There are two parties in a typical real estate transaction. And, as a real estate agent, you will usually find yourself representing one party while negotiating with the other.
But even to get to that point, you will have to sell your prospective client on why they should want you to represent them in the transaction.
The best way to do that?
Demonstrate that you understand what it is that they are trying to accomplish and convince them that you have the expertise to help them do just that.
Taking Sides: Becoming a Buyer’s Agent
Many brokerages go so far as to make the strategic business decision to specialize in representing just one side of the transaction. They niche themselves as a listing brokerage or a buyers brokerage. They do this because, in the eyes of many, specialization equals expertise.
Whether or not you or your brokerage chooses to go that route, it remains critical that you be able to convey that you have the expertise that clients seek. To that end, you should spend some time exploring the motivations and needs of the parties to the transaction.
Well, sellers need to sell, and buyers need to buy… right?
Yep. That about sums it up — at the most superficial level, that is. But you should strive for a deeper understanding than that. And to get there, consider the concept of the client life cycle.
Let’s start by looking at the buyer.
The Buyer Life Cycle
To better appreciate a client’s motivations for buying as well as the support they are going to need, you’ll want to recognize where they are in the buyer life cycle, which can be broken into three stages:
The first-time homebuyer will need lots of hand-holding and reassurance through the transaction process. They typically buy what are known as starter homes and have little saved in the way of a down payment.
You will need to guide them through the process of figuring out what they can afford, where to get financing, and what the market looks like at the time they begin their search in earnest.
Setting realistic expectations will be critical to your success.
First-time homebuyers value your expertise and representation in what will likely be the biggest financial decision in their lives thus far.
Upsizing homebuyers come to you with some experience. They are generally homeowners who need to find a larger home, suitable for their growing family. You will find that they already understand much of the process that goes into a real estate transaction but can still use your guidance if a sale-of-buyer-home contingency needs to accompany their offer on a property.
Here are a few ways you can expect to help upsizing homebuyers:
If the buyer is relying on the sale of one property to purchase another, you may need to offer a comparative market analysis on each property. And a net sheet on the sale of the first property will give them a sense of how much cash to close they will have for the purchase of the second property.
New Home Deep Dive
Although you know the buyer wants to upsize, you can't assume to know how that translates for them into desired square footage, number of bedrooms and bathrooms, size of yard, etc. Be prepared to ask very detailed questions about what it is they want and need... and try to get to the why behind each desire stated.
And while you're probing them about the characteristics of their ideal home, remember to enquire about the importance of other matters, like schools, parks, traffic patterns, etc., that could be of concern to them. Your questions might cause them to consider things that are important to them in the upsizing homebuyer phase that they wouldn't have thought to ask about.
Empty-nesters and retirees are often looking to simplify their lives. Part of that is accomplished by "trading down," meaning replacing a larger property with a smaller one.
They, too, will possibly need help with a sale-of-buyer-home contingency but, other than that, these buyers will likely not require a lot of education about the transaction process.
Things to think about when assisting downsizing homebuyers:
Realize that downsizing homebuyers are moving into a completely new phase in their lives. If you are helping them sell one property to buy another, understand that they may be more emotionally attached to their present home than are typical sellers. Keep that in mind when talking about the property’s market value. Help them look at it objectively while being empathetic about the feelings and meaning the property has to them on a personal level.
Even if the client has experience buying and selling homes, this particular downsizing transaction will be different.
Will they want to make the purchase of a new home contingent on the sale of their current home? If they are substantially downsizing, do they want to "sweeten the deal" on the home they are selling by offering more included items than are typical leave-behinds?
For example, furniture that fits their present home may not be suitable for the smaller residence they're looking for but could be seen as a real perk to prospective buyers of their current home.
Will this next home be their last home? If so, do they want to plan for current and future needs? How might that affect their thoughts about things like stairs, baths vs. showers, yard size, and landscape maintenance?
If you have had experience helping others facing similar choices at this stage of their lives, you probably have something of real value to contribute to the downsizing homebuyer’s thought process.
Recap: Buyer-Client Life Cycle
Here's a quick recap of the three stages in the buyer-client life cycle — suitable for framing, if you're so inclined: