Broker's Playbook - Good For Real Estate

BROKER'S PLAYBOOK

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Tempering your clients’ expectations

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Every sales agent can recount having at least one fastidious client—and they might even tell you that managing them is as important as closing deals.

Zia Abbas, owner and president of Realty Point, says buyers naturally search for the best deals on the market and it can sometimes result in tunnel vision. The kind of deals they look for usually have little to do with market realities.

“Buyers want the best deal, but they don’t want to pick something ordinary and they want something way lower than market price,” he said. “That usually only happens if the seller is desperate—such as if they bought a house a year and a half ago and it’s time to take over, leaving them with no choice but to sell their existing home quickly. It all depends on who you’re going to hit, in terms of getting the most desperate seller for the best buy.”

According to Abbas, first-time homebuyers present the greatest hurdle because, to no fault of their own, they’ve been priced out of the market. If they’re spending ceiling is capped at half-a-million dollars, their options are scant. And they usually don’t like his advice.

“They have to go for a drive,” he said of moving farther away from the city’s core. “But if they don’t take it today, they’ll regret it tomorrow because the prices will be higher. I tell them, ‘You have to start somewhere else.’”

Erica Mary Smith, broker of record and co-founder of Stomp Realty, tells the story of a client who refused to budge on an offer they tendered. In December, they were interested in a unit at Pier 27, a high-rise condominium on Toronto’s waterfront, that was listed for $1.25mln, and after some back-and-forth the sale price was lowered to $1.2mln, but Smith’s client refused to budge from their $1.1mln offer.

“So the seller took it off the market and relisted it for $1.35mln and sold it for $1.322mln,” she said. “They could have made $122,000 in two months if they’d bought it. It was a relatively newer client I was working for, but I think sometimes the best way to manage expectations is for a buyer to go through something like that. After it sold, I sent them the sales price and they realized a good broker will always be honest with you. I always provide my clients with the sales price.”

Smith advises educating clients but not pressuring them. It’s integral that they come to their own conclusions, she says.

“Every seller thinks their property is worth so much more because last spring properties were going for crazy amounts and they still have those numbers in their head,” she said. “What properties go for is based on the demand at that time and comparables really have no say on the value of the property. Comparables can give you a rough range of what to list the property at, but before you look at what sold in the last six months to a year understand that can now literally change from month to month. Some properties have increased $200,000 in two months. You might have a home or condo that’s sold for $500,000 in March but in May another one with the same layout sold for $600,000. It really comes down to the product and you really have to educate your seller. You want to list at a good enough number so that you can generate a lot of offers and potentially go over asking, but you don’t want to scare buyers away.”

 

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