Is it Time to Step Up Your Game?

Here in the Grand Rapids market -- and in many other markets throughout the country -- we are in an extremely hot "Seller's Market." Homes well-prepared for the market are hitting the MLS and selling within hours, not days, weeks or months.

Working as a Buyer's Agent in a Seller's Market.

It's simple. Unlike in 2008, we have more buyers than sellers. Buyers who want to take advantage of historically low interest rates are out in droves, trying to grab up the best of the limited available inventory. Buyer agents are battling it out in multiple-offer shootouts, and there is only one winner.

Buyer agents whose buyers lost out to another offer must explain to their disappointed clients that the seller accepted a different buyer's offer. Often, it happens several times before the buyer agent and buyer accept they are going to need to write a stronger offer. Too often, they are stuck in their buyer-advocate paradigm from 2008, believing their obligation is 1) to make sure their buyer "is not paying too much for the house" or 2) they believe they can renegotiate the offer based after inspections.

In doing so, they lose the home the buyer has their heart set on. That train left the station in 2012.

Let me be clear: As the buyer's agent, your job is to help your buyer achieve their objectives, not your objectives. If you are so focused on helping your buyer get a good buy, or being the hero, you will undermine their goal, which is to buy the home of their dreams (or the best one they can afford.)

If you insist on working as a buyer's agent in a seller's market (or you believe you have no other choice), you need to make sure your quiver is jam-packed with arrows. Here are a few tips on how to win in multiple-offer situations:

1. Put Credit Scores in the Pre-Approval Letter -- If your buyer has a high credit score, ask the buyer's lender to to put it in the pre-qualification letter. Many lenders will push back, saying they cannot because it violates privacy laws. Explain to them that they can if they get the buyer's written permission to do so. If you were the listing agent, which offer would you recommend, all other things being approximately equal -- the buyer with the 785 credit score or the buyer whose credit score is a mystery. If the lender still refuses, find a different lender who will.
2. Write Over the Listing Price -- This should be obvious, but, as the trainer for 250+ agents, I am still hearing agents lament, "But I offered full price and still lost." Yes, you did. And so did your buyer. Or buyers who say, "Nobody offers full price." Seriously, there are six buyers standing in the living room jabbering intently with their Realtors and you think nobody is going to offer full price or more?
3. Keep the Offer Simple -- Ask for only what is offered ... or less. If the MLS sheet says the seller is including the refrigerator at the asking price but your buyer doesn't need one, don't ask for it in the offer. If the seller has the option to sell it on eBay, it might make the difference between getting your buyer the house or not. Eliminate as many contingencies as possible from the offer. Don't ask for the John Deere tractor or ask for a rent-back from the seller for possession past the closing if you suspect it will weaken your offer.
4. Include a Guaranteed Appraisal Clause -- Many agents will include a "homes must appraise for purchase price or higher" clause because they -- or their clients -- believe the buyer should not be paying "more than the house is worth." Or, they may not be able to qualify for a mortgage if an under-offer appraisal comes in. Your buyers must recognize that many buyers they are competing with are writing offers in which they guarantee (with a cap) to bring the difference between the offer price and the appraisal in cash to the closing ... and provide verification of those funds along with the offer. If you were the listing agent, which offer would you recommend to you sellers to accept?
5. Include an Escalation Clause -- Include a clause which automatically triggers an escalation in your buyer's offer -- "Buyer hereby agrees to pay $2,000 more than any other bona-fide, competing offer, up to a maximum of (some amount)." In some markets, escalation clauses are new or frowned upon. Check your local standards of practice to make sure you won't be hurting your buyer to include one. It is a trend which is growing and will continue to do so. If you are a listing agent who is resistant to the trend, it is in your seller's best interests to get on board.
6. Have Your Buyers to Write a Letter About Themselves -- Sometimes, sellers will accept an offer which may not be the highest in price because they feel a personal connection with the buyer. Maybe their children were in the high school marching band together or the buyer loves the house because it is a jungle of perennials and they can't wait spend their weekends pruning and digging the dirt. When I first meet with buyers, I ask them to create a template letter which they can edit quickly (as in "immediately," from the iPad or smart phone they are carrying with them on the showings) to tell the seller how much they love the house and why it is perfect for them. Usually, I have the letter loaded into my iPad so I can make it available for them to edit while they are standing in the kitchen they have just fallen in love with.

Using these tips for your buyers will result in winning more offers the first time around.

So, do you want to work hard ... or smart?

Working with buyer's in a seller's market is hard work. You have almost no control over your career; buyers want to see a listing which just showed up on the MLS and you must drop everything you are doing -- on weekends, evenings and during family time -- to get them into the house as quickly as possible or risk losing it to another buyer. Even if you are successful, you still have the multiple-offer battle to fight.

Listing agents, on the other hand, put the sign in the yard, load pictures on the MLS and wait for the offers to pour in. As I am writing this article, I have 25 agents who are scheduled to show up to my open house tomorrow with their buyers in tow.

Compared to buyer's agents, listing agents have it easy in this market. So why not be a listing agent instead of a buyer's agent? Because being a listing agent takes work, too.

Building a marketing machine which will position you heads and shoulders above the other choices sellers have to list with takes a lot of time and money. Once you have your platform in place, however, and your Unique Selling Proposition is clear, being the one sellers call to list their homes happens regularly.

Take Control of Your Life: Become a Listing Agent.

If you want to list more homes and work with fewer buyers, here are a few tips:

1. Don't Settle for Votive-Candle Marketing -- Some agents list a home, put it on the MLS, light a small candle, look to the heavens and pray their new listing sells. Although this marketing strategy is more successful today than it was in 2008, solely because of the market shift from buyer to seller, in today's seller-savvy world, you won't get many listings by minimalist marketing.
2. Build Your Marketing Machine -- You can self-promote all you want through direct mail, social media or cold-call prospecting, but when you get in front of that owner of the prospective listing, you'd better come with more than a gift of gab and a flashing smile. What is you answer when they ask, "What are you going to do to sell my home?" If your competitor appears to be offering more than you are, you may want to keep working with buyers. Are you addressing these hot-button marketing strategies when you meet with sellers?

• E-Blast Marketing -- How big is your client database? How many people will your "Just Listed" e-blast reach? Do you have a list of the top 300 agents in your market in your database who will receive your e-blasts?
• Direct Mail Marketing -- Will you be mailing "Just Listed" postcards throughout the neighborhood? Or, better yet, walking the neighborhood handing out flyers to a "Neighbors Only" open house on Saturday morning? You want more listings and referrals? Do this; it works.
• Open Houses -- For those who tell you open houses don't sell houses, I have two suggestions:
• 1) Don't believe them. In this "new millenium" environment, buyers are wary of committing to a buyers agent. they are shopping open houses and writing offers with the listing agent. Plus, remember than 65% of open house visitors have a house to sell. It's a great way to meet new sellers, and,
• 2) Your seller believes open houses sell houses. If you aren't to do them, your competitor probably is. Who is going to get the listing?
• Keep a Home Stager on Retainer -- Work out an agreement with a stager to consult at no charge to the seller. The stager will make suggestions which is free of charge, or proposals to do the actual staging work, rent furniture, etc., at an added cost (to the seller). Or, if it makes, good business sense, pay an amount for the stager to do the work necessary to stage the home (up to a predetermined maximum.)
• Marketing Plan -- Do you have a written marketing plan for new listings you can share with a seller? If not, create one. What are you going to do on Day 1 of the listing? Day 2? Day 3? Your competitor knows exactly what he or she is going to do. Whatever you tell them you are going to do, follow through on your promise and do it. Don't make promises you aren't going to keep.
• Use Current Technology to Market Properties -- Are you still copying the MLS sheet to hand out at the open house? Do you have a four-color brochure made up for every listing? Do you create a web site for each listing? Do you have a drone photographer take pictures or videos of the breath-taking ocean views your listing offers or its 20 acres of rolling pasture? Do you have a virtual tour resource or video producer to create exciting presentations of your listing? If not, you are not providing what your competitor is. Visit my Facebook Commercial Page to see and example (and give me "like" while you're there!)
• Social Media Marketing -- Do you actively engage in social media? Do you know what to do and what not to do on Facebook, LinkedIn and Twitter? Are you on Pinterest (and if not, why not, when so many women are the initiators in a real estate decision and Pinterest is heavily skewed female?) Do you have a Facebook commercial page and, if so, do you have an app installed so visitors can contact you via Chat Now technology, e-mail, text and phone? Does your Facebook commercial page offer visitors the option to search for homes right from your page? What are you doing to engage with potential clients via social media?

In today's seller's market, I see a lot of listing agents who are resting on their laurels, content to get a listing here or there and let the market sell it for them. The question is, will the seller perceive they are earning the commission they are paying the agent? It most cases today, a seller wants to feel they getting more for their money than they could get by putting a black-and-white F.S.B.O. sign in the front yard.

Only after you can prove to them that you can give their home more exposure than they can, or another agent can, will you start landing more listings ... and having more control over your career.