestion is optional.

It's a business, not a hobby.
0 votes Thank Flag Link Wed Sep 21, 2011
I agree with the answer above. I have wasted countless days and weeks, usually when I have had to drop everything to show them homes. They are usually very demanding people that drain your time and your patience. See if there is another professional realtor in your office that has handled these type people before and have gotten through to them. Offer to give your clients to him/her in exchange for a referrral fee. I have told clients before that I may not be the match for them as I obviously am not able to communicate with them effectively concerning prices. They will either change their mind and be more realistic or they might prefer to hear it from another person. Your broker or manager might also be able to talk to them about market conditions and they believe him/her. Good luck, I vow everytime to drop these people but sometimes I try to make it work only to have them cause me more heartache!
0 votes Thank Flag Link Tue Sep 20, 2011
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