Agent2Agent in 92008>Question Details

Valli Lopez, Real Estate Pro in San Diego, CA

Dear Agents, anyone have advice on how to handle, educate, instruct a buyer who has "champagne taste with beer pocket books?" The

Asked by Valli Lopez, San Diego, CA Mon Jul 2, 2012

situation is: I've advised on 203k loans buy cheap and renovate, I've done everything I can, but she will look at the MLS listings and pass even though they are within budget because she can't see the potential. Is this a waste of time?

Help the community by answering this question:


Kawain Payne’s answer

You and I are living parrallel lives.

It is hard to say you have had enough. I have had buyers who run me to the ground, and right when I am reday to give upon them they buy something. My most difficult client actually ended up buying a home and referring me 2 clients after we closed. She even told her friends how hard she was to work with and that I did not give up on her.

That being said, there does come a time when you have to slow down. You can not keep showing home after home and the buyer not be motivated enough to at least make an offer.

Best of Luck to You,

Kawain Payne, Realtor
2 votes Thank Flag Link Fri Jul 6, 2012
I suspect that for you it is a waste of time. ...but only you can ultimately determine that. I've found that most people want more than they can afford...seems to be the human condition.

I usually give buyers a chance to adjust their expectations to the market. I judge their earnestness by a number of factors...whether they have a pre-approval, the degree to which the person communicates with me, how much driving I have to do, and the price point.

If after a few months, people keep dreaming and don't make the needed adjustments, I usually refer them to someone else.

One of the hardest things I've found to our job is that we don't get paid for our time. So, at some point, I need to see a path to success in order to keep spending time with a client.

Good luck.
2 votes Thank Flag Link Mon Jul 2, 2012
Some people are a waste of time and you as a Realtor® need to manage your business and your resources. I have an investor friend who used to flip 6-8 homes per year and averaged a 20-25% return the last couple of years. The last 2 properties he flipped his margin dropped to 10-15% because of competition in our marketplace. We have been out 3 times and looked at over 30 properties and have not found any he can make 20-25% on. He is unwilling to accept a lower margin (the profit is made on flips when the property is purchased correctly) and the banks have raised prices significantly or are doing their own flips. (Carpet & paint) Therefore we/he decided his is going to take a break for a couple of months then try again. The kicker on these transactions is the commission is usually preset by HUD at 1250.00 this does not give a Realtor® a lot of time to spend with a potential client and still make money.
2 votes Thank Flag Link Tue Jul 3, 2012
Agents can't educate buyers or sellers.
Let's face it, today most buyers and sellers, with the exception of about 1% of first time buyers, have a world of information about buying and selling at their fingertips long before they come in contact with an agent. There is nothing an agent can tell them that they haven't read or heard already. From market reports to detailed descriptions of the transaction process, they have access to as much information as agents do. Thanks to syndication, IDX, and sites such as Trulia, they also have access to the same inventory that agents have, with the exception of a pocket listing or two.
How civilians process and apply that information is the wild card. There are three potential outcomes:
1) the civilian ignores the mountain of free and easy to find information and lives in a fantasy world, in which case only a crazy agent would follow the civilian of the intellectual and financial cliff; the prudent agent deftly analyzes the situation and makes a polite exit before taking flight above the 1,000 foot gorge
2) the civilian digests the information available in a rational manner but pushes their agent to get "impossible" deals (how many agents advertise "I do miracles in one day, the impossible takes two" - I see that tired and uninspiring pitch weekly; it's one of the "kick me" signs that many agents pin to their own backs)
3) the civilian familiarizes themselves with all the information available and works with their agent to assess realistic opportunities and move on one that meets their needs and they abilities
My point is that clients don't need to be educated, they just need to think. If they can't, it's not the agent's fault and it's not the agent's job to make them.
That's all. Bye-bye.
2 votes Thank Flag Link Mon Jul 2, 2012
Have one final heart to heart talk with your client. Don't pull any punches. If she still doesn't change her outlook, refer her to another agent, and make space for a real buyer.
2 votes Thank Flag Link Mon Jul 2, 2012
We usually work those buyers when we don't have any other business. Explain to her once more how she might have to adjust her criteria. Cities, bedrooms, bathrooms, square footage etc.., If she is unwilling, just tell her to call you when she finds something she would like to see and put her on the back burner. Go out and find new business, hold an open house this weekend. Good luck!
1 vote Thank Flag Link Wed Jul 11, 2012
Keep her in your database. She is looking for that "diamond in the rough" that will probably never happen. She said "I don't want to pay more monthly" so she is not going to pay all cash. The all cash buyers are always going to win out on the best deals. She is always going to be slow in "pulling the trigger" so she will lose out. Don't fret that she isn't buying, she wants the info and it shouldn't be difficult for you to supply her with the mls info. Heck, she's already fed you with 4 referrals that closed.
1 vote Thank Flag Link Wed Jul 11, 2012
I would like to update everyone that I shot it straight with her today. The conversation went like this "We have been looking for 4 years! You will not find a home in Serra Mesa, with a pool, 3 bed, 2 bath over 1000sq ft, in habitable condition for less than $320k and if there is a home for less than that, you will need to buy it with cash."

On her end of the line: Silence.....then "I won't settle for higher because I don't want to pay more monthly" (hence champagne taste beer pocket books)

Me: "expand your area, try East County"

Her: "No way."

My conclusion: this is a big waste of time if she doesn't make changes from here on even to check up on status of properties or entertain her latest "idea".

Dilemma: She has given me 4 referrals in the course of 4 years that have closed, do I continue this circus or ask her nicely that I appreciate the referrals, keep em coming, here's gift card to a nice dinner, but research the answers to your questions yourself?
1 vote Thank Flag Link Tue Jul 10, 2012
I'd say to make an adjustment to your showing strategy. Have her use google maps street view to "preview" the locations. Then if she's interested have her drive out there, if she still is thinking of putting in an offer after that give the agent a call and try and find out how low the seller might be willing to go. After you've felt out where the property might sell for and made sure there's no stronger offers than what your client is willing to make THEN set up a time to go view it with her. This will save you gobs of time, and will save both of you frustration. This level of work is certainly worth it considering how amazing her referrals are.
Flag Tue Jun 10, 2014
Great question and many great answers.

I have been doing rehabs and renovations since 1993. and the 203K loans when they first came out.

Now for FIRST TIME HOME buyers, I do not recommend any rehab or fix up properties.

Fix up homes are for seasoned investors or those ppl who have bought and sold a few homes in the past.

IMHO, Move in ready is KEY for a first time buyers success and happiness.

Now, Champagne comes in many price points.

Show them the Champagne of their price points.

We can show some one a $150K dump that needs $100K work, 6 months of intense work and still only be worth $300K when finished. OR a MOVE IN READY $150K perfect condition home.

For a first time buyers are easily confused and over whelmed. Let's help them by making it easy.

that is part of our jobs, to listen between the words buyers are saying.

Best of Luck
1 vote Thank Flag Link Mon Jul 9, 2012
There are a lot of great answers here!!
1 vote Thank Flag Link Mon Jul 9, 2012
If she is balking because of the financing she may be right, 203k = custom REO in a lot of cases.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
1 vote Thank Flag Link Mon Jul 9, 2012
Yes it sounds as if your wasting your time. The problem most agents have is a simple one; their not busy enough. When your' consistently busy you realize that one of the few things we actually have control of in our chosen profession is how we use our own time. There are countless people we come into contact with on a regular basis who if we permit them to will squander our time. I see agents wasting time with buyers and seller all the time.

It's your business, you get to decide who your willing to spend time on. This doesn’t mean that your client is a bad person, it simply means she's either not really ready to buy in which case you can spend a little time with her when you've nothing better to do, or (and this is worse) she believes she knows more about real estate than you do in which case my advice is to do yourself a huge favor and tell her that things aren't working out and that you feel she'd be better of finding another agent.

This second approach has two benefits, the first is you'll immediately feel much better, trust me firing a pain in the ass client will make you feel 100 lbs lighter, time wasters weigh you down. The second benefit is that some clients once fired immediately beg forgiveness, acknowledge they've not been listening and suddenly their ready to pay attention and move forward.

Personally I'm not a huge fan of the 203K loans, they carry a lot of rules that most buyers simply are unwilling to comply with. I don't know your market at all, so it may be what they need to do, but perhaps you can find them a home that doesn’t require as much work as one that would ordinarily be a 203k candidate.

Good Luck.
1 vote Thank Flag Link Mon Jul 9, 2012
You are not an investment specialist are you? If not, don't waste your time on someone who may take your advise on something and then become the client from hell if she can't roll it over in six months for a huge profit. Home buyers are a lot easier to live with after the sale and it is from them that future business will come as a result of the hard work you put in finding them their dream house. Their referrals make getting up on Monday morning to go to the office knowing that someone not on your payroll was out there working for you at their work, church, golf course, or bridge club. I am 92 years old, haven't been in the business for 17 years but my memory is good and I remember what made my selling days a lot easier in the Indianapolis residential market. jdw
1 vote Thank Flag Link Sun Jul 8, 2012
It's not a waste of time if she has a need for housing, if she has a want for housing then it will be a waste of time.
1 vote Thank Flag Link Sun Jul 8, 2012
HI Vall!
My advice is to don,t give up on that client. The hardest clients give the best referrals. Everything is about the client and not about you. That is our job to make clients happy. Don,t think that you are wasting your time. You are not. Let her to see everything and then she will be educated with the housing market, and you will find out what is she really looking for and help her to find the right place that she can call a home.
Veronika Baba
Kian realty NYC
phone 347 528 5573/
1 vote Thank Flag Link Sun Jul 8, 2012
I find that realty comes into focus over time, but there is a point at which you have to have the "heart to heart" if the buyer isn't grasping it. Sounds to me as though you have reached that point.

Good luck and best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
1 vote Thank Flag Link Sun Jul 8, 2012
I have found that sitting down with a client and showing them the recent sold comparables is very valuable. That way the client can see what is closing in their budget. It can help manage expectations. If they seem to have the "aha" moment after proper education, then they are probably worth working with.

Sometimes you just get people who have been looking to buy for years because they are not realistic on what they can afford. In that case I think your energy is better spent else where. Your time is valuable!
1 vote Thank Flag Link Mon Jul 2, 2012
Client - "why can't you find me what I want?"

Me - "because what you want costs more than you can afford."

Educating clients is the key, but yes, that is common.
1 vote Thank Flag Link Mon Jul 2, 2012
I never show properties till clients have a prequa or preapproval letter in hand done by a reputable loan person. I have a loan agent named Barbara Tammen at Wells Fargo in Carmel Valley who is simply amazing. I always have the clients submit their financials first to her (if they don't have their own loan person) and won't start showing till we have the letter. It's a waste of everyone's time if the buyer is not ready and qualified to pull the trigger if we find the right property.

I think its fine to put the client on a gateway so they get daily updates of houses, but until the preapproval letter is done, don't show properties.

The houses themselves will educate the client when they are fully aware what they can afford.
0 votes Thank Flag Link Fri May 30, 2014
Setting expectations with all buyers is important. Some buyers are a little more challenging than others. When we find ourselves seemingly beating our heads against the wall and not being able to "break through" and appeal to their better senses, it may be time to move on. Its not an easy talk to have, but sometimes a necessary one.
0 votes Thank Flag Link Fri May 9, 2014
Be honest and if she doesn't get it, fire her.
0 votes Thank Flag Link Thu May 8, 2014
Hi Valli,

Has your client been pre-qualified by a reputable lender to verify she or he is qualified to purchase based on the current income, interest rates, loan program, credit and any other compensating factors your lender will tell you and your client how muchyour prospect will qualify for.

Based on that conclusion do you have any properties that fit her criteria and what she qualifies for?

If not does she have someone that will purchase the home with her that will help her quinch her Champayne taste?

If not it's time to move on.

Mark Marley
BRE 00571602
0 votes Thank Flag Link Thu May 8, 2014
To me this sounds like your client is not ready to commit to a move. Maybe shes teying to test the market ar your time and expense. Your best bet would be having a sitdown with your client to let her know you have done everything in your power to find the perfect property for her but she is just being unrealistic. Be firm and let her know that she is wasting her own time looking for properties that she wont qualify for. Hopefully she will decide to make a run at 1 of the properties you have been showing her. Best of wishes and good luck.

Ricky Smiles Jr.
Bre #01940776
0 votes Thank Flag Link Sat Nov 9, 2013
It usually takes getting in the car with 5 they pick and 5 you pick. Show them the price of what they want and the condition of what they can afford. Reality usually sets in:)
0 votes Thank Flag Link Tue Nov 5, 2013
Find a way to help her see the potential. Once solution that worked for me was partnering with a local contractor in my area while working with clients that wanted that wanted a diamond in the rough. It was a win-win for all of us--the contractor was not only able to show the client what could be done to a home with great bones but was also able to put a cost to what it would take to make it what they wanted. My clients got the home they wanted at their price point; the contractor was hired to do the work; and not only did I earn my commission but a great referral source.
0 votes Thank Flag Link Sat Nov 2, 2013
Find a way to help her see the potential. Once solution that worked for me was partnering with a local contractor in my area while working with clients that wanted that wanted a diamond in the rough. It was a win-win for all of us--the contractor was not only able to show the client what could be done to a home with great bones but was also able to put a cost to what it would take to make it what they wanted. My clients got the home they wanted at their price point; the contractor was hired to do the work; and not only did I earn my commission but a great referral source.
0 votes Thank Flag Link Sat Nov 2, 2013
This question was posted Jul 2, 2012.
This is an agent problem, not a buyer problem.
The agent, Valli, revealed this buyer has been kicking tires for 4 years. Most of us would say, "Kick 'em to the curb." That of course is a response when transactions are the focus.
Valli later reveals four referrals received.
Valli is doing something right!
The 'agent problem' that needed to be solved is understanding the goal of the relationship. In this case chauffering a tire kicker about is the cost of the referrals. I would have lost out on this opportunity. Valli did not. I can take a client to dinner or show them a few homes they will not buy. The truth is, my costs are the same.
Now, do you think Valli is still driving the tire kicker about? That would be a total of five years! Prices have gone up. Distressed inventory has gone down. Likely purchase - non-existant.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
Move to the Front of the Line (
0 votes Thank Flag Link Sat Nov 2, 2013
Just get real with them. Show them the market and what has sold and for what price. If they don't get it after that, cut them loose. No reason to spin your wheels with unrealistic buyers. NEXT.
0 votes Thank Flag Link Sat Nov 2, 2013
uggh sounds like you are wasting your time. Just wasted several weeks with someone similar.
0 votes Thank Flag Link Wed Jul 11, 2012
You don't say how long you have worked with them, not have they even written any offers.

Once you've shown them what they can afford, also show them what they can't afford. If they are looking for houses but a condo or town house would fit show them that too. Then sit down and explain here are your options for your budget... Fixer, Condo, or Pay More... which of these three options will you consider?

You may need to give them a fresh set of eyes. Try this, give them an analogy of going to the auto dealer. Have you ever purchased a car? What was that like for you? Buying a home is like that. You either have cash or need a loan and your budget will qualify you for a compact car, used car, or Lexus.

Have an amazing day!
Web Reference:
0 votes Thank Flag Link Sun Jul 8, 2012
Are you sure you know what she can afford? Sometimes buyers do not want their agent to know that they can go higher in price.
0 votes Thank Flag Link Sun Jul 8, 2012
Give her the link to this thread. If she is deeply offended, your problem is solved.

My other advice to you is to forget the 203K "TLC" houses and concentrate on showing her completed renovation listings. These are ideal for buyers who want it already fixed up and mostly new inside without paying a new home price. If she can't afford a fixed up flip, buying a fixer with a 203k is not going to save serious money. Look carefully at Scott Hulen's post. he correctly wrote the flippers make their money by buying below market (usually for cash at the courthouse steps) Your buyer can not do that. She does not have cash. The flippers then usually sell at market value for a renovated home, not at a premium to market value.
0 votes Thank Flag Link Sat Jul 7, 2012
Jim Walker, Real Estate Pro in Carmichael, CA
There is no reason to show buyers a home they cannot afford. Get them qualified with whatever bank or credit union they have their checking account at. I typically tell buyers to use Wells Fargo since they are pretty tight on guidelines.

Once you have their price point, only show them homes they can afford.

I wish you well -

Kevin McLaughlin, Broker Owner
Berkshire West Realty
0 votes Thank Flag Link Fri Jul 6, 2012
If they are able to borrow for the "champagne" great. If they aren't, then the market is what the market is. You can't manifest a property that meets their ability to purchase/borrow if it doesn't exist. If they don't want to look at alternatives, and they don't like what's in their price points, then yes, a waste of time. You can only work with ready, willing and ABLE buyers. She doesn't seem as if she's able. You can refer them up to me in Portland, OR. Our market might suit her needs better ;-)
0 votes Thank Flag Link Fri Jul 6, 2012
Aaaargh, been there, done that! I would strongly recommend that your buyer get a pre-approval from a lender. Suggest they speak to their bank first.
Good luck, don't waste too much time if your buyer is unrealistic about their purchase.
0 votes Thank Flag Link Thu Jul 5, 2012
Be careful with 203K and that type buyer the home must reappraise at the higher value and a high end kitchen would put that client in trouble.
0 votes Thank Flag Link Wed Jul 4, 2012
Since you're talking about 203k renovation, would you have a creative, low-end designer/remodeler to introduce? We all know that third parties can sometimes communicate where we fail. Designers with "the eye" can either get them to see the same, or persuade them to trust in their vision.
0 votes Thank Flag Link Wed Jul 4, 2012
I'm sure you've done all that you can do to educate this buyer. If not, then I suggest you follow those suggestions given by the other agents on this forum that sit right with you. But, if for your sanity and for better managing your time, you need to let this client go then so be it.

Another piece of advice I offer is that perhaps you have a general contractor that would be willing to go an appointment or two with you. Maybe the GC would be better explaining the potential (and costs) of a renovation.

Good luck!
0 votes Thank Flag Link Tue Jul 3, 2012
Hi Valli,

We are primarily listing agents, here is what we can say from our side of the transaction:

1. A pre-approval letter is the key. The lender says "this is what you can afford", you say "I talked to your lender and here is what is for sale in your price range. I think these are the nicest for the money, drive by them and let me know which properties you want to see".

2. Show her the sold comps for the area. If there is a 1.5% difference between list price and sold price on average, let her know that she can most likely offer 1.5% below the list price and get the offer accepted.

If they choose to deny reality, talk to her lender and and have the lender handle the price point. If it persists beyond that, it is most likely a waste of time. Earlier in our careers, we both represented buyers. Very few ever ignored the reality of the price point. If she is one of those, suggest she hire another agent.

Best of luck,

Mark & Kari Shea
Shea Real Estate
Home Sales Specialists; New and Resale Homes
Property Valuation Specialists
Land Sales, Acquisitions & Consulting
Serving Greater San Diego
0 votes Thank Flag Link Mon Jul 2, 2012
Not necessarily. I think it is time for blunt honest truth conversation, you have "champagne taste with beer pocket books" and let them what they can truly afford.

if they do nto agree to work in this premise, then tell them adios.
0 votes Thank Flag Link Mon Jul 2, 2012
Hi Valli,

This is a great market to buy, but a really tough market for the lower price ranges. A lot of new buyers have this syndrome, and many ultimately don't buy because they want nice and new. I've had clients lose their beautiful homes to foreclosure that were shocked at what they could actually afford to buy in this lending climate, and so are still renting.

The only thing you can do is educate them on location and potential. They have to know they'll have to give something up for a fully remodeled home - location, size, something. Ask them what that will be.

As far as showing, explain that seeing homes is the step before submitting offers. So each time they want to see something way out of their range, let them know you wouldn't be able to submit an offer, so let's skip that one. Also, in the lower price range, any home that looks good to them, will look good to many other buyers and investors, so low ball offers are a waste of time, especially yours (refer them to an agent who likes paperwork).

But, also show them some before and afters of flips you see on the MLS. They can do that too with a rehab loan if they want to go through that process. Or, show them some nice condos if they're looking at detached homes, with lower HOA fees that won't scare them off.

It could be a waste of time in the end, and there has to be a reasonable end.

Good luck!
0 votes Thank Flag Link Mon Jul 2, 2012
We frequently find that buyers, especially first timers, are often unrealistic at the start. And there is a lot of data out there that can be manipulated to your point of view. I think my favorite was a client who sent me a long email about their buying strategy (that was way off the mark) based upon data for the 9 Bay Area counties.

Usually they have to miss out on a place or two, or at least gain complete trust before they start getting it. I have been fortunate in that both me and my associates have had great clients, but I have needed to have a couple of conversations letting buyer clients go because they were unrealistic. I would say that firing the client would be a last resort and depends on how long you've been working with them. If they aren't ever going to be realistic then you probably are wasting your time.

I've also had a couple of clients come through whose philosophy was to keep flinging super low ball offers with the idea that eventually one would stick. We let them go elsewhere.
0 votes Thank Flag Link Mon Jul 2, 2012
On TV, the Brothers take their Clients first to a Million Dollar home to show them all the things they want and cannot have:
I don't think this would work in real life, unless you had a TV Camera and offered them $20,000 to help with the renovation!

I know of no tool we have other than WORDS:
I am heartened to know that I am not the only one who has a problem with this.
Even after we have qualified them, and tried to communicate with them, we probably are going to have this problem.

Good luck and may God bless
0 votes Thank Flag Link Mon Jul 2, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer