A common misconception amongst real estate agents is that the most important resource in the real estate process is the buyer or seller. After-all, without them, we don't have a job! In our frantic desire to have buyers or sellers, sometimes at any costs, we tend to forget that there is an even scarcer commodity at stake. Ourselves! Our time, our health, our knowledge base and yes...our sanity! If we don't take care of ourselves and properly evaluate the viability of a potential client, we risk loosing far more than a transaction.
You may have heard about the story of Casey Serin, the 24 year old whose real estate misadventure in flipping homes resulted in eight homes bought in 8 months with 5 of them currently in default and being repossessed. Not one to go quietly, Casey regaled the world with stories about his recklessness; even admitting to lying to justify mortgage loans...on camera. Well, it's over for Casey who now faces a number of lawsuits, problems at home and problems with the FBI.
Unfortunately, although Casey's story is extreme, it is not unique. And far more troubling than the specific details surrounding this particular media circus is the fact that the traits that propelled Casey Serin into a series of disastrous decisions are far more widespread than most of us would care to admit. Casey's inability to come to terms with reality and live within his limits may have ultimately been his biggest flaw.
But you don't have to be a foolish investor to make this type of error. The tendency to ignore warning signals regarding a potential clients qualifications and limitations is a trait which is so inimical to the real estate community that it's like a moth flitting towards a flame. Certain destruction...but enticing nevertheless.
The investigation surrounding Casey Serin is likely to expand to include a wide swath of professionals within the real estate community who assisted a client who really shouldn't have been one! But we must ask ourselves, would most of us have had the criteria in place to properly evaluate whether we should have taken on Casey as a client?
This is a big issue for most real estate agents. Many of us do not practice the discipline of qualifying a client. Consequently, we waste time working on deals which will never materialize. Several years ago, my real estate mentor shared a simple system which has proved invaluable in clarifying how and when to work with clients. This tool, that he referred to as the ABC Rating System has helped me to appropriate scare resources...namely my time and energy. Although, I have modified the systems somewhat, the basic tenants remain the same. Here's an example of how the ABC System qualifies a potential buyer client.
- An (A) Client is Someone who is Willing (wants to work with ME) Ready (would like to do a real estate transaction within 3-6 months) and Able (can qualify for financing within normal parameters)
- A (B) Client is Someone who is Willing ( wants to work specifically with ME) Ready (would like to complete a real estate transaction within 6-12 months) and Able ( is able to qualify for financing within normal parameters)
- A (C) Client is Some who is Willing ( wants to work specifically with ME), Ready (would like to complete a real estate transaction within 12-18 months) and Able (is able to qualify for financing withing normal parameters )
You will note from the above list is that the only criteria which changes is the time frame in which a client desires to move forward. After all is someone who doesn't necessarily want to work with me, and is still "shopping" around for real estate agents truly a client? NO! Neither is someone who cannot qualify for mortgage financing. But rather than asking these questions right in the beginning, many real estate agents play a high stakes game of chance...hoping that driving clients around and continuing to stay in touch with them will yield a lucky roll of the dice and create clients from the non-committed or unable.
The inability to accurately discern the viability of a transaction is becoming increasingly expensive. For every non-client that takes up time, the loss is far broader than the deal at hand. The fact is that my ability to earn a living 3 months from now is based on what I am doing right now. Focusing on the wrong thing now guarantees that the right things will not occur in the future.
So ulitmately, it's about practicing Triage. It's realizing that my time, energy, stamina and strength are limited resources that must be protected and utilized in the most effective and efficient way. It is only through this kind of sober discipline that real estate agents can hope to be around long enough to assist those who are not clients today when they become clients in the future!
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Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511.
Lola - EXCELLENT POST - I just emailed it to everyone of my team member's. Bravo... thank you for making my life easier you said everything i wanted to say at our next meeting but without all my sarcasm.
The "greener" ones on my team sometimes spin their wheels with clients I don't even understand why they are bothering.... but i guess it comes with experience. Thanks again have a great evening
Lola - This is excellent advice, and I'm sure one that many of us need to read again and again as a reminder. Thanks for putting it all so succintly.
Jeff
I just weeded out my potential buyer list that I send auto notification of listings. I was surprised that a lot of them are still actively looking and so I emailed them to get a few responses.
I have learned to show property once...and if they are not interested then not devote a lot of time and effort. I have also learned to follow up with the LO to see if they have followed up with the ones who had some credit cleaning to do but were going to be ready in a couple of months.
Lola, One of the nice things about working with sellers is that most of the qualifying comes automatically. For buyers agents they really should follow your suggestions very closely. Being a Mortgage Broker I have had this discussion with sales people many times. "why are you wasting your time on somebody that you don't know if they can actually buy something, or buy something in that price range?"
:Your posts are always a pleasure to read.
Bill Roberts
Lola! Can I adopt you? Your thoughts are so well laid out, your words flow so well!
Back in the late 80's, I had a series 22 securities license, as we were selling limited partnerships. One of the rules for that industry is qualifying the buyers... If the buyers do not meet certain minimums, they are not buyers. Hard & fast. Mabe we should do something like that here in residential...
Oh Lola, you hurt me. I have ALWAYS been the proponent of NO OVER-PRICED LISTINGS! It is not a matter of qualifying the seller, but rather control. Do you let the tail wag the dog? Just because they say that they want "thus and such" doesn't mean it is "worth" "thus and such."
An over-priced listing is NOT going to sell. It hurts the seller if they do in fact want to sell, but it also hurts the broker. The broker's reputation is built on successful transactions, not failures. An over-priced listing leads to failure, hence to reducing the reputation of the lister.
I've been in this business since 1975. In all the years that I sold real estate I worked primarily with sellers. I would rather turn down a listing than take an over-priced listing. I do not subscribe to the theory that you try it for a while and then reduce the price. That's a subject that deserves entire post.
Bil Roberts
Hi Lola, I subscribe to your blog because I don't want to miss whatever you have to say.
Bill Roberts
Lola,
I have been frustrated with several clients I have been working with for A YEAR, shown them homes on several occasions and now they are moving to a different area. Trying to find out if someone is serious about a purchase or window shopping would help in prioritizing.
Flagged for featured and rated a 5 for it's relevance to this market.
Hi Angie, Thanks for letting me know about the mention in Week in Review. I appreciate it.
Hi Fran, I can certainly appreciate your sense of frusteration. This market is challenging in a number of ways. That's why I wrote this post...because, we often forget that we must take care of ourselves so that we can serve others effectively. Having some clear cut guidelines helps us to more accurately evaluate potential clients. Thanks for stopping by to read and comment.