Effective Communication in Real Estate: Buyers

Most consumers don’t understand the real estate process, and why should they?  They aren’t real estate salespeople and they don’t help people buy or sell real estate on a daily basis, yet many real estate agents neglect to explain the basics of the process to their clients.

It’s like speaking another language and forgetting that there may be a need to translate the terminology and process for the client to understand.  Agency is one of those terms that isn’t clear to most consumers, and sometimes not even to agents.

When working with agents, whether new or experienced, they frequently seem to forget that the terms and terminology that they use on a daily basis are “Greek” to the consumer.   I often have to pull that agent back to the basics and work with them to establish a process to educate their clients before they ever begin showing them houses.  When we fail to do this we are much more likely to find out clients have “wandered off” in another direction.

People don’t like to admit that they don’t understand something, so rather than say “What do you mean?” they will just nod their heads and go along with the flow of the conversation or tour.  Then the following week when that enthusiastic buyer is not returning your calls, or communicating with you – you will be at a loss to explain it.  The reality is this, many real estate agents are talking over a consumers head using real estate “jargon” and “lingo” that only confuses the client or customer.

The KISS principle applies beautifully here, but it’s a hard one to remember, keep it simple stupid, an in this case the “stupid” is the real estate professional who is in the process of scaring away their client.

Here are some tips to help you keep your clients, and communicate effectively with them.

  1. Start with a Buyer Education meeting.   –  When you first make contact, whatever the method of that first contact is, be sure to explain that your process involves a first meeting at your office to explain the process and answer questions on the real estate transaction, the buying process and the market conditions and practices.Part of this process is to also make sure that they are pre-approved with a lender and have a realistic and comfortable price point set for their needs.  You are also using this time to set a series of expectations between yourself and your clients.
  2. Set Expectations and Share Explanations.  – Making sure that your clients understand that you are there to serve their needs, and that part of that is to understand their expectations of you in the process is important.  This also allows you the opportunity to dispel some of the myths and misconceptions about the process and the practice of real estate.Some expectations that  should be reviewed at your first meeting include how they would like you to communicate with them, any specific time restrictions on your practice, how they can reach you if it is an emergency, and discuss and explain your commitment to them, as well as their commitment to you.
  3. The Mutual Commitment of Buyer Agency. –  Explaining in the simplest terms what agency means is important, I find saying something like “What we discuss stays between us, I can’t discuss anything you tell me without your consent, and I am obligated to provide you with any information I learn about a property you are interested in.  I am your agent, I work at your direction, as long as those directions are legal.” is a simple and effective way to explain it.

    I also like to explain that when I am showing them properties in a certain area and price point, I am not also showing those properties to anyone else.I am making a commitment to them, in my time and business, and may be turning away other clients, because it would not be fair or ethical to create a competitive situation for them.  You also need them to make the same commitment to you, which is why you then present the Exclusive Buyers Agency (or related) agreement to your client.  They protect themselves, and you protect yourself, when all parties participate and understand the commitment of buyer agency.

    Nothing hurts more than a client “keeping their options open” after you have turned away multiple other consumers in the same market as they are in to keep their best interests at heart, only to have them wander off and buy with another agent.  It happens, and it truly sucks to be the one it happens to, especially after you commit time and efforts to helping people over many years, sometimes even helping them find resources for credit counseling, etc.

  4. Ask If They Are Working with an Agent. – I always do this, and I suggest everyone do this.  Whether I was on office phone duty, or at an open house, I always ask a consumer who seems to want to engage my services if they have an Agent.  Frequently they do not, but sometimes they do – sometimes they tell me they have not signed anything and their options are open.  I will typically ask who their agent is, offer a compliment about that individual, or if I only know the name say “Yes, I have heard of them but have not worked with them, I only hear wonderful things” (keep it positive always), and I will redirect that client back to their agent.  I will also call that agent as soon as possible to notify them that their client reached out to me, or was at an open house.  I direct the consumer back to their agent, letting them know that their agent can show them any property that I can because we all participate with one another, so they won’t miss out on anything.

    Occasionally a consumer will insist upon working with me, they don’t get along with their agent, or they like my experience better, or thing I will provide them with better service, whatever the reason, I make sure they don’t have an agreement with another broker before, and will frequently send a referral agreement to the agent they had been working with (after I get them to sign an Exclusive Buyer Agency agreement with me) after I have contacted them directly and explained the situation.   Do unto others as the saying goes. It’s shame more agents don’t operate on this same principle.  I can’t even fathom the amount of guilt I would feel if I did this to someone else. Ick.

  5. Provide Market Data.  – I use RPR for this, I will pull neighborhood market activity reports, and also general neighborhood reports from NARRPR.com for the clients. These reports include some amazing economic indicators, demographics and some very sexy data in the form of things like heat maps for a variety of indicators.  I will review a report with the client and explain what each section is about and what the indicators are.  RPR is my secret weapon in impressing, and educating my clients.

If you communicate openly, effectively and respect other REALTORS we will all see a better public opinion of our industry I believe.  As well as educating the consumer, we are also educating ourselves.

So stop talking “jargon” and “lingo” and start focusing on customer service and needs.  If we communicate better, everyone’s experience gets better.

Expert Answers: What is an AVM?

Today’s question comes from a consumer in Michigan.

Question: “What is an AVM?”

Expert Answer:

An AVM is an “Automated Valuation Model”.   AVM’s have long existed, most frequented used in actuarial processes for lenders or lien holders of real estate.   First, there are many different kinds of value to be determined, is the value “Fair Market” or is it “replacement” or another?

Companies have created systems and algorithms to calculate the value of a real estate portfolio, which could be the total of loans outstanding for a large lending institution or the portfolio of individual real estate investors.  Insurers also have their own methods for creating AVM’s.

Today consumers are most familiar with some forms of AVM’s that are frequently available via real estate search sites – which in reality are really media companies advertising properties to attract consumers and then sell the “consumer lead” to a real estate professional who is paying the media company for the lead.  That is the simplest means to explain these portal websites.

The AVM models displayed are proprietary, created specifically for the purpose of that use.  Data collected determines the results provided, the larger the pool of data the more likely an accurate valuation will be provided.  Many models are based on geographic methodology that might not hold water in a different geographic area.

Much like real estate itself, a property value in California can’t be determined in the same way that a property value in Boston might be.  A zip code is a lousy means to measure a value but is frequently the main means for some of the most popular portals to provide values.

Today, the most current valuations are those that use many sources for data collection.  For instance the National Association of REALTORS has invested greatly in creating REALTORS Property Resource (RPR) to help REALTORS meet the needs of the consumers seeking valuations of their properties.   RPR uses data only available to real estate professionals via listing services (Multiple Listing Services), loan processing services, various data aggregation, public records and more.   The result, as I have tested myself, is an incredibly accurate and powerful valuation model, in this case it is called an RVM – REALTORS Valuation Model.

I have been using RPR for a number of years, and for full disclosure I am a certified contract trainer for RPR.  I have shared my valuations with clients, REALTORS and appraisers.  I have been told numerous times by appraisal professionals that the RPR RVM is “spot on” accurate in the comps, and the values determined.  Yes there is some human input in the final adjusted results, as there should be in any valuation.

People are not machines, and an AVM is not for people – so looking at a portal AVM for your property, or a property you are interested in, without consulting a real estate professional, is not going to give you a realistic – nor fair – view of true value.

Before you put stock in that “estimate” of a properties value, put your faith in having a real estate professional, and even a appraiser, tell you what that true value is.

Pulling Back the Curtain of the Real Estate Industry

Nothing frustrated me more than the current contentious state of relations between the real estate professionals, the real estate industry and the consumer.  Add to that the confusion of all the resources for finding real estate, and the lack of accuracy in some of those resources.   Media companies portraying themselves as “service” sites, while selling advertising to real estate professionals, spending to capture and establish trust with consumers, and then in turn selling the consumers contact information to real estate professionals as qualified “leads”.

In some ways it has become a game of who has the biggest budget, who can manipulate the public perception best, and therefore dominate a market.  The truth is that service is the core of the real estate transnational process.  I have spent the last 8 years helping to educate real estate professional on how to best serve the needs of their clients, through clear and concise communications, client education meetings, mutual expectation discussions and more.

Being a Consumer Advocate
During this process I have long wanted to address the consumers, the sellers and purchasers of real estate, to help facilitate a positive experience, and revise the public perception of what a “Real Estate Agent (Broker/Associate, etc)” is.  I believe that time has come, if not past, and as I see more predatory methods being used to monetize the listings of real property, the native distrust of the real estate professional by many consumers only allows those seeking to profit more opportunity.

There comes a point in time when the curtain needs to be pulled back and the “wizard” behind exposed for all to see the truth.  The goal of EstateSocial.com is to pull that curtain back, to discuss the industry, the process, to help remove misconceptions and prevent misunderstandings between consumers and professionals.

There is so much more to the business of real estate than the two aspects of the professional and the consumer (or client).  There is the brokerage model – and how the business of a real estate brokerage works.  There are many models and agents/licensees decide who to associate with.  By shining a spotlight on the industry and the process the goal of EstateSocial is to facilitate a great understanding and appreciation of what a real estate professional offers a consumer, and to help those professional understand many of the common concerns, or confusion, of the real estate consumer or client.

A Great Divide
There is a disconnect between the real estate consumer and the real estate professional.   A great part of that disconnect is the lack of understanding of how the process of buying and selling real estate works.

On the other foot, the real estate professional sometimes forgets the magnitude and impact of a real estate transaction on an individual, couple or family.

Between professional jargon and acronyms, consumers often are lest wondering what is going on.  What is a FSBO?  What is a CRS? ABR?  REALTOR or Realtor or realtor?  What is the difference, or is there a different between a realtor, licensed real estate agent, broker, etc.

Many terms are often used interchangeably in various media outlets, when in fact they are not.  Consumers need answers, and real estate professionals need reminders of why we all are doing this – as professionals and consumers – to help people.

Customer Satisfaction Starts with Understanding
Real estate, as an industry, is really about customer service and satisfaction.  Serving the needs of the client, putting their best interests first in a real estate professional capacity as their representative (aka Agent).  The consumer needs to understand that the real estate professional works for them, how they are compensated and why “keeping our options open” when looking for a property is more often a disservice to the consumers needs rather than an advantage.

By facilitating conversation, answer questions and providing explanations, EstateSocial.com hopes to help bridge the gap between consumers and professionals to provide a better understanding, mutual appreciation and less frustration on both sides.

Estate Social is a place for consumers, real estate professionals and conversations between the two.  To encourage understanding, compassion and a positive outcome for everyone who buys, sells or transacts real estate in any capacity.