Real estate professionals often have twisty-windy career paths that bring them to this field, and I’m no different. People are often surprised to hear that before I became a real estate broker, I was an attorney – and before that, I earned a master’s degree in Psychology. Of all my credentials, it’s my Psychology training that I believe has served me the most fully throughout all stops on my career path. And not because it gave me super powers of mental manipulation for handling crazy clients or agents (seriously – it’s not!).
Rather, Psychology gave me a therapist’s ear and a deep understanding of what causes – and calms – panic and fear.
If you’ve been in this business for awhile, you know that panic and fear – freak-outs, to put it more colloquially – are common, normal reactions of smart, normal people when faced with the life-altering financial and lifestyle decisions involved in buying or selling a home. Unfortunately, unmanaged freak-outs also have massive derailing potential for transactions: they cause buyers to sit on fences, back out of deals and make lowball offers — and sellers to resist reasonable offers and requests from across the negotiating table.
Here are three approaches I’ve found to be very successful when working through, or preventing, freak-out moments with buyers and sellers:
1. Manage their expectations.
If you’ve ever read my Trulia Voices blog, you’ve undoubtedly heard me repeat what has to be one of my favorite real estate adages:
Surprises are for birthday parties – not real estate transactions.
Surprises are, in my opinion, one of the number one reasons that buyers and sellers freak all the way out – some recurring real estate surprises arise when:
- They are asked to bring in more cash to close than they were told to expect – and they don’t have it.
- They are told they need to show up – in person, during the work day, and they can’t get the time off.
- They start making offers in what they thought was a buyer’s market and find that they have to compete.
Surprises cause panic and fear because they put people in the position where they feel like their homes, funds and futures are being held hostage for a ransom they might not have (e.g., the time to show up right this moment, the unanticipated extra thousands of dollars of cash to close). Surprises can also confirm deep-seated negative stereotypes and beliefs people unconsciously hold about the real estate industry – it can even confirm their own negative self-talk about whether they truly deserve to own and live in such a great home, or to move forward with their lives through an easy sale.
The best way to prevent freak-out-inducing surprises is through skillful expectation management, and the best time to start proactively managing your clients’ expectations is at the dining room table, before you sign the listing agreement with a seller, or at the coffee shop or conference room table, before you ever put your buyer clients in the car.
Make sure to cover these things, as you manage expectations:
- Current market dynamics. Is it a buyer’s or a seller’s market, or roughly neutral? How long do homes stay on the market, on average? Are homes getting multiple offers, or lagging and selling for below asking?
- Market norms. If you know it’s normal for a home in your area to have a pest bill of $25,000 – say so, early on. If the seller normally does pest repairs, say so. If sellers usually get inspections before listing – say so! If there is normally an extensive negotiation before coming to a meeting of the minds in your market, tell them that, too.
- Escrow timeline. Up front, and then continually throughout the transaction, brief your client about what’s coming up on the calendar. In particular, focus on the inflection points where they’ll have to make a decision, a deposit or an appearance.
In fact, from your first meeting, you should be highlighting when clients will be expected to pull a trigger or make a final decision, like contingency deadlines, and when they’ll be expected to bring their money or themselves to the property or to escrow. When these timelines sneak up on people, it derails their daily calendars and cash flows, causing fire drills which only contribute to them feeling hectic, panicked and frantic.
- Ranges and margins. You and I both know that the precise date on which escrow closes impacts the amount a buyer will need to bring in to close – and the net amount a seller will take away from a transaction. But our clients don’t know this, unless and until we tell them. Anytime there is a range or a margin of error on an estimate – of time or money – that you are aware of, let your client know this as far in advance as possible. Encourage them to be in constant contact with their mortgage broker, too, and suggest times they might want to check on how firm or rough an estimate is.
The side benefit of smart, constant expectation management is credibility: when you tell your clients what they can expect on an ongoing basis, and then your prognostications about the future come true, it instantly and permanently positions you as the sort of expert every savvy consumer wants to have on their side.
2. Constantly remind them that the power and the decisions are in their hands.
One other major source of wailing and gnashing of teeth by home buyers and sellers is the sense that the ultimate outcome of much of their transaction is entirely out of their control. And in many senses, it is: the lender has the discretion to approve their loan (or not), the buyers of the world have the final say on whether a seller’s home gets sold (or not) and the opposite is true – sellers can say yea or nay to a given buyer’s offer to buy a given property.
But you and I know the underlying truth, which is that there is an order and a system to real estate matters which empowers buyers and sellers to strategically increase their chances of creating a successful outcome. And giving them that power represents freak-out deactivation at its finest, e.g.:
- Buyer, are you worried about sellers not accepting your offers? Tweak your qualifications and your search price range, and you can reposition your offer as one sellers can’t refuse.
- Seller: worried no buyers will bite? Well, seller, you have the power to pull two levers – pricing and property preparation – on that score.
- Afraid the bank won’t approve you? Let’s meet with the mortgage broker and get some action steps you can take to bring your financials in line with their guidelines for borrowing the amount you need to buy the sort of home you want.
Let your clients know, every step of the way, you have no personal position or judgment around the decisions they make. You might be surprised at how often buyers are concerned about disappointing their agent or mortgage broker; you’re probably less surprised at how often buyers think every agent is only going to tell them to buy, buy, buy! What you want to give, instead, is your professional advice, and expertise on what your client should consider in the course of making these decisions; help them collect the relevant facts; and then let them know that you will support them and execute whatever decision they make (within the realm of what’s ethical and legal, of course).
This helps them feel much more comfortable choosing you to help them walk through all factors on all sides of the decision, positioning you as their ally in making the right decisions for them.
3. Then, teach them how to make the decisions.
We humans fear what we don’t understand. And real estate transactions are uniquely challenging for most folks to understand, as they involve a complex and rapidly changing array of facts and decisions most people only deal with a few times in their whole lives and are set in the context of knowing that every one of these decisions could impact their lives and their families for years and years to come, for better or for worse.
You can crank down your clients’ anxiety level by spending much of your freak-out prevention and management efforts to helping them understand, in detail, how to make the decisions that are causing the freak-out. Don’t tell them what to decide – help them understand how to think about the decision:
- what information they should gather,
- the full spectrum of options that are available to them
- and even things like what inputs to account for – including intangibles you can’t help them with, like the potential financial, legal, lifestyle and even relationship consequences of going in any of the directions they could take.
For instance, let your buyer know that you’ll help them collect repair bids or estimates before they’ll be required to remove contingencies and make their deposit non-refundable. Tell your seller what the process of collecting and analyzing the comps will involve, equipping them to set a list price. Because many buyers and sellers are simply uncertain about how these things are done, simply briefing them on how people normally make these decisions can create a sense of order and calm from the chaos and mystery that they might have had around these subjects before.