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Mastermind #18 September 28. Buyer’s Remorse and Sharing Financial Information

If its Wednesday it must be Mastermind. Thanks to all that showed up. In addition to the regulars I am happy to have some of the new agents attend as well. While they haven’t put time into the business to share their ‘war stories’, its good to know that they are taking advantage of others. So, if you missed todays meeting, you missed a good discussion on buyer’s remorse, getting your clients to open up about their financial situations and clients from out-of-town who are surprised by Toronto prices.

First up, the fabulous world of buyer’s remorse. I think it is safe to say that we have all had a case of it at least once in our lives. It can hit us over the purchase of a pair of pants or a home. Buyer’s remorse knows no bounds. One of the agents brought to the group a story of a young couple who visited an open house over the weekend. They walked in and fell in love with the property. They came back several hours later with their agent and eventually made a substantial offer which was accepted. The next day, a bad case of buyer’s remorse set in and the couple pulled out of the deal. We spent a good amount of time trying to come up with ways we can counter this pervasive malady. One agent suggested getting the couple back to look at the unit again. Sometimes picturing yourself in a home is all you need do stir up the right emotion.  Another suggested showing them the comparable properties for sale (and sold), and another thought that educating them on the neighbourhood might do the trick. In the end there is nothing better than to have the buyers sleep on the decision. If there is a way out of a deal, a buyer will find one. That holds true for firm deals. Unless the market is really bad, your job, as an agent, is to negotiate a solution. Sometimes sellers take buyers to court and other times, they mutually release each other so that they can get on with their lives.

Occasionally you come across buyers who will not disclose any financial information about themselves. Fair enough, I suppose, as I am not willing to share my information with someone I just met.  As agents however it puts us in a difficult position. The last thing we want to do is spend a lot of time with a client only to find out that they are not approved for the home you just spent days negotiating on. The solution to this dilemma is simple; get the client to a reputable mortgage professional that you trust. let the client know that you are not privy to their financial information but you will get a clear understanding on what their price threshold is from the broker. I would also like to mention that this is a good talking point when speaking to someone who is considering buying with a relative or friend. Sometimes we need a little separation between agent and client.

Finally, we talked a bit about working with clients that have come from other regions. Toronto prices can be a shock to some, so it is important to educate people on general values. It has happened to me before. A client lives in a 2000 sq ft loft in Montreal and pays $1500 per month. They are moving to Toronto and hope to find the same thing in Yorkville. Their expectations do not meet reality. Once again, the conversation goes right to qualifying clients properly. Your job will be infinitely easier if you pre-qualify potential clients first.

That’s all for today. Have a happy and successful week!


Referrals and Taking Care of Business

From time to time I get agents asking me how much of a referral they should be giving to another agents under a variety of circumstances. I decided it was time to make this the topic of yesterday’s morning meeting. There is no magic answer here as every situation is different, so I put to the group a few scenarios and asked them what they thought.

 You are an agent working with a client for the last year. You have shown them 25 houses. You decide that they are probably never going to buy so you decide to take the month of August off. You ask your desk neighbor to answer your calls. Sure enough, your only clients see a house on mls and call your desk mate who types a deal and gets the deal done.  Does the agent that you referred the buyer to deserve 25% for the quick no fuss deal, or 50% for getting the clients to paper, or maybe 75% because the deal got really complicated near the end and the agent worked for a solid week to make it happen.

How about this one; You have a hot new listing, but before the open house a family member gets sick and you have to leave town. You hand the listing off to someone in the office. They end up negotiating a deal with another agent. You have done all the pre-market stuff (pictures, brochures, floor plans, ads, etc). What is a good referral fee and would it be different if the agent double ended it because someone called through and what if they double ended it through a client that they met at the open house? Are you getting sick of ‘what ifs’ ? Here is something else to think about. How many generations do the referrals continue? Does the buyer have a house that needs to get sold? What if that agent picked up another buyer at that open house?

At our company, we recognized early that a referral policy had to be in place so we designed a very simple form called “Taking Care of Business”.  It is a no-nonsense guideline that agents can use with suggestions on what referral rates to consider given certain situations. The over-riding principle in any referral is; if you both agents agree to the terms of the referral and how deep it goes, and that agreement is in writing, there cannot be any dispute. Obviously we are trying to avoid a situation where a casual conversation leads to some sort of referred business and there is nothing in writing. Our policy manual clearly states that in those situations, the commission is split 50/50.
Finally, one last word. Referral rates should also be considered if you are dealing with a client buying or selling outside your normal scope of work. For instance, you work in the downtown condo market but you have a client who wants to buy a house in Windsor. Do you a. Drive out every week to show them places b. Call a local agent and refer it out or c. Work with a local agent on a 50/50 basis? To find the right answer, ask yourself if you are providing skilled and honest service to that client. If the answer is no then you must refer it to a local agent. This is also the case when you meet someone who wants to buy or sell a commercial property. Unless you know what you are doing, refer it to someone in the company who understands the intricacies of the commercial market. Your clients will appreciate your honesty and the property has a better chance of being sold.

Mastermind forSeptember 21. Returning Deposits and Reading Clauses

Yesterday afternoon the page went out; ‘Who wants to be a millionaire? Mastermind can help’. Once again, a great turnout at this morning’s meeting by those who are actually committed to being the best in their field. In case you didn’t make it you missed a discussion on getting clients to take the leap into home ownership, a lesson in reading clauses, dealing with frustrated or angry clients, and returning deposits after deals fall apart. Lets get started.

One agent recently listed a new one bedroom condo downtown.  It is priced a little on the high side but the premium over similar suites in the building seems fair given that it has a very large patio with a killer view.  Two days of very busy open houses had generated a lot of interest but no offers to date.  4 people, unrepresented by a realtor, saw the property and all expressed interest and despite several follow-up calls, the listing agent just could not get one to take the leap. One person said they were waiting to transfer money for a deposit, one person was waiting to hear back from their mortgage person, and one person asked to be notified if an offer comes in. Seems like there were some stalling tactics out there  which is probably normal considering the property was decidedly for first time buyers. After a quick discussion we all thought that  timing needed to considered. The condo has only been on the market a week so far, and given the area, it may take several weeks to generate an offer. Stick to your guns.

Talking about taking a leap, our conversation turned to developing talking points with people who are frustrated and angry that they missed buying a house years ago and will now have to either consider a much smaller property or borrow a lot more money. What do you say to someone who says they have been waiting for the market to correct before they buy? We live in a real estate obsessed city. We all talk about how fast properties have appreciated. People say things like ‘I’ve made over $200k in the last year on my house’. The reality is that the house may have appreciated $200K but you haven’t actually made the money until you sell it. Real estate has become more about the investment and less about shelter. Maybe, to those people who have waited, all you need to tell them is that it is never to late to get into the market.

Next topic; Reading pertinent information. I will admit it. There was a time when I would breeze through Agreements of Purchase and Sale. Today, our obligations to protect our buyers and sellers has never been stronger. We cannot afford to leave any stone unturned. So here are today’s words of wisdom; Read every scrap of paper that concerns a property. Study the attached schedule B, the home inspection report, and of course the listing. If you have questions, ask the right people. If floor plans are available, print them off and attach them to the offer as another schedule. Sidetracking for one minute I recently heard people talking about another agent’s 5 page long Schedule B. In it, the agent (from another company) literally waived any responsibility for anything they did, from the measurements to the names of the sellers. It seemed clear that this agent had more than one run in with disgruntled buyers so the lengthy schedule B was there to protect them. Remember, when you list a home, you are contractually accepting responsibility for the accuracy of the listing. You cannot opt out of that with a clause. You would be surprised how many offers come across my desk with a clause that asks the buyer to verify the information in the listing. It begs the question; what responsibility do companies that simply post listings to MLS have? The answer is clear. They must take responsibility for the information. But do they? Probably not. That is an issue you may want to take up with the Competition Board.  Of course that’s just my opinion and not necessarily the opinion of Bosley Real Estate.

Finally, someone asked what happens to the deposit if a deal falls apart? The simplest answer is usually the best answer. The real estate company holding the deposit cheque can be given back to the buyer by mutual release only. Failing that, it is released it by court direction.

 Have a great week.

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