The Buyers We Can’t Help
Was I nuts?
After all, most Agents would welcome the chance we had: To work with the husband and wife who called a few days ago about a home we have listed for sale in Alabaster.
We really need to find a place, the wife tells me.
Moving here from out of area and pre-approved by their local bank to spend up to $300,000, they tell of their frustrating efforts to find a home in Birmingham.
And yet, I would wind up sitting down with them face to face and telling them what some might consider unthinkable: “Sorry, we can’t help you.”
After determining that the house they called about is not a good match, I ask a little more about their situation, and if they’d like help with finding a suitable property.
I get an earful.
They have put full price Offers on two homes, only to have the houses “sell right out from under us,” the husband says.
They had tried to get help from two other Realtors in the area.
“They’ve put us on the back burner,” the husband tells me during a half hour phone call. “I’ll ask to see a particular home a week ahead of time, and nothing happens,” he says.
There is nothing Colleen and I hate worse than hearing about Agents who are non-responsive to their Clients. This kind of behavior makes all of us in the profession look bad.
In our roughly 15 years combined of helping people buy and sell homes in the Birmingham and Shelby Co. area, one critical step we always follow is to learn as much as we can about our Buyer’s particular situation.
It pays to listen.
The Offers that failed, it turns out, were both made on the condition that the Buyers could first sell their existing home.
From the description of their home—five bedrooms, over 4,000 square feet on a beautiful lake setting, five car garage, in-ground pool and boat dock—you’d sure think it would go easily…especially in today’s market.
I look their home up on MLS and the Internet. Sales price: Just under $600,000.
My conclusion about their place: Very nice.
Sales data I uncover for the property suggests that these folks paid less than half their current asking price when they bought it. Maybe they’ve put some money into the place over the years.
I can certainly understand that one Agent they’d contact would be a dud.
But two Agents? That’s possible.
In my mind, questions are starting to rise.
Then comes the bombshell.
They’ve been trying to sell their home for two years.
No home should be on the market that long.
During one of our phone calls, I ask the husband more questions.
How many Offers have you gotten? Answer: None
How many showings do you typically get each month? Answer: Maybe one.
What kind of Feedback do you get from those showings? Answer: Everyone says it’s a very nice home.
Has anyone ever told you that your home may be overpriced? Answer: Absolutely not.
So, why, then, do you think your home hasn’t sold? Answer: There just aren’t that many people who can afford homes in our price range. Besides, he adds, none of the homes for sale in their area have sold in a long time.
Remember those roughly 15 years selling homes I mentioned? They’ve taught us other things, too.
Experienced Agents know that when homes fail to sell, it’s almost always for at least one of three reasons:
With the setting on the lake and the home’s general appearance, I’m able to eliminate two of the three causes immediately.
Price, then, can be the only reason.
My exchanges with these people make it clear to me that there is a lot they may not understand, including the changes that are taking place in the Birmingham and Shelby Co. area housing market:
- Inventory has dropped;
- It’s not a Buyer’s market any longer;
- Sellers have more clout than they did a couple of years ago;
- Multiple Offers are occurring again;
- More homes are starting to sell in shorter amounts of time (sometimes, new Listings go Under Contract within one to two weeks of going on market);
- More Sellers who price appropriately and have their homes in top condition are getting full asking price or close to it
I realize, too, the probable effect of a recent local MLS rules change on our Buyers, which they may not be aware of.
The rules change requires homes that go Under Contingency Contract be removed from Active Listings and moved to a different category. This reduced exposure, while waiting on the Buyer’s home to sell, is not likely to be attractive to most Sellers.
As a result, many Sellers—at the advice of their Agents—are not accepting home sale Contingency Offers unless the Buyer’s home is already Under Contract to sell. This is understandable; Sellers want at least some assurance that they will be able to actually sell their home, as opposed to losing valuable time on market, only to have the Contingency Contract fall apart if the Buyer’s home fails to sell.
It’s time, I decide, to share some market and general buying knowledge with these people. I sit at the computer and start drafting an e-mail with information they should find useful.
In the meantime, I get a text message.
They’ve found a home for sale in the area they’d like to see today. It’s a Short Sale. They want to know if we can show it to them that afternoon.
I look the home up on MLS. It’s available, and it’s occupied.
There’s a hitch: Lenders in a Short Sale will not accept Contingent Offers based on the sale of the Buyer’s property.
I also look at personal considerations: We would be asking the occupant to let us show their home to people I now realize have very little chance of actually being able to carry through with a purchase at this point in time, even if they wanted to.
We’ve learned—and our Broker, Keller Williams Realty, preaches a lot—that successful sales need to be a win-win for everyone involved.
This means that we need to assess carefully the viability of our Clients to actually carry through and meet their goals.
While I might represent the Buyers and not the Sellers, is asking to show this home under these circumstances appropriate? Is this likely to be a win-win for everyone?
I respond that I can’t show them the home. Instead, I decide, it’s time to have a conversation.
I recommend that we meet in person at our office that afternoon. They agree.
“This is the situation I see you in,” I say, while seated at our conference table. I hold up a note pad.
“First, your main focus is trying to find a home here in the Birmingham/Shelby Co. area,” as I scribble point number one. “And you’re finding it difficult.”
Heads nod in agreement.
“Second,” as I write point number two, “You’re not getting help from the Realtors you’ve called, and you’re finding that extremely frustrating.”
“Absolutely,” I’m told. Heads are really nodding now, with facial expressions providing more confirmation.
“And third,” as I keep writing, “You’re still dealing with trying to get your own home sold, something you’ve been unable to do for two years.”
I almost hear an ‘amen, brother.’
There is total agreement; husband and wife relate 100% to everything I’ve said.
At this point, I describe what’s happening right now in the Birmingham area real estate market. I talk about how homes are selling. I explain why Sellers are unlikely to find their Offer—even at full price—attractive.
“One hundred percent of nothing is still nothing,” I tell them.
I share other valuations I’ve found for their property. And while I stress that none of those numbers should be considered reliable for pricing their home, there is such a wide disparity between them and the current asking price that I look straight at them and say, “I think this is a huge problem.”
I point out that inventory in the Shelby Co./Birmingham area can change substantially in less than a 60 day time frame. With no immediate prospect of selling their existing home, I tell them that, by the time they might actually be able to move ahead with a purchase, they would probably have to look at a different set of homes to choose from than is on market right now.
I then offer recommendations.
“First,” I say point blank to them, “Stop what you’re doing. It’s not working.”
I take my pen and abruptly strike through the bullet points I had just written down.
They seem a bit taken back.
No matter what home they find, and when they find it, I tell them that they can’t move ahead with buying until they sell their current home.
Getting your current place sold, I tell them, needs to be your absolute top priority over anything else.
I tell them that I feel very sure their home is overpriced, and that Buyers are, in fact, responding to this.
The silence Buyers have created for two years is deafening.
The husband reminds me that no other lake properties in the area have sold. I have a quick answer. That’s something we have seen before. “It may well be that they’re all overpriced,” I tell them.
“Every home will sell. There are Buyers out there.”
The husband mentions that they have to be able to walk away from the sale of their home with a certain amount of money.
“I completely understand,” I answer.
While I tell them I realize that how much money these folks clear from the sale of their home is very important to them, I point out that it’s of no concern at all to a Buyer.
The true value of your home, I tell them, is the figure at which a Buyer and a Seller agree to sit across from each other at a closing table.
I write down a new set of bullet points on my pad.
Number one, I recommend, is to get an appraisal. It’s the best independent assessment of their home’s actual probable value.
The husband mentions that they can use an appraisal from two years ago. Nope, I respond, that won’t work. It needs to be no more than about six months old. After looking at a current appraisal of their home’s probable selling price, I tell the couple that they’ll have a decision to make.
Number two, as I continue scribbling, is to adjust the sales price. And, I tell them, they have to keep adjusting it until they get sufficient interest—and an Offer that turns into a Contract—on their home.
Number three, as I talk and scribble, is to get their home Under Contract.
I conclude by scribbling item four: Start looking for your next home.
When they make it to point number three, I tell them, is when it’s time to pick up the phone and call us for help with finding a home in the Birmingham area.
And that’s more promising to be a win-win for everyone.
I tear the sheet off the notepad and hand it to the husband.
“Colleen and I would love to be your Agents,” I tell them, “but now you understand why we can’t help you with looking at homes right now.”
While our meeting concludes on a friendly tone, I sense that these folks are not walking out very happy.
Will we ever hear from them again?
Did we manage to lose a potential Buyer Client and sale?
I have no idea.
But my conscience is clear.
It’s about being honest and giving people information they need to know.
Even when they may not want to hear it.
Posted on September 15, 2013, in Commentary, Real Estate and tagged alabama, appraisal, birmingham, colleen black, david black, feedback, home for sale, homes for sale, inventory, over priced, real estate agent, realtor, shelby county, the black team. Bookmark the permalink. 1 Comment.