This May marks Inman’s sixth annual Agent Appreciation Month. Look for profiles of top producers, opinions on the current state of the industry and tangible takeaways you can implement in your career today. Plus, the prestigious Future Leaders of Real Estate return this month, too.
I was recently asked to write an offer for a buyer outside our normal service area. Since our core business is located in the uber-competitive Greater San Francisco Bay Area, we have well-honed systems designed to help our sellers maximize their returns.
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On the flip side of the coin, we also have a process aimed at increasing our buyers’ probability of getting their offer accepted. I was surprised, then, when preparing to write my buyer’s offer, that none of the Bay Area’s generally accepted practices were in place in that other area, both on the listing and buying sides.
Even more interesting was the fact that local agents I talked with recognized the lack of effective procedures, but did not seem to be particularly interested in “raising the bar.”
Over the years, I have learned that agents who deliver “next-level” services have a higher chance of succeeding long-term than those who just do enough to get by. Knowing this, it seemed to me that this particular market was ripe with potential opportunity for those agents willing to amp up their game. With that in mind, here are my recommendations.
5 key listing-side opportunities
1. Prepare a comprehensive disclosure package before the property goes live on the market
When I first got into the business (back when dinosaurs roamed the earth), no one had a prepared disclosure package up front. Over the years, listing agents began to realize that a well-prepared package would accomplish a number of things:
- It provides a potential buyer with all of the information they need to write stellar offers.
- It demonstrates the professionalism of the listing agent.
- It shortens transaction contingency timelines because everything is provided upfront (it is not unusual in our market to get offers with the Inspection Contingency removed).
- It reduces the number of calls a listing agent receives with queries about the property — assuming, of course, that any given buyer’s agent takes the time to do their job and reads everything before calling.
In our market, the disclosure package provided upfront typically includes all the seller disclosures — completely filled out and signed, a full range of inspections (typically home, wood-destroying pests, roof and any others as applicable), HOA docs if applicable, a Natural Hazard Report, a preliminary title report, any broker-related disclosures, an offer from an insurance company to underwrite the property and so on.
This has now become an area-wide standard, and any exclusions are an exception, not the norm. Our team goes the extra mile and, in addition to the standard disclosure items, also provides an FAQ that answers the questions we know most buyers and their agents will be asking.
After working in this market for so many years and seeing the clear benefits of providing disclosure packages upfront, it was actually a bit of a surprise to discover that this was not the norm in other parts of state and, on more than one occasion, to have a listing agent state, more than a week after the home had been on the market, “We haven’t gotten around to filling them out yet.”
2. Promote open house opportunities
This is so easy, you would wonder why so many agents do not understand how to make this work. Many buyers who are not willing to sign a preemptive buyer-broker agreement realize they can go straight to open houses without needing to sign an agreement with a buyer’s agent. As a result, it makes sense to make it as easy as possible for buyers to find those open houses.
All of the MLSs I am aware of make it extremely easy; the listing agent can go on the MLS to their listing and add the dates and times of their open houses, along with any key information required.
This information then automatically syndicates to most web portals, which is where buyers can find the information and simply go if the property interests them. Total expenditure on behalf of the listing agent? Five minutes max. Benefit? Priceless.
3. Provide detailed instructions for writing an offer
In addition to providing a detailed disclosure package and FAQ, we also provide comprehensive instructions for writing an offer. This document provides a roadmap for buyer’s agents and helps ensure that offers are written correctly out of the gate.
This is especially helpful when dealing with trusts or probates, as the seller’s name that needs to appear on an offer is not always obvious. Our instructions include the following:
- Correct name(s) of the seller(s) as they should appear on the purchase agreement
- Whether or not the sellers are asking for rent-back
- Correct Agent Broker DRE ID numbers
- A link to download the disclosure package in the event they do not already have it
- Whether or not Inspection Reports are being provided and how to access them
- Specific information about relevant documents, such as state-required Natural Hazard Disclosures (if applicable), who is providing a home warranty. (In our region, the seller typically pays for a one-year warranty. We pre-purchase it and include it in the package.)
- A receipt we ask the buyers and their agent to sign acknowledging that they have received and read the entire disclosure package
- Information about any pre-escrow we may have opened
- The need for the buyer’s agent to include a current loan pre-approval
- Verification of funds demonstrating that the buyers have the required funds for the deposit, down payment and closing costs
- Instructions on how to submit an offer to ensure it is received and acknowledged
We are continuously thanked by buyer agents for the comprehensive instructions, which are designed to help them write effective offers. Again, this is assuming the agent actually reads everything, which, though it is assumed to be an integral part of the job, is not always a given (this comes under the category of “don’t get me started”).
4. Respond to queries
Put another way, “Answer your phone!” I confess that I simply do not understand the ongoing inability of so many listing agents to respond when called.
Additionally, listing agents should be eager to provide the level of information required to help a buyer’s agent write a winning offer. I was consequently flabbergasted when talking to listing agents in this particular market by the lack of information they were willing to provide.
Preparing to write a cash offer on one listing, I discovered that they already had one offer in hand. Since my buyers had expressed a particular interest in this specific property and were willing to do what was necessary to secure the deal, I asked the listing agent for details on the existing offer that would help us effectively compete. “I can’t tell you that,” she said.
That’s bogus. Instead of being willing to help me craft an amazing offer, she stonewalled me. The irony of this is that in California, both buyers and sellers must sign a disclosure that states:
“Offers not necessarily confidential: Buyer is advised that seller or listing agent may disclose the existence, terms, or conditions of buyer’s offer unless all parties and their agent have signed a written confidentiality agreement. Whether any such information is actually disclosed depends on many factors, such as current market conditions, the prevailing practice in the real estate community, the listing agent’s marketing strategy and the instructions of the seller.”
Put another way, a listing agent in our market is able to share any and all information on any offer they may have in hand unless they have a written confidentiality agreement signed by the seller. In my experience, sellers in our market are usually eager to have existing offer information shared with buyer agents in the hopes that transparency will generate better offers.
Over the years, I have only had one seller ask to sign a confidentiality agreement. While I understand that there may be valid reasons for not disclosing the terms of another offer, in the whole, I have discovered that the more information is shared, the better the seller is served.
5. Negotiate
A listing agent, as a part of their fiduciary responsibility to the seller, should be prepared to do the work necessary to negotiate the best possible terms for their client. Unfortunately, many agents choose to take the “high” road, focusing only on the biggest number without regard to the overall quality of the offer.
In my case, having written a cash offer with a great price and terms, I submitted it to the listing agent along with a note stating that our buyers were eager to negotiate the best deal possible. With the three offers in hand, rather than negotiating, the listing agent merely recommended to their sellers that they take the highest offer, which was only a fraction higher than ours, but had loan and appraisal contingencies.
Had they come back to us, my buyers were more than willing to beat that price and provide upgraded terms in other areas as well. Additionally, since it was a cash offer, there were no loan or appraisal contingencies.
Not only was the listing agent not willing to provide any information on offers they already had in hand, but they also refused to negotiate to obtain more money and better terms for the seller. I just have one question: “How is that adequately fulfilling their fiduciary responsibility to represent their client’s best interests?”
What so many listing agents fail to understand is the simple fact that the goal should be to cooperate with a buyer’s agent to establish a mutually beneficial partnership so that the goals of all parties (seller, buyer and both agents) can be achieved.
This requires a substantial amount of work on behalf of the listing agent, which, sadly, many either do not know how to do or are simply unwilling to put in the extra effort required.
5 key buyer-side opportunities:
1. Prepare your buyer(s) for success
This includes all of the obvious things, such as making sure they are pre-approved and actually have all the funds they need to complete a purchase. As explained in an article entitled “What homebuyers can expect now,” a mandatory buyer consultation should be the critical first step when preparing buyers for success.
During this meeting, the agent should go over all of the steps required to submit a successful offer and also detail potential mistakes to be avoided.
2. Read the confidential comments
You would think this would be obvious: Many listing agents go out of their way to make sure the critical information a buyer’s agent needs to write winning offers is spelled out clearly in the confidential agent comments on the MLS. You would be wrong, however.
I’ve learned over the years that there are agents out there who prefer to take shortcuts rather than do the actual work of reading. Strange, but true. As a result, we constantly field calls to answer questions because the agent in question cannot be bothered to do due diligence.
To be honest, if I encounter agents who call to get answers to questions I have already prepared the answers for, it raises doubts about that agent’s competency and calls into question whether or not I would actually want to work with them.
3. Call the listing agent
Prior to the foreclosure crisis, agents actually communicated with each other (by and large) before offers were written and submitted. With the advent of REOs and the fact that a significant percentage of REO agents absolutely refused to communicate, agents quickly learned the Spaghetti Method of writing offers: Throw as many against the wall as you could, hoping that something would stick.
Sadly, once the market rebounded, a significant number of agents did not go back to the activities of the past. Instead, we started seeing offers show up out of the blue with no precursory notification or conversations. In many cases, these agents also did not read the confidential comments, which included offer deadlines and so on.
It is critical to call the listing agent when getting ready to submit, if for no other reason than to make sure the property in question is actually still available. Find out what the seller wants and then, as much as possible, actually write that into the offer.
4. Submit all the necessary documentation with the offer
We ask for the following to accompany an offer:
- A current pre-approval
- Verification of funds (We do not need more than the first page of any applicable bank statements) and, if funds are being sourced from a number of funds (we have seen offers come in with documentation for up to 12 different accounts), an accompanying page totaling all of the accounts is a nice touch
- A copy of a gift letter, if others are providing funds (along with the gift provider’s verification of funds)
- Our disclosure receipt, signed by the buyer(s) and their agent, signifying that they have received and read all the disclosures
- Full contact information for the buyer’s agent
Everything should be neatly packaged into as few documents as possible. We also provide very specific details as to how to submit the offer (either by uploading to Disclosures.io or emailing to a specific email address), but you would be amazed at how often those instructions are not followed.
5. Pay attention to your phone
There is nothing worse than fielding an offer, presenting it to the seller and then circling back to the buyer’s agent with questions, only to have them refuse to answer their phone. If we have multiple offers and cannot communicate with a buyer’s agent, there is a possibility that they may lose out.
This is not rocket science. If followed, these steps can enhance the ability of your clients, whether sellers or buyers, to get effective offers written and accepted. In those markets that do not have comprehensive systems in place, opportunity is waiting in the wings for a few stellar agents to ride into town, demonstrate their skills, and seize the day and market share.
