Buyers Who Go It Alone
Buyers Who Go It Alone
FSBOs garner a lot of salespeople’s marketing energy, but there’s a separate breed of consumers you may be overlooking in your prospecting efforts: buyers unrepresented by a buyer’s agent, or BUBBAs — an acronym that’s becoming part of real estate vocabulary, according to practitioners.
A byproduct of a buyer-friendly real estate market, widely accessible information on the home-buying process, and easy-to-use real estate listing Web sites, many buyers believe they can navigate their purchase themselves.
“With the Internet, people believe they have the information they need,” says Phyllis Staines, CRS®, GRI, a broker-associate with RE/MAX Coastal Real Estate in Jacksonville, Fla. “They think they can buy without a professional. It’s like when people have aches and pains and say, ‘I can go to WebMD and figure out [a remedy].’ ”
Last year, 23 percent of home buyers didn’t use a real estate practitioner to make their purchase, up from 19 percent in 2005, according to the NATIONAL ASSOCIATION OF REALTORS® 2006 Profile of Home Buyers and Sellers. Most of those buyers — 13 percent in 2006 — bought directly from a builder or a builder’s agent, the research shows, and 1 percent bought through a foreclosure or trustee sale.
That leaves 9 percent who bought directly from the previous owner; these are the buyers you can convert into happy clients through education and patience. Your best approach will depend on the buyers’ past experiences and their perceptions of the real estate market, real estate practitioners say. Here’s a look at four common scenarios and how to respond.
Scenario 1: Confused Over Commission
Some unrepresented buyers — particularly first-timers — mistakenly think they’ll have to pay the commission if they use a buyer’s agent, says Jo Anne Souza, a sales associate with RE/MAX Visalia in Visalia, Calif.
Souza speaks from experience. Recently, she met with an unrepresented buyer who demanded to know her commission in an attempt to lower the purchase price. Even after she explained that her commission would be paid by the seller, the prospect wasn’t satisfied. He made a disparaging remark about real estate practitioners being “rich and greedy” and walked away.
“You’ll always have reluctant buyers who really don’t know how things work,” Souza says. “Lately, it seems to be a lack of trust.”
Indeed, after years of not-so-flattering media coverage about how some real estate professionals profited from the real estate boom, it’s not surprising that consumers have a skewed view of how practitioners get paid, Staines says.
The solution: “I truly believe it’s an education issue,” Staines says. Address the commission issue upfront with potential buyers, just as most practitioners do with prospects at listing presentations.
Scenario 2: Looking for Savings
Other unrepresented buyers have some experience in the real estate market — because they’ve bought or sold a home in the past — and intend to negotiate a better deal by shaving off the commission that would normally go to the buyer’s agent.
Limited-service Web sites such as BuyOwner.com, which target FSBOS, also are also making their pitch directly to buyers who don’t mind doing the legwork that’s usually done by a real estate practitioner, such as scheduling open houses, researching comparable home prices, making an offer, negotiating, and coordinating the closing.
But will cost savings really result? Paul Purcell, a partner at Braddock & Purcell, a New York real estate firm and consultancy, says that’s certainly not a given. He warns that buyers shouldn’t make the assumption that they’ll get a better deal from sellers just because they’re not represented by a real estate agent.
“Why would the seller ever pass on savings to them?” he says. “The sellers don’t know them, and they’re not going to give a bargain to buyers [rather than pocketing the savings].”
Another thing to stress with unrepresented buyers: time is money. If they have a full-time job, a busy family life, and other commitments, it may make the most financial sense to have an experienced professional handle all the details involved in a home search, making an offer, and closing.
Scenario 3: Thinks Buying Is a Cinch
When you speak with prospective buyers who have experience buying or selling on their own, you should explain that every home purchase isn’t the same. Their last transaction may have been smooth sailing, but there’s always the potential for tough situations, Purcell says. Are they prepared for what they’ll do if they think a home is overpriced or if their offer is rejected?
“These buyers don’t know how complicated [the purchase process can be] and don’t have a high expectation of what a good agent can do in looking at comparable values” and negotiating, Purcell says.
Prove your expertise by spelling out these and other issues that the buyer may not have thought much about — for example, the quality of the neighborhood schools or whether there’s a waste treatment plant nearby that could affect their enjoyment of the area, says real estate consultant and coach Terri Murphy, GRI, CRS®, president of Memphis-based Terri Murphy Communications.
As you explain the benefits that you’ll bring, keep in mind the top five things that buyers say they want most from real estate professionals, according to NAR’s 2006 Profile of Home Buyers and Sellers: Help finding the right home, help with price negotiations, help with paperwork, help determining what comparable homes are selling for, and help determining how much they can afford.
Scenario 4: Doesn’t Want to Be Pressured
As you seek to convert unrepresented buyers into clients, be wary of pushing too hard, Murphy says. It could backfire. Prospects may be gathering facts for a move that may be two or three years away, and don’t want to commit yet to working with you.
“They need space,” Murphy says. “You can’t hound them. You just need to be a resource for them to come back to [when they’re ready].”
Rob Levy, a broker with Prudential Northwest Properties in Portland, lets potential buyers set the pace at his pressure-free Web site PortlandMLS.net, which markets itself as a free online service to help buyers find their dream home.
Once consumers register, they receive e-mail several times a week with listings and information about the buying process. This helps create a relationship without any pressure, he says. Levy says the site is successful at wooing clients, but the gestation period is long.
“The biggest part of converting buyers is showing what you can do for them,” Levy says. “It’s an educational process. It used to be we had the book, and they had to come to us for information.”
Now, buyers have access to much of the same listing information, so practitioners have to demonstrate what other value they bring to the table, he says.