Managing Expectations, Teaching Change
Managing Expectations, Teaching Change
One of the biggest stumbling blocks I run into in real estate deals is when agents haven’t prepared their clients for certain challenges and don’t know how to manage their clients’ expectations. This can be due to a few reasons: poor planning, failure to consider negative results, or insufficient communication.
When you know how to prepare your client for the potential outcomes — good or bad — in a deal, you won’t have a lot of fallout when plans go awry. Here are some examples of how to get them ready for a transaction.
Prepare for the Worst
Think about all of the things that could go wrong in your deal and prepare your clients for the most likely options. (You don’t want to prepare them for every single thing, or else you’ll freak them out. The exception to this rule is if you’re working with an engineer-type personality — then you want to tell him or her everything that could go wrong and how you’ll handle it if it does.) If your clients are prepared for the worst, then, when something less than that happens, they’ll be relieved rather than upset.
I had some clients who were selling their condo. The other agent brought in some buyers who were coming in to work at Pfizer Pharmaceuticals, a big employer in our area. I had been hearing rumors throughout the community that a lot of their employees were coming out of China through New York, and all of them were negotiating hard both at the offer stage and at the home inspection stage. I didn’t know why this was happening, but it seemed to be a theme, so I prepared my condo sellers for the worst. I knew that if the buyers asked for a ton of stupid stuff in the home-inspection stage, they would go ballistic. So in the offer stage, I told the sellers what the trend was and that they should only negotiate down to $1,000 above what they were willing to take and be prepared to give the buyers the $1,000 in the home inspection. So when the buyers asked for $500 at the home inspection (which was actually an outrageous figure, given the paltry results of the inspection), the sellers were thrilled to give it to them, thinking they had just made $500 more than they had expected to.
Teach Them What to Expect
The other challenge that real estate professionals face with clients is dealing with their emotional state throughout the deal. The process of change is a complex one, but it goes through several distinct stages. For instance, one stage that really gives people challenges is between making the decision to do something and actually doing it. This is a time of buyer’s remorse. You must prepare them for the fact that there is a natural place in the process of change where they will start to feel uncomfortable and question their decisions. This is a natural part of making any big change in their lives, and it doesn’t mean that they’ve made a bad decision; it just means that they’re out of their comfort zone. If you’re clear about that up front, you’ll have a much lower fallout rate for buyers who back out of deals.
As part of my standard buyer’s agency presentation, I end the conversation with a big, friendly slide that says “DON’T PANIC!” It is at this point in the conversation that I assure them that, at some point in the process, they’ll begin to panic. I then add that they need to remember they are not allowed to panic until I tell them it’s time to panic. I also assure them that I will absolutely tell them if and when that time has come. So when buyer’s remorse comes — and it almost always does — I ask them, “What was the rule?” They always look at me blankly and stop thinking about whatever they are panicking about to try to remember the rule. I then help by saying, “About panicking?” And they break into a huge smile and say, “We’re not allowed to panic until you tell us to!” I respond with, “Right, and it’s not time yet. We’re still fine.” They take a deep breath, and everything settles down again.
Short Sales and True Remorse
In today’s market, the real remorse is that felt by sellers who have to do a short sale. They feel stupid for having made such a bad investment, ashamed about not being able to pay off a debt they agreed to repay, and embarrassed that you, their agent, have to know about this dirty laundry. And they are often very depressed about the damage to their future caused by that loss of equity. It’s demoralizing. Now, combine that with the buyers who are trying to get a “steal” and putting in ridiculously low offers, and you’ve got a challenging situation all around. Helping sellers understand that they’re in the same boat as many other Americans, many of who are quite intelligent and wealthy, helps, as does telling them that the market is down, so they can buy low to compensate for having to sell low. Making it clear that you are not judging them — without saying that outright — and that you have compassion for their situation goes a long way towards helping them through the process.
I recently had a long discussion with a friend of mine who is considering what to do with her house in Arizona. She bought it before the height of the market for $140,000. At the height, comparables went to $260,000 and just a couple weeks ago, she heard about a sale in her neighborhood for $50,000. Needless to say, she was devastated. She is also out of work and behind on her mortgage. So she needed options. I spent about 45 minutes on the phone with her laying out her options for dealing with the banks: a possible foreclosure or short sale, mortgage modification, and so forth. But at the core of the conversation was this feeling that she had done herself some major wrong in buying this house. She was devastated. The single best thing that I did for her in that conversation, aside from giving her a plan of attack, was to assure her that I, as someone who qualifies as an expert in the real estate industry, wouldn’t have proceeded any differently than she did at the time. I assured her that based on her knowledge, she made a good investment decision. Now she just needed to forgive herself for the unexpected outcome, accept where she is now, and make good investment decisions from here.
It’s often sellers’ inability to accept current realities that keeps them from moving forward in these situations. If you can help them through the issues that are keeping them from accepting the truth of what is now, they can make some serious progress.
Compassion and Empathy
As real estate practitioners, we sometimes forget what it’s like to walk into this incredibly complex world of buying and selling with no knowledge of how the whole thing works. We forget that there are people behind the doors of those houses and more is going on in their lives and in their minds than just this transaction. We have to deal with the person, not the house, and with the whole person, not just the issues surrounding the transaction. When we can put ourselves in their shoes, imagine what they are dealing with, and have compassion for what they are going through, it’s then that we are most effective.