The Buyer Consultation: Demonstrating & Articulating Value Interactive Workshop Student Workbook
The Buyer Consultation: Demonstrating and Articulating your Value What is a Buyer Consultation? What is your goal? What are you trying to accomplish? What is the Buyer s perception of the entire home buying process? 2
When working with buyers, it is best to begin your relationship by having a complete buyer consultation. It is highly encouraged to have your consultation before showing any properties to a buyer. Be Professional and show your value. Sample Dialogue <Buyer>, In order to better serve you, I would like to review some key components of the home buying process and get a better understanding or your expectations. (In the event a formal consultation cannot be made, use the strategies by having an informal consultation over the phone prior to showing properties or as early as possible in the buyer relationship.) 3
It s about the possibilities in our clients lives Ask questions. Focus on your client s needs, concerns, motivation and expectations. Let them know you are here for them. Then provide answers and share the resources you will use to help them reach their goal. <Buyer>, at John L. Scott, we believe it is about each individual client; the possibilities in your life and helping you move forward with your plans. John L. Scott has been successfully serving buyers and sellers for over 80 years. I have chosen to partner with John L. Scott because of their reputation as a leader in the industry. (It s about the client s situation and how you can help the buyer move forward with their plans. This is a great opportunity to ask the buyer questions about their expectations; discover their motivation by finding out their timelines and what's most important to them. You can ask them questions about previous home buying experiences, whether they have a home to sell, if they are renting and the duration of their current lease, and more. If you already have this information then use this page to confirm the information they have already provided.) 4
What Buyers want most Find what is important to the buyer in their home buying process. Review the statistics and ask them how each of these needs or expectation rank. Ask questions throughout the Buyer Consultation. Discover more of your client s needs, concerns and expectations. <Buyer>, 53% of all home buyers believe finding the right home to purchase is most important, 23% believe help with negotiations is most important, and 21% believe help with paperwork including financing is most important. How would you rank your order of importance? 5
What s most important to you? Ask the buyer to identify any other items that may be important that have not already been disclosed or discussed. Are there any other needs or concerns I should be made aware of? Have you considered school districts, commute to work, etc.? (You may want to help them out by naming some of the words in the word cloud. Either discuss these additional needs and concerns and provide answers or let them know you will be addressing them in a couple of minutes.) Develop your dialogue and practice with a partner. 6
Three Important Factors to Consider when Buying Discuss the buyer s wants and needs. Use the Wants and Needs Worksheet and have a discussion and qualify each want vs. need. Let the buyer know that after narrowing the home search parameters, these factors will play a role in the home search process. When we think of value we normally consider the condition and the attributes of the home in relationship to its price. Another important factor in determining price is location. As we increase our expectation on condition and the home s attributes, the price may also increase. As we adjust our desired location, this too will have an impact on price. When we do some online viewings, we can narrow and expand our search results so you can gain a better understanding how these factors affect price and vice versa. (Probe and ask questions to find their frame of reference and their ideal home including location, condition, attributes and price.) 7
Location Discuss and discover the buyer s desire on location; Close to work School District Community or Neighborhood How important is location? If price, condition and the home s attributes were not an issue, where would you like to live? (Probe to find if close to work, school district, or close to a lifestyle are determining factors when it comes to location. If there are multiple factors, then try to prioritize with buyer. Let the buyer know that sometimes location has the biggest impact on price.) 8
Consider the Condition Discover what the buyer is looking for in a home relative to condition. Are they looking for a turn- key ready home or a cosmetic fixer. Also, be sure to find the buyer s frame of reference between turn- key ready and fixer. As we saw on the previous page, besides location, the condition of the home may greatly impact price. Have you thought of the condition of the home you would like to buy? Would you be willing to trade any attributes of the home for condition? 9
Getting to the Right Price Discuss with buyer how the first two factors influence price. We can control two out of the three factors. Beginning with our Wants & Needs Analysis of the home s attributes, if we want the home to be in good condition, our choice of location may dictate the price. If we choose the price and condition, this may dictate the location. And lastly, if we choose the price and the location, this may dictate choice of condition. So, if you like, later we can view some properties online using the Wants & Needs Analysis and begin with location as the determining factor and then look at price compared to condition. We can then make adjustments to location, wants and needs, or price and compare the condition of each property. (Do some online showings and get a better understanding of the buyer s wants, needs and preferences.) 10
Backlog of Buyers Discuss the backlog of buyers, especially for the specific area and price range the buyer has specified. Refer to the market stats and explain the impact the backlog of buyers may have on the market trends. No matter the market conditions, there is always a backlog of buyers. We may be competing with another buyer or multiple buyers on the same property, especially if it is new on the market. If we see a new listing, on a scale of 1 to 10, what must that property be rated in order to submit an offer and submit a full price or even above full price if we are in a multi- offer situation. Also, in areas of low inventory, we may be in a quick- action market and taking action fast may be necessary. (Discuss how multiple offer situations could be handled by the seller and their listing broker. Include REO and Short Sale information.) 11
Buyer Ready Day One TM Find the frame of reference the buyer has with regard to the market conditions. Share market trends for their specific area of interest. What are you reading or hearing about today's market. I would like to share with you some of the market trends that may have an impact on our home buying strategies. (If needed, show Trendgraphix charts, MLS statistical data or NAR RPR reports. Include in the conversation inventory numbers, percent list to percent sold ratios, absorption rates and month s supply of inventory. Ask the buyer if they understand the impact of these reports on their home buying process. Share your knowledge of market trends and numbers. Explain how these trends necessitate being Buyer Ready Day One TM.) 12
Underwriter s Approval - Certified Mortgage Ready TM Discuss with the buyer how financing makes an impact on a seller's choice to accept an offer. Explain to the buyer the differences between pre- qualified, pre- approved and underwriter s approval. More and more, sellers want reassurance of a bonafide buyer. Some buyers only get pre- qualified, others pre- approved. Buyers that obtain underwriter s approval are far stronger than the latter two. (If working with a Priority Home Lending mortgage consultant or loan officer, introduce the concept of Certified Mortgage Ready TM.) Underwriter s approval means the underwriter has approved the buyer for the loan based on their credit report, income verification and job verification. The underwriter only needs the purchase and sale agreement, clean title and an appraisal to close the loan. This is a huge difference between pre- approved and has a greater impact when presenting an offer. Attaching such certification with any offer gives you the best opportunity to reach mutual agreement with the seller, especially in a multiple offer situation. Has anyone prepared a Good Faith Estimate for you? Have you received a pre- approval letter from a lender? And what was that amount? Would you like to speak with one of my lenders that supply underwriter s approval? 13
Mortgage Smart Share with the buyer some of the do s and don ts that have an impact on the ability to obtain financing for closing. Once you have been pre- approved or Certified Mortgage Ready TM, you might want to make sure you don t do anything that will disrupt your status. For example, if you haven t been to the lender yet, I have a list of items to prepare you for your meeting with the lender. There is also a list of items to avoid once we receive our documentation from the lender. Please review this list and feel free to ask me any questions. (Share some highlights of do and don'ts located in the Home Buying Planner resource section. Show buyer the page in the resource section of the Home Buying Planner.) 14
Representation Share with the buyer how you will represent them through the entire process. Introduce what the buyer should do in your absence when viewing new construction or open houses. I want you to feel confident you have the best representation. It is more than being Buyer Ready Day One TM. I will negotiate price and terms on your behalf. Once we reach mutual agreement, I will manage the transaction and the entire closing process. I have your best interest in mind at all times. Also, If you see or visit an open house or new construction in my absence, be sure to give the listing broker one of my cards and let them know I am representing you. If you ever want information, please do not hesitate to contact me, I can follow up with any properties and get you the information you need. (Ask the buyer if they have any concerns. Provide answers to their concerns and share with them the resources you will use to help them navigate through the home buying process.) 15
Negotiation Factors Discuss the strategies of preparing an offer and the terms most important in the negotiation process. Review factors of Price Terms Times lines Contingencies Concessions Seller Psychology Days on Market Price, terms, time lines, contingencies, concessions and days on market are all important in the negotiation process and reaching Mutual Agreement. Remember, on a scale of 1 to 10 what would the property have to be in order to offer highest and best price? Terms, including down payment, loan type and earnest money may be more important to the seller then any of the other factors. Timelines and contingencies also may play a role in the negotiation process. This could include the closing date and possession date, the financing contingency, the home inspection contingency, and a home sale contingency. All these have an impact on how attractive an offer could be to a seller. Including a larger earnest money amount or even partial release of earnest money could help offset contingencies. Asking for concessions from the seller definitely has an impact on our offer. And the seller psychology of days on market will have an impact especially for new listings. This is my job to discover and we will definitely be discussing offer and acceptance strategies prior to writing an offer. Do you have any questions or concerns about any of these negotiating factors? (Provide answers to their concerns and share with them how you will help them with that particular question or concern. It may be wise at this point to discuss the process and difference between REO properties including HUD, Fannie Mae and Freddie Mac along with bank owned properties and asset management companies and how they differ between short sales and non- distressed properties. Also discuss the importance of Property Disclosure Statements and work orders completed by various seller types.) 16
The Home Buying Process Review the entire home buying process to assure you and the buyer are setting expectations of how the process will unfold. Review each step with the buyer to see if they have any questions. Provide answers to their needs or concerns and share with them the resources you will use to help them navigate through the home buying process. Sample Dialogue: First, let s make sure we are Buyer Ready Day OneTM and find the right home for you. Then, I will Prepare and Negotiate our offer. Upon Mutual Agreement, I will manage the transaction. I will direct and coordinate Title and Escrow for you. I will help you with a Home Inspector and the Home Inspection Process. I will even be there with you during the entire inspection. I will work with you and manage all Contingencies. Once we have satisfied or removed all contingencies, I will monitor the Appraisal and Loan Commitment and keep in direct contact with your lender. The Week of Closing, I will coordinate with the escrow company and make sure we are on track with loan documents and our Closing Date to assure we re on target with our Move- in Day. Do you have any questions or concerns on any one of these steps? How knowledgeable are you of the closing process? (Ask the buyer if they have any concerns about any step. Provide answers to their concerns and share with them the resources you will use to help them navigate through the home buying process.) Develop your own dialogue and practice with a partner. John L. Scott Career Development Program Copyright JLS Inc. 2014 All Rights Reserved 17
Partnering with the Right Team Share with the buyer the team members you will be using to help navigate a successful closing. Lender Title Escrow Broker Services As you can understand, having the Right Team will help assure a smoother transaction. I am recommending these companies because I know these companies will have the same goal we have; to have a smooth transaction. (Recommend your preferred team members. Share with the buyer the resources you will use to help navigate a successful closing. Show them the resource pages in the Home Buying Planner that include your team; title company, escrow company and mortgage company. Share each team member with the buyer explaining their significance and importance in each step.) 18
Our Next Steps John L. Scott Tools Do some online showings using the buyer s Wants and Needs Analysis. Save their Favorites or Save their Search and create a Property Tracker Account. Create a Market Watch Report. Explain and share with the buyer their Property Tracker Account and Dashboard; how they can monitor their search and receive email notification of new listings and market updates, save their favorites and track status and price changes. As part of the home buying experience, while we are previewing listings, I would like to create a Property Tracker Account for you that will assist us in finding you the right home. With a Property Tracker Account you can Save the Search or multiple searches; we can enable email notification of new listings plus Save Favorite listings and track homes by receiving email notification of price and status changes. We can also create a Market Watch Report that will give you weekly updates of stats and trends for any area. 19
GPS Home Search App Share the GPS Home Search App and the benefits to the buyer. Have them download the app and help them create and set their home search criteria. The John L. Scott GPS Home Search App is a great tool to have on the road. Everything you see on the internet you can see on your mobile device. See all new listings; actives, pending and even sold properties. You become the expert with the enhanced search features and detailed information on every property. Would you like me to help you download and set up the App? 20
Introduce the Home Buying Planner Introduce and share the Home Buying Planner with the buyer; including all tabs and resource section Obtain Buyer Agency. I would like to share with you our Home Buying Planner (Show tabs and how to use). I also would like to go over some paperwork; Agency Law Pamphlet and the Buyer Agency Agreement. (Obtain Buyer Agency Agreement.) 21
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