Real estate transactions are similar to putting together a jigsaw puzzle. Every transaction involves multiple parties, motives, challenges, and timelines. One of the main responsibilities of a real estate agent is to effectively organize all the competing interests of a transaction (or pieces of the jigsaw puzzle). The end goal is that at the end of the process all the pieces of the puzzle add up to a successfully closed deal. Most agents quickly realize that “coordinating the chaos” is a major part of their role in a given transaction. The reality, however, is many agents struggle to properly set and manage the client’s expectations of how the chaos is going to work and how the process is going to play out.
Managing client expectations is critical, and sadly, often overlooked as part of the agent/client relationship. There is nothing worse than when a client says, “you never told me to expect any of this.” There is also nothing better than when a client says, “you completely prepared us for this whole process.”
Setting and Managing Client Expectations for Your Real Estate Transactions
If you struggle with setting or managing client expectations in your real estate practice, try addressing these four fundamental client expectations at the outset of each transaction.
Expectation 1: The Scope of the Overall Process
It is critical for agents to remember that the general public does not know what they don’t know regarding real estate transactions. Most of the information that the general public has regarding what constitutes a real estate deal comes from social media, the internet, and real estate shows they see on TV. In fact, most clients now believe a buyer should be able to identify one of three home options, negotiate a favorable sales price, and close on that property in half an hour just like they do on TV! As agents, we know better.
One of the best things agents can do for their clients is to walk them through what a typical transaction will look like for the type of property under consideration. And I highly advise that you do that overview at the outset of the business relationship.
How should you approach the broad overview? First, ask the clients what previous experience they have had with real estate transactions. Second, ask them if they have any pre-conceived concerns. Third, ask them if they mind you sharing a broad level overview of what they might be able to expect. Finally, have some type of presentation (I recommend print so they can read it as a follow-up to your appointment) that you can walk them through that describes a typical transaction from A-Z.
You will have to determine how detailed you want to be in your overview. I believe it is helpful to consider topics such as: communication during the transaction, condition of the property, marketing, negotiation process, timelines, transfer of ownership, etc. Customize your presentation to fit the concerns you most often encounter with your clients. I would recommend including at least property access, financial outcomes, and potential roadblocks from contract to closing.
Expectation 2: Property Access
Sellers and buyers need to have a clear understanding of who can and will have access to the property in question.
For sellers, they need a clear understanding of what showings, open houses, and inspections could entail. Not only do sellers need to know the proper protocol for preparing a property for viewing, but they also need to understand rules about surveillance, vacating the premises in certain circumstances, and preparing the property for ownership transfer. For buyers, they need a clear understanding regarding booking showings and the implied commitment of time that appointments have. Buyers also need to know how often they will be allowed to inspect a property, who can make onsite visits, and what things can be done to a property (if any) prior to closing.
Access to the property is a common sticking point between seller and buyers during a transaction. The clearer you can describe what both parties can expect, the smoother the transaction will go.
Recommended Reading: Top 3 Phrases NEVER to Say to Clients. Click here to read the full article.
Expectation 3: Financial Outcomes
Another major expectation that sellers and buyers share is potential financial outcomes. For many people, their home is their largest financial investment. Therefore, both the seller and buyer need to have a clear expectation of how their financial situation will be impacted by the deal.
Agents should prepare a full seller-net sheet for their sellers. Seller-net sheets should include any and all anticipated costs it will take to sell their property against the backdrop of anticipated market value. It is true that an agent cannot anticipate every expense a seller may have, but there are certain expenses sellers will most certainly encounter. We should prepare them for those expenditures.
Agents should also prepare buyers for all the expenses that can go into a transaction. They should be educated on loan costs, contract fees, inspection expenses, etc. Buyers should also be advised to not do anything leading up to or during the process that may negatively impact their ability to perform on the contract from a financial standpoint. Advise your buyers to be in close consultation with their lender and to get advice before making any decisions that may impact their credit or the loan process.
Very few things can make people happier or more upset than their money. Do yourself, and your clients, a big favor by preparing them for as many of the financial outcomes of a real estate transaction as possible at the outset.
Expectation 4: Potential Roadblocks From Contract to Closing
The last expectation I would highly recommend that you include in your presentation is preparing sellers and buyers for the potential roadblocks that can exist between signing a purchase contract and getting to the closing table.
I used to get excited when I got a property under contract as a new real estate agent. I quickly learned, however, that it was far more exciting to actually take that contract and successfully make it to the closing table.
Agents would be wise to prepare sellers and buyers for the minefield that exists between contract and closing. Most transactions that do not make it to closing are the result of inspections, the loan process, repair negotiations, appraisals, and legal research—all the things that can happen after a property is under contract.
Preparing sellers and buyers for potential roadblocks may not prevent the issues from happening, but it may give you a fighting chance to deal with level-headed parties. Human nature tells us that people typically handle stress and troublesome circumstances they are prepared for far better than things that catch them off guard.
The more you can prepare your clients and manage their expectations, the more success you are going to have as an agent in your real estate transactions.
About the Author: John Walker is a national DREI Candidate and teaches regularly for Superior School of Real Estate in North Carolina. John and his father own and operate The Diamond ReMax real estate offices in Mebane, North Carolina.