sales - an a-z introduction

8/9/2019 Sales - An a-Z Introduction

1/34

Prepared by Robert Ortiz Real Estate

SALES

AN A-Z INTRODUCTION


2/34

Sales: An A-Z Introduction -- General

Overview

This is a light manual that briefly covers every aspect of real estate sales. It is up to you to incorporate

these aspects into you daily regimen, applying an organization that is right for your work style. Many

sales agents recognize the importance of these aspects, assign time values to each, and break

themselves into teams where a division of labor can be performed. Some sales agents pick and choose

from these aspects only what they are able to do themselves and operate as sole proprietors. Whether

you are destined to run a team or be a sole practitioner, you should certainly familiarize yourself with all

aspects of the Listing and Buying sides of Sales and lead yourself through further investigations of each,

to become a master of this information.

CONTENTS

General

Competitive

Continuing Education

MLS Membership & Training

Building a Team

Research Markets

Absorption Rates

Marketing

The List Side

Prospecting for Listings

Qualifying Seller

Pricing / Market Analysis

Marketing Plan

Listing Presentation

Secure Listing

Marketing Lead Time

Condo Docs and Budgets

Marketing

Offers and Counteroffers

Acceptance Contingencies

Condo Questionnaire

Purchase and Sale

CO2 Inspection

Appraisal & Commitment

6D Certificate

Final Water/Sewer Bill

Final Inspection

Closing

Testimonial Solicitation

Just Sold Cards

The Buy Side

Prospecting for Buyers

Qualifying Buyer

Debt-to-Income Ratio

Consultation

Preapproval

Search

Offer and Counteroffers

Negotiation

Acceptance and Delivery

Contingencies

Mortgage Application Purchase and Sale

Appraisal

Commitment

Pre-Closing

Final Walk Through

Closing

Testimonial Solication

Total Timeframe

Housing Warming

Follow-up


3/34


Competitive

Start, pursue and end your day with the presumption that there may be someone better than you in this

market trying to do the exact same thing you are doing. All day long challenge yourself to keep pace

with and then out run this imagined competitor. Constantly seek improvement of ability and process.

Make time for continued education. Expand your inventory knowledge. Start networking withprofessionals in all aspects of real estate and with any professional in a field abutting real estate---

network with everyone. Increase the depth of services you can offer. Know everything you possibly can.

Conduct regular self-diagnostics, probing for weakness in your skillset or mindset and then directly

address this weakness.

Pass out the most business cards. Shake the most hands. Knock on the most doors. Make the most cold

calls. Post the most advertisements. Mail the most postcards and letters. Qualify the most leads.

Schedule the most appointments. Conduct the most negotiations. Follow up with prospects the most.

Handle the most deposit monies. Close the most deals. Give the best housewarming presents. Be the

quickest to make sure your referral sources get paid. Follow-up the most with past clients. Research the

most new advantages in online advertising or marketing. Research the most effective selling strategies.Answer the most questions, give the most free information, be the most in all things.

Track your behavior and activities with a spread sheet. Every week attempt to increase your productivity

in specific categories and track your improvements. Each new week compete against yourself in the

previous week. Slowly but surely make yourself your own top competitor. Break away from the pack and

do not look back except to see your own shadow. Do this, every day, unless you are on vacation. But

know for sure what is and is not vacation. Create the absolute black and white difference by the sheer

output you can produce when you are working.

Continuing Education

Do not make the mistake that some agents and brokers make by mailing it in with a lazy mind duringcontinuing education. Treat this aspect of your development very seriously. Take as many classes as you

possibly can. Rather than using the online versions, schedule in-person classroom training. Build a

rapport with the instructor. The instructors sometimes are very well established commercial advisors

with years of experience managing clients on advisory contracts that cover whole territories, like New

England or Tri-State. When you remove all distraction from the equation and commit to classroom

training, you better honor the process of continuing education. Seek out the free continuing education

courses that are routinely offered by the lawyers and mortgage professionals. Enroll in seminars and

workshops that cater to first time homebuyers, flix and flip professionals, developers, buy and hold

strategies, 1031 exchange, auction property purchasing. Stay thirsty for new knowledge. Become a

viable source of all knowledge, ready at an instant to serve any prospect that comes your way.

MLS (“Multiple Listing Server”)

MLS is a very good tool for generating business and researching the market. You should immediately

obtain an MLS account and sign up for as many training courses as you can. Training is included in the

cost of membership, most courses are 2.5 hours in length. Use MLS to study changes in the market, get

pricing information, learn who the major players are, manage clients, promote properties, search public

records, and obtain mailing address lists for marketing postcards and letters.


4/34


Building a Team

As you pursue your professional development, one thing that will emerge is your network. Of this

network, think in terms of Team. Make time first to create a team and then to nurture it. Your real

estate team is a group of professionals who perform key functions that are related in some way to realestate and that all your clients will need, either immediately upon meeting you or in the future. Identify

these team members and then establish and maintain an on-going professional relationship with them

so that you can easily and efficiently provide more service to your clientele base than your own

expertise allows. You and your team members will form a symbiotic relationship. The more leadership

you provide to this team, the more business you can ensure will develop from the relationship.

Start first by identifying people who are professionals in your target fields. Meet them in person and

qualify their interests and philosophies. Make sure that you are both simpatico in terms of business

philosophies. Make sure you match in some way. Once you begin the referral process, their work ethic

will reflect upon you. Test out their abilities to follow-up, their presentation skills, even their so-called

bedside manner. When you are sure you’ve got a match, trust your judgment and start sending them

business. If you feed them well, they will feed you in return.

Follow-up with both your team members and your clients and solicit feedback from the opportunities

they are involved in. In this way you hold yourself accountable for giving good referrals, and you hold

your team member accountable for handling your clients appropriately. Once you’ve started the referral

business, make time, perhaps once a quarter to meet with this team member in person---stay updated

on their life events, determine if they need more or less business. The scope of your team needs not be

limited. You should try to incorporate all facets of living. Below is a list of some professions that you

should target.

Examples of Team Builder Profession Targets

Accountant

Acupuncture

Appraiser

Auto Repair

Banker

Baker

Bed and Breakfast

Carpenter

Carpet Cleaner

Carpet and Tile Installer

Chimney SweepCleaner

Closing Attorney

Chiropractor

Computer Repair/Data Recovery

Dentist

Doctor

Electrician

Eye Care

Flooring

Florist

Financial Planner

Foundation Crack Repair

Furniture

Furniture Rental

General Contractor

Gutter Cleaning and Repair

HVAC

Home InspectorHome Stagers

Insurance Agent

Jeweler

Junk Removal

Landscaper

Laundry and Dry Cleaner

Lawn Care

Massage Therapist

Mold Remediation

Mortgage Broker

Mortgage Specialist

Moving and Storage

Music Lessons

Painter

Personal Chef

Personal Trainer

Pest Inspector

Pet GroomerPhotographer

Plumber

Property Manager

Salon and Spa

Shiatsu

Siding, Roofing and Window

Snow Removal


5/34


Elevator Repair Locksmith Tailor

Veterinarian

Research Markets

The more market knowledge you have, the better you will be able to serve your clients. The process of

mastering a market could take you years of dedication. In the meanwhile you can leverage theexperience of others, harvest what you can from online resources such as Zillow and MLS, get clues from

word on the street, newspapers and trade magazines, and also gain insight from your own drive-bys

within neighborhoods, broker tours and open houses. You have to be thirsty for this knowledge in order

for any business to be done.

You should spend at least 30 minutes every day, preferably more, dedicated towards market research.

Monitor both on-market listings as well as recently sold data. Absorb as much as you can . Learn “The

Story” behind each neighborhood of each market.

You may not need to specialize in every single neighborhood of the market. Pick your favorite

neighborhoods to become an extreme expert in. Then apply a slightly less aggressive research methodtoward assembling a general knowledge of the market surrounding your favorite neighborhoods. Know

precisely what contributes to the property values in these neighborhoods, i.e. trains, buses, parks,

hospitals, attractive store front retail, etc. Know also what might positively or negatively affect prices in

the job creation, new commercial buildings, re-zoning, changes in crime rates, nearby schools rating

changes. The best example of this is the proposed extension of the Green line into Union Square and

points beyond. Already sellers are trying to realize higher than usual sale prices, based upon a future

expectation of value.

Absorption Rates

You’ll hear this everywhere you go when someone finds out you are in real estate, “How’s the market?”

Do you want to know precisely what to say to them? Assume that person has a ton of cash or knowssomeone who has a ton of cash. Be prepared to tell them exactly where to invest this cash. Part of this

preparation is acquiring the knowledge of the absorption rates of the markets in your surrounding areas.

Absorption Rate is a calculation of precisely how fast the inventory of a specific market is moving. Or in

other words, the rate tells you in Months, how long the current inventory would take to reach zero,

based upon the previous 12 month’s sales activity.

Here’s the Absorption Rate Calculation: Number of Active Properties (divided by) 1/12 of the number of

Properties Sold in Past 12 months.

If there was 18 active properties in a market and 48 sold in the previous 12 months, the absorption rate

is 4.5 Months. You can really get sophisticated with this knowledge by breaking down your calculationsfirst by Town (or Neighborhood) and then by Price Range. And then even further by segmenting the

rates based upon type: Condos, Single Fams or Multi-Fams.

With these rates in mind, you will have definitive knowledge of whether or not a property is a Seller ’s

Market, a Stable/Balanced Market, or a Buyer’s Market. A Seller’s Market is 0-5 months of inventory. A

Balanced Market is 5-7 months of inventory. A Buyer’s Market is 7 or more months of inventory.

Competition is fierce in a Seller’s Market, you’ve got to be well networked to pick up deals there---


6/34


properties in this type of market are Blue Chip, very safe investments and that is why they are so highly

sought after. Clients willing to take risks while looking for good deals and weak sellers should seek the

Buyer’s Market.

The chart below is showing the Absorption Rates as of February 2014. Almost all markets appear to be

seller’s markets. The low rates probably has more to do with the Off-Season than any other factor, but

none the less, at this particular time in the Market, conditions are very favorable to the Seller.

February 2014 Absorption Rates (in Months)

Town/City $501K

Boston 1.3 1 0.9 1.6

Brookline 0 0 0.6 1.3

Cambridge 0 0 0.3 0.7

Somerville 0 0.5 0.5 1

Arlington 0 0.3 0.8 1

Belmont 0 0 0.7 1.1

Medford 0.7 0.7 0.4 1.3

Malden 2 0.9 1.2 3.2

Everett 0.5 0.9 1.7 5.1

Chelsea 1.8 2.8 2.3 4.5

Revere 1.3 2.6 2.8 11

Winthrop 3.2 1.8 2.6 4.5

Watertown 0 0.7 0.6 1

Waltham 0.5 0.8 0.8 1.2

Newton 0 0.3 0.3 1.2

Quincy 1.8 1.1 1.3 2.1

Milton 0 1.1 1.1 2.1

Dedham 1 1.4 1.2 4.2

Lexington 0 0 0.9 1.5

Winchester 0 0 1.9 1

Woburn 0.8 0.6 1.8 1.9

Markets

Seller's - 1-

5 Stable 5-7 Buyer's 7+

* Active/Sold Date is for All Condos, Singles & Multis


7/34


8/34


Suggested Marketing Activities (continued)

Testimonials - You should try to collect a list of testimonials from past clients. By asking a client

to write a testimonial for you, you cause them to think about all the good qualities you’ve

demonstrated and further increase the likelihood that they promote you to their friend

network. Additionally, you can use your assembled list of testimonials to increase your

credibility with new clients who are just getting to know you.

Referrals – Agents from within your market and beyond your market can be great sources of

business to you. Some agents will take on all business single handedly, while some agents only

focus on specific segments of the market. Agents outside of your market may also never be able

to properly service their client but would be happy knowing they are referring them to a good

source. Reach out to these agents, offer a generous referral fee of 20-25% for business they

send your way. By investing a specific amount of time developing a referral network, you can

ensure that you are always working with clients.

Cross Marketing – Take advantage of the marketing efforts of members who comprise your real

estate team. These folks are searching for clientele within the same market you are. You already

know you can help each other when serving the same client. Offer to promote their marketing

materials in packets you provide to your clients if they would do the same for you. Perhaps they

can include a write up about you with a picture in their newsletter. Some mortgage brokers run

constant contact drip campaigns and will include your contact information in their newsletter.

Real-Estate Activities – Get visible at real-estate related activities, like workshops, seminars,

conferences, open houses. Promote yourself while learning.

Non-Real Estate Activities – Your friends may have a real estate need or know someone who

does. When it’s time to kick back and relax, if you’re surrounding yourself with friends and

family, you’re staying fresh in their minds. Being present and caring makes you a first choice.


9/34

Sales: An A-Z Introduction – The Listing Side

Prospecting for Listings

Gaining listings requires focus and daily application. Marketing via online platforms and postcards is one

method that generates listing leads, but not the only one. Other methods include property signs on

existing listings, hosting open houses, giving out business cards, word of mouth, social media, planning

and conducting free out-reach workshops, and in-person networking via social and professionalnetworks. Joining and participating in local religious, trade and social groups is a great way to increase

your book of business, suggestions would include (Church, Spiritual meetings, Meet-up.com meetings,

Adult Education courses, Chamber of Commerce, Cambridge Local First, Lion’s Club, Kiwannis,

Europeans of Boston). Position yourself with extra-curricular activities and be prepared to field inquiries

once prospects become interested in your professional life.

Expired and canceled listings are another method for attracting listings. You can use MLS to search

listings that have been on the market but have not sold for one reason or another. You can use Public

Records, White Pages.com, and the Massachusetts Secretary of State Corporate Database to uncover

the phone number and mailing address of the owner of record. Devise a plan to obtain the listing, which

includes first contact and follow-ups. First contact may be a phone call or a lead-in marketing piece. The

marketing piece in a situation like this could be a letter with your business card. Follow-ups are

necessary. The more you contact a prospect, the more likely you are to obtain the future business.

A Neighborhood Drive-by is one of the best most accurate methods for prospecting, because it yields

the most glaring information and is seldom practiced by the least productive agents. As you attempt to

develop a base within your favorite neighborhoods, you should also develop intimate knowledge of all

the properties within this neighborhood. And by all, I mean ALL. Start by driving through the

neighborhoods slowly, have a notebook with you. Spot check each property, observe the condition. You

will see quickly that there are some properties in pristine condition and some properties that are looking

very poor. All of the properties you see are potential listings. The owners with perfect looking properties

command higher values than the owners of troubled looking properties. You can easily approach either

owner and you should. Your approach for a perfect property owner would be to gratify their ownershipcapabilities, praising them and suggesting their property could fetch a higher value than their neighbors.

Your approach with a troubled property would be to suggest that their property values could be greatly

increased in the near future if attention was paid to certain key elements, such as exterior painting,

washing stucco, fixing trim, adding or improving fencing and shrubs all to enhance curb appeal. For the

troubled property owners, you should work closely with your team. If you can take on a consulting role,

you will become the prime candidate for the listing once the true market value is reached.

Door Knocking – In 2013, the top real estate broker in the Greater Boston area had a gross volume of

nearly $250,000,000 in sales. This broker started her career by simply knocking on doors in her favorite

neighborhoods, introducing herself as a local, friendly, honest and caring broker, and letting the

prospect know that whatever they needed, they should consider her first as their primary resource.Before calling anyone else to have a problem fixed, she wanted them to call her. This approach is still

applicable and followed by some of the top producing sales agents in the city. From this first inquiry, it

may be possible to immediately move into a qualifying position. It may be required to follow-up via

letter and then by phone call. But so long as first contact is made, then you are in the game and moving

in the right direction. Then you will start to experience a boom of business via word of mouth, because

even if the prospect does not need your service now---he or she will undoubtedly know someone who

will in the near future. You will be the first person that comes to mind.


10/34


Qualifying a Seller

Out of the combination of good education, market research, prospecting, and marketing, invariably and

continuously, you will develop Seller leads. In order to manage this business properly, you must always

remember to fully qualify your leads. Know who and what you are dealing with. Leave nothing or verylittle to chance. Enhance your time value and increase your ability to enhance the market value of your

seller.

You can begin the qualifying process by self-training. Memorizing scripts that have worked in the past

and translating the scripts into a manner of expression that is comfortable and natural to you. The types

of information you are looking for varies slightly depending on whether you are qualifying a seller of

commercial or residential property, and under the residential umbrella, whether the seller is one of

condo, single-fam or multi-fam type. The more you know the better you are. In addition, the very fact

that you employ a methodical qualifying process lets your prospect know that you are a professional

and an expert, and this builds trust bond. Some of the questions you need to have answered can be

answered by doing research of Public Record, so to the point of impressing the seller, get as much of theproperty research done before you start asking questions---then you only need to ask that which you

could not find online.

Qualifying Question Examples

Condos

1) What is the square footage?

2) How many rooms, bedrooms and baths

3)

Does the condo come with any parking? How many spaces? Deeded?

4) Is there laundry in the unit or just in the building?

5) How old is the kitchen and bathroom?

6) Is it currently rented? Until when? How much is it renting for?

7) Who manages the building? What is the condo fee? What does the condo fee include?

8) How old is the heating system, roof, windows?

9)

Are there any special assessments that you know about?

10) How long have you owned this property?

11) Why are you interested in selling this property?

Single Families

1)

What is the square footage? What is the lot size?


3) Any parking? How many spaces?

4) How old is the kitchen and bathroom?

5) Is it currently rented? Until when? How much is it renting for?


11/34


6) What type of heating system? How old is the heating system, roof, windows?

7) What type of siding does it have?

8) How long have you owned this property?

9) Have you conducted any major renovations in the past 10 years? Do you have permits for the

work?10) Are there any underground oil tanks on the property?



12/34


Qualifying Question Examples (continued)

Multi-Families

1)

What is the square footage?2) How many units in the building?


4) Any parking? How many spaces? Tandem or parking lot?

5) How old are the kitchens and bathrooms?

6) How many units are currently rented? Are there leases? When do they expire? How much is

each unit renting for currently?

7)

What type of heating system? How old is the heating system? Are the units separately metered?

8) How old is the roof, siding, windows?

9) What type of siding does it have?

10)

What are the taxes, water/sewer and insurance bills?11) How long have you owned this property?

12)

Have you conducted any major renovations in the past 10 years? Do you have permits for the

work?

13) Are there any underground oil tanks on the property?


Pricing / Market Analysis

Once you know sufficient details about the Subject Property, it is time to investigate what other

properties sharing comparable details have sold for within the past 6 months (perhaps even in the past12 months). Building off of the training you received from MLS, you can conduct a Comparative Market

Analysis and build a report with which you can furnish your prospective seller to come to terms on the

asking price.

Selecting the right price is both an art and a science. If the price is too high, it may scare of some

potential buyers, create lengthy on market times, dilute your time value and frustrate the seller. If the

price is too low, it will naturally attract many offers, but offers with price assumptions too low to

generate a property selling price.

Every factor from your qualification process of the property and your seller’s motivations for selling, plus

every factor of the location/neighborhood of the subject property will come to bear in the Price perSquare Foot determination. It is not very hard to know what the actual market value of a piece of

property is. Even with no experience you can probably come to within a $10,000 margin of this value.

The hard part comes in securing your seller’s interest in endorsing the price you suggest. The seller has

his own number in mind and probably has price opinions from a number of other brokers as well.

Therefore, when you select a price that you are willing to endorse, you should be able to rationally

explain your sales position, why you believe this number is the right number and all the reasons that

contribute to this belief. You should have at least 3 reasons to support your sales position. These


13/34


reasons touch upon the Size, the Quality and the Location. Other reasons could be the number of times

a similar property has sold in the past 6 months (Performance), as well as the number of similar

properties on the market currently (Competition).

If for instance, you know that a similar property has sold for $400/sq ft more than 10 times within the

past 6 months with average Days on Market less than 30, then you can say that this type of property isin extreme high demand and warrants premium pricing. If on the other hand, there are 5 or more similar

properties active all with more than 30 days on the market, then competition is high and the market

may be flooded with that type of inventory; if your seller is highly motivated, then perhaps lowering the

price per square foot by a fair margin would be the best selling position to ensure your seller properly

motivates prospective buyers.

If you have been using a weak marketing system, you may end up servicing only troublesome sellers.

Troublesome sellers are sellers who want you to market their property well above a reasonable price

point, refuse to pay a reasonable sales commission, and expect you to pay for expenses that should be

paid by a seller, such as staging. When you find yourself agreeing to these seller demands, you are

engaging in a practice known as “Buying the Listing” – in which case you are overly sacrificing time orfinancial resources in exchange for the business opportunity. Though it is not unreasonable for you to

agree to some of these requests, there should be a give and take. If your marketing is top shelf, you

create leverage for yourself and are able to confidently say “No” to unreasonable seller requests. And

you should, if the seller is being unreasonable before you take the listing, you can count on him being

unreasonable for the entire length of time you are marketing and selling the property.

Create a Marketing Plan

How you go about marketing a property will depend largely on what type of property you have, its

condition, the asking price and certain sensitivities of the seller. A multi-family house will attract adifferent sort of buyer than a 2 bedroom condo. So will a fixer-upper attract a different sort of buyer

than the product of gut renovation. And some seller’s sensitivities will prohibit you from using on-

market strategies, like using MLS or online advertising, or even installing property signs---some sellers

want you to be very stealthy in your selling methods.

Hopefully if you’ve gotten to the point of preparing for a listing appointment, you’ve previously decided

upon which type of listings you want and this is one of them. If you do not occupy a specific niche in the

market, you will need to be prepared to think out a marketing plan almost each and every time you

engage a seller. However, if you cater to only specific segments of the market place, you can re-purpose

previously developed and successful marketing plans quite easily and swiftly.

The marketing plan that you choose, should be chosen with respect to the seller’s wishes, above your

own. Customizing, even a little, is essential. The goal of the marketing plan is to maximize the exposure

of a particular property with respect to any restrictions the seller has given you.

If for instance the seller does not want you to utilize an On-Market Approach, no property signs, no MLS,

no advertisements, you can still prepare fact sheets, brochures, and a market analysis. You’ll then also

imagine and/or brainstorm a list of types of potential buyers, starting with the ones you already know,


14/34


developing your rolodex, and get started making phones calls about the property and follow-up emails

to recruit interest and generate word of mouth buzz.

You should try to set yourself both a financial budget for the marketing of the property as well as a time

budget. Determine how much of your resources you are able to risk in the effort to sell the property.

Perhaps the property needs to be staged. Perhaps floor plans need to be generated. Perhapsprofessional photography is in order. In some cases, it may be possible to negotiate with the seller to

pay for parts of the marketing expense. The first step, though, is knowing what the budget is and what

the expenses will be.

If you really want to be advanced, you should attempt to create a tracking system for each marketing

element so you can determine the return on investment per item. The true goal is not to sell just one

piece of property, but to use one sale to fuel the next 5 sales opportunities.

The full on marketing platform could include but not be limited to the following:

Just listed post cards to the surrounding houses Beauty sheets/brochures about the property

Catered and well publicized broker tour open houses staff

Professional staging, the inclusion of local art on the walls

The presence of mortgage professionals

The presence of contractors needed for renovation (could be just quotes)

3D Renderings of what the property might look like after renovation

Professional photography

Inclusion on a real estate blog you run

Marketing Platform (continued)

Well publicized open houses for the general public Spots in the local newspaper real estate section

Online advertising both free and sponsored (e.g. Zillow, Trulia, Boston.com)

Inclusion in MLS

Email blasts to past clients, property signs

Creation of a website specifically for the property (e.g. 123LordStreet.com)

Pay per click advertisements driving traffic to search websites

Flyers in surrounding venues, coffee shops

Brochures sent to local corporate HR departments

Listing Presentation

The listing presentation is your job interview. It should be handled face to face; preferably at the seller’s

home, but in the company office as a secondary. Avoid meeting at third party locations, limit outside

distraction. Whenever possible, ensure that all decision makers on the seller side are present for this

presentation, to reduce the chances that your skillful presentation is mishandled by one seller

translating it to another seller.


15/34


You should come to these listing presentations prepared with a comparative market analysis, along with

a marketing plan and an exclusive contract form. Here you will present the seller with the precise

method by which you will sell his property, suggest possible situations that might arise, either during

marketing, negotiation or during the transaction, inform them how you will handle offers, hold escrow,

and the sales commission you are asking. It’s here most where you convince the seller you are the best

possible agent to handle all elements of the transaction and worthy of a commission that is tens ofthousands of dollars.

You should paint a very general but detailed picture of the entire sale process at the listing presentation.

Once you finish the presentation, invite the seller to ask you questions. Carefully listen to these

questions, this is where the seller will pick your presentation apart. If there were any holes, or details

you left out, here’s where they get filled in. The question and answer session is integral to securing the

listing as well as informing you how to deliver better presentations in the future.

Once questions and answers are complete, it’s time to push the contract. Turn it facing the seller, push it

forward and hand him a pen. Ask him to read the contract so you can answer any questions about it.

Point out key elements you feel warrant special attention. If the seller immediately signs, great. If theseller hesitates or pull away, ask him if there’s something on the contract he wants to negotiate or if

he’s just not convinced that you are the person to get the job done. Treat all elements of the listing

presentation like a sale, fight to secure the business---show the seller that you don’t back down from a

prospect---win the seller’s regard and signature. The more listing presentations you go on, the better

you will be at winning signatures on your terms.

Secure Listing

If the seller signs the contract on the first listing appointment, you may head right into Marketing Lead

Time. If the seller balks in any way, you may then have to conduct one or more rounds of follow-up calls.

The importance of Follow-up calls cannot be overstated. Routinely initiate contact. Keep your name andthe prospect of doing business with you alive in the seller’s mind. At each contact, probe for the current

hesitation in signing the contract. Requalify the seller’s needs. His life is a changing variable, identify

what changes are affecting his decision making ability. Thinking on your feet, prescribe a solution and

ask if the solution works best for him. If you fail to achieve a Yes decision in any one follow-up call,

reflect on the possible reasons why, then formulate an email or letter, send that, schedule a follow-up

and try again. Continue this process until you do have a signed contract.

Marketing Lead Time

In some cases, there may be a time delay between the moment when your client signs an exclusive

agreement and the moment when you actually put the property on the market, or begin the marketingprocess. The time that lapses between these events is known as Lead Time.

During the lead time, you should prepare your marketing materials, assembling a list of prospective

purchasers, prepare your blast, organize staging, plan and schedule your broker tours and open houses,

invite mortgage brokers to sponsor an open house or lure in any other professional that can assist you in

procuring a buyer, contact tenants to notify them of showing schedules, install lockboxes, install

property signs, and create your advertising on platforms like MLS, Zillow and Trulia.


16/34


As you gain expertise in a certain niche, your lead time will decrease significantly. The sooner you can

bring a property to the market, while maximizing exposure, the better an agent you will be. Your ability

to notify the entire world, and the persuasion you can employ in this notification, is what distinguishes

you as excellent, ordinary, or poor.

Condo Docs and Budgets

When marketing condominiums: very shortly after the exclusive agreement is signed and prior to the

first showing of the property, you should have in hand a copy of all condo documents and budgets for

the condo association. When you receive offers on this type of property, almost invariably the offer will

be subject to a satisfactory review of condo docs and budgets. You must be prepared to quickly and

efficiently gratify this curiosity for your prospective buyer.

As you gain experience handling these documents, especially the budgets, you can adequately gauge

whether or not a particular property management company is efficiently managing a property. Should

you discover inefficiencies, you may be able to win over new clients within the condominium by liningup a more efficient management contract, saving them money.

Marketing

Marketing is the process where you obtain the most ideal selling scenario for your seller. It really all

depends on precisely what your seller is hiring you to do, that determines your marketing. In most cases

you are trying to not only recruit the highest and best purchase price, but also the least risky offer with

the fewest contingencies and shortest closing times. Sometimes your seller wants to be very quiet in the

process of selling, in which case your marketing should be stealthy and targeted, revealing very little to

the general market. Sometimes your seller wants to be loud and glaring, in which case you must pull outas many stops as possible in your effort to notify the entire world. In either case, you must always

represent your seller and his property in the best possible light, in order to ensure the best possible

results. All properties have value. Value is present in a property regardless of where it is located, the

boonies or on the main drag, and regardless of its size or condition, it could be brand new construction

or the building could be shot and in need of gut rehab. You make an educated guess at what the value is

and establish a selling position. Marketing is promoting and defending this selling position.

The better you are at marketing, the more offers you will generate and the greater leverage you will give

your seller to negotiate these offers. Some popular tricks in marketing are setting the asking price below

the actual value. A lower asking price, for what is common in a particular neighborhood, tends to

generate a significantly higher level of interest. When this interest is channeled appropriately, a multipleoffer scenario can be created. With multiple offers you can incite a bidding war, by playing one offer off

of another. You may see real estate agents bragging about how much higher the sales price was over the

asking price---they are touting their ability to lever up offers via a multiple offer scenario.

A standard approach to marketing is to first start by spreading a word of mouth acknowledgement to

the key players in your market, i.e. tell The Money. The Money: the deep pocket buyers you know. The

Money could also be super well qualified clients, not necessarily with deep pockets, who have previously


17/34


expressed high desire to purchase a property like you have to sell. Let The Money know first about a

property and see if they are interested and if they will honor the seller’s asking price.

If The Money passes on the opportunity, then notify all the agents within your own firm, to access their

client lists. If your internal agents come up short, proceed to court the outside brokers by inviting them

to a Broker Tour. The broker tour should occur on either the Tuesday or Thursday prior to your openhouse weekend. The broker tour generates additional buzz, gives them a chance to feel out the property

on behalf of their clients and gives you a chance to convince them to promote the property on your

seller’s behalf. Next in marketing is an open house, which could be a Saturday, a Sunday, a Monday or all

three days. When you know you’ve priced the property very well, it’s customary to set a deadline for

offers, usually by the end of business on Monday or Tuesday. This lets everyone know they should be

competitive and step forward by a certain time. If you do not sell the property by the first open house

offer deadline, you’ll move into private accompanied showings and then perhaps another open house

scenario. You should spread out open houses to every 2-4 weeks.

Offers and Counter Offers

You’ve got to make a decision at the start of marketing how you will handle offers. From the first person

you clue into a property, you might start to receive offers. If you let one person tie up the property

before gaining appropriate leverage, then you will have no way of knowing whether or not you’ve

gotten the best possible price. It’s a good practice to establish a review period, during which all offers

received will be held and reviewed only at a certain hour at a certain date. If a buyer knows about this

review period, they may write a more serious offer from the start, to avoid losing the property to a

competitor.

Openly communicating with agents and principals who are submitting offers is permissible. You want to

guard the seller as often as possible by not giving out specific numbers on any offers you’ve already

received or specifics about contingencies and closing dates. Let the buyers always think that they need

to make a better offer. You can say “Your offer is too low” or “…way too low” or something like that if

you have multiple offers and you’re trying to create a bidding war.

Keep your seller in the loop on the accruement of offers. Never keep a seller in the dark about any offer.

Always and instantly communicate when you’ve got an offer. Look the offers over carefully. You must be

accurate and honest when you are conveying details. It will be your job to find strength and weakness in

each offer and present these observations to the seller so the seller can appropriately decide what

action to take. In this phase of the deal, you are very much a consultant. You work through the seller’s

decision making ability, give your opinions, but follow the seller’s wishes.

If the offer is too low or too complicated by contingencies, or if you have multiple offers and you are

attempting to lever up a particular offer to a more favorable position for your seller, a counter offer maybe necessary. Counter-offers are tricky only when you do not have enough leverage. Leverage is either

multiple offers in hand or the very strong likelihood that another more suitable offer is coming. Be as

honest as possible with your assessment of the market. You will know very well how strong the winds of

opportunity are blowing, if you sense your seller’s position is strong---go with a counter offer. The

stronger you sense your seller’s position to be, the more potent your counter offer then is.


18/34


You must be careful not to deflate the spirit of the offeror or offeror’s agent when presenting a counter

offer. You must convey to the offeror or agent the strong sense that a deal can be made. Should it be in

your opinion and the seller’s interest that no deal is made with the offeror, then simply give “No

Response” as your seller’s answer to the offer. This response will shock the offeror into an inferiority

complex, to which they may respond with a much stronger and unsolicited offer. If not, you lost nothing.

To the offeror’s who have better potential, there then comes a game of getting them up from their

current position. You may develop your own style in this phase of the deal. You can counter the offeror

in multiple ways: Tighten down the Purchase and Sale dates, tighten the closing date, remove an

inspection contingency, say no to concessions at closing, offer only a $5000 break on closing price

instead of a $25,000 break, etc. In many cases your counter offer will be met with a counter offer from

the buyer. Little by little, nurturing these offers from phase to phase, you can affect a meeting of the

minds between your seller and the buyer. Never let fear of losing a deal affect the manner by which you

conduct the offer phase. You can’t lose something you don’t have and you do not have anything until

both the seller and the buyer sign the offer.

The one thing to keep in mind most, especially when presenting counter offers, is that negotiation is agame of who needs it less. Be mindful of your se ller’s needs and with as much care as you can muster,

tone down the motivation, so to keep your seller from appearing desperate. The exception of course is,

if your seller is desperate and badly in need of a quick sale---then represent him according to his wishes.

However, in most cases it’s your job to drive up the sales price, which does not necessarily mean to

drive down the market time.

Acceptance

Once both parties have agreed to the terms of the sale, you will have acceptance. Acceptance is signified

when both the seller and the buyer sign the offer and a check for $1000 is conveyed from the buyer tothe seller to bind the deal. The buyer signs first, then the seller signs. Then the buyer sends over the

check. The agents should have copies of a fully executed offered as well as a copy of the check.

Contingencies

A contingency within an offer is essentially a clause that allows the buyer to back out of the deal for a

specific reason. There are many kinds of contingencies that can enter an offer. The two most common

contingencies are Inspection Contingency and Mortgage Contingency. Other contingencies include lead

inspection, satisfactory review of condominium documents and budgets, and the sale of a buyer’s

house. The more contingencies an offer contains the weaker the offer actually is, because should a

discovery be made that triggers these contingencies the buyer then has the right to back out. Theexecution of this right can sometimes give the buyer a new negotiation stance to push the sale price

down below what was originally agreed to.

Inspection Contingency should be set to expire within the first 10 days, preferably first 5 days. This

means the buyer should conduct his inspection as soon as possible after acceptance. Some

contingencies will cite a specific dollar amount of damage as a ceiling limit, so that if during inspection it

is revealed that there are damages but not enough to trigger the contingency then the deal stays active.


19/34


If the damages exceed the dollar amount allotted then the contingency can be enacted. In most cases,

the brokers are using educated guesses to determine whether damages trigger the contingency or not.

Should it ever come down to the wire, the brokers on both sides of the equation, at their client ’s

expense, would have to order actual estimates from contractors to justify their client’s positions.

Mortgage Contingency concerns the mortgage process and identifies a buyer who is using bank moneyto acquire the property. Because the bank is involved, there is a whole new set of steps that are involved

in the process than if the buyer was using only his cash to purchase the property. The first agreement in

the Mortgage Contingency is the date upon which the buyer actually completes an application for a

mortgage. This date should come as close as possible to the end of the inspection period. The next date

that is involved is the Mortgage Commitment date. Commitment is the letter that the bank sends the

buyer notifying them that they have completed their due diligence and are ready to make the loan.

Commitment comes after application, after appraisal and before closing.

Condo Questionnaire

When you are selling a condominium, you will need to obtain a completed Condo Questionnaire form

from the manager of the condo building, whether that is a property manager or the seller. Property

managers should have their own forms. For a seller or a trustee of a self-managed condo building, you

will need to send them a template which you can get online or from a mortgage lender.

At some point in the mortgage process, the bank will request the condo questionnaire, as part of its due

diligence. You should have it on hand already so that there is no downtime in the bank’s process. One of

the things the bank is looking for from the condo questionnaire is whether or not the condo is

“warrantable” and conforming. In other words, they want to know whether or not the mortgage for the

unit can be sold on the secondary mortgage market. Some banks do not want to hold the property in

their own portfolio. Banks that do hold the property are making Portfolio Loans, usually absorbing

higher risk mitigated by higher interest rates.

In most cases it will cost between $25-125 paid to the property manager in order to get a completed

questionnaire. This is one of the costs that the seller pays and should be prepared for in advance. It’s

best to order the condo questionnaire as soon as you’ve cleared the inspection phase of the deal. If

there is no inspection in the deal, then order the questionnaire upon acceptance.

Purchase and Sale

The purchase and sale agreement is a more in depth agreement and is an extension of the offer. In this

document the seller and the buyer officially come to terms with all of the details pertaining to the deal,including anything negotiations that were agreed to in the offer, as well as any further negotiations that

were agreed to after inspection. The purchase and sale agreement is customarily drafted by attorneys

representing both sides of the transaction. Some attorneys will charge specifically for a Purchase and

Sale agreement. Some attorneys do a free P&S so long as the buyer or seller uses them for the closing.

Once the purchase and sale has been drafted, then four copies should be printed out and signed by the

buyer first.


20/34


21/34


usually costs around $50 and this cost is paid by the seller. You should take no chances with this test,

put in a fresh set of batteries in all devices, add extra devices to be on the safe side, ensure that the

building or unit passes inspection on the first try when the fire chief shows up. And do not fall asleep in

the unit waiting for the fire chief, he will not ring twice!!

6D Certificate

Needed when selling condos. The 6D Certificate is obtained by the property manager or condo trustee.

It signifies that the seller has paid all owed condo fees, and that no condo fees are currently owed. The

deal cannot close without a 6D Certificate, so make sure you’ve got one. You should plan to get this

certificate within the final 10 days before closing. The seller pays the cost of obtaining a 6D certificate.

Final Water/Sewer Reading

Needed when selling any house or unit for which the utilities are separately metered. At the time of

closing, whatever portion of bills the seller has paid which benefit the buyer will be prorated and

credited back to the seller. This includes tax bills, as well as water/sewer bills and/or condo fees. All paid

bills for the period within the closing will be accounted for in the closing as a credit to the seller. All bills

that have not been paid during this period of time will be credited to the buyer. It is important that at a

time very close to closing, perhaps within 5 days of closing, you obtain a final water/sewer meter

reading for the unit, house or building. This reading can be scheduled through the city or town in which

the property is located. You must give enough lead time so that a reading can be done prior to closing,

to ensure it happens smoothly. If you don’t give enough lead time, you’ll have to really sweet talk the

staff at the appropriate department for help accounting for your negligence, or face a delay in closing.

The cost of this final reading is paid by the seller. You must bring this reading with you to closing.

Final Walk-Through Inspection

The second to last phase of the listing process is the Final Walk-through Inspection. It typically happens

within 24 hours of the closing day/time, usually on the morning there of. This is where the buyer returns

to the property to visually inspect and make sure it is in the same or similar condition as it was on the

day the offer was made. This is the final chance a buyer has to back out of the deal, at the loss of

Purchase and Sale money, before heading to closing to pass papers.

Closing

Closing is the big day that the buyer gets the property and keys, the seller gets the big check and you get

the smaller check. Closing is the win-win-win day and has probably been somewhere between 6 to 10

weeks in the making. The closing location is usually arranged by one of the attorneys involved, probably

the seller’s attorney, and typically occurs at the registry of deeds but sometimes occurs at the seller’s

attorney’s office. You should plan to attend the closing, in case last minute details are needed to be

shared. Once all the documents are presented and signed, the money will change hands. The attorney

will then record the sale and the deal is done.


22/34


Testimonial Solicitation

Get a testimonial from your seller while your good work is fresh in his mind. You’ll need this for

credibility with future clients. Plus the act of writing nice things about your work calls to mind and focus

your abilities and ensures the seller will promote you further. Always ask for a testimonial.

Just Sold Cards

You’ve done the job, it’s time for bragging rights. Send 100-300 cards to the immediately surrounding

area of the house you just sold. Tell them what you sold it for and how fast you did it. Let them get

excited for and even jealous of their neighbor’s good fortune and come seeking it for themselves.


23/34

Sales: An A-Z Introduction -- The Buying Side

Prospecting for Buyers

The same energy and focus that goes into developing listings is also needed to recruit buyers.

Prospecting for buyers is a daily ritual. Assuming you have held up your end of the bargain in terms of

research and professional development, you should be a walking buyer magnet already. Virtually

everyone you meet is a potential buyer. Almost everyone desires to have their own piece of real

property, or many pieces, or a full on portfolio. If you become adept at finding this desire and harnessing

it, you’ve got a constant job opportunity as a buyer representative.

If you choose, you can approach the buying process as a “one deal and done” agent or as a consultant in

your client’s lifelong wealth building campaign through real estate. You don’t necessarily have to go on

the full life journey with any one client if you don’t want to, but you might find that if you do so with

each client you get, the marketing budget you require to generate business becomes smaller and your

net gain increases. Repeat customers and referral business from past clients constitute are the least

costly and most effective sources of revenue.

So where should you begin to find buyers? The best method for finding buyers is by prospecting.

Prospecting is mining for now and future deal opportunities. You should adopt the habit of prospecting

every chance you get. Every event you attend, from breakfast to a dance hall contains prospective

buyers. You are never more than a 5 minute conversation away from securing a client for life.

Here are some suggestions of places to look for buyers:

Business Cards – Hand out a business card to everyone you meet. If you are meeting a team member,

such as a mortgage broker or an insurance agent, give them a stack of your business cards so they may

hand them to everyone they meet. Work the symbiotic relationship routine with your entire network,

getting tens of people to pass out hundreds of your cards. You should go through a box of business cardsevery month.

Rental Clients – Folks in the rental market are prime candidates for becoming a buyer. Most folks don’t

know that there are mortgage programs that allow them to buy with as little as a 3.5% down payment. If

they did know this, they might be less motivated to rent and more motivated to work with you to buy. If

you try to rent apartments as well as work with buyers or sellers, you can use your own rental lead

generation to fuel a sales lead generation campaign. Prepare brochures that show a comparison of what

the monthly rents are vs. the monthly mortgage payment with a certain down payment. Include this in

your move-in packets or follow-up emails. Constantly contact all of your rental clients with information

about the sales market. Recruit other rental agents in the market to feed you referral business---somerental agents only want to focus on rentals, so proposition them with the prospect that you will pay

them a handsome referral fee for every lead they send you that turns into a deal. Proposition your

landlord clients as well. Landlords are some of the first people to know that a renter is leaving them to

search for a house. Ask every landlord you meet to give their tenants your business card when they

decide it’s time to buy.


24/34


Social Media Venues – Craft a message to your friends and family. Let everyone know you are in the

business of buyer representation. Ask everyone to forward your contact information to anyone who

may need your service. Reach the friend of your friends.

Mortgage Brokers – You will need to liaise with Mortgage brokers anyway. So while you are picking a

couple to be part of your team, meet with them and present your credentials and abilities. Ask them to

refer buyers to you. Mortgage brokers get requests for pre-approval letters all day long from potential

buyers. Some of these buyers do not yet have representation, and that’s where you step in.

Open Houses – Open houses that are hosted by other real estate agents are a major attraction to buyers

and would be buyers. Not every person who attends an open house is represented by a buyer agent.

Being present at open houses and being outgoing gives you an opportunity to meet prospective buyers.

Real Estate Workshops – Everyday, somewhere within a 10 mile radius of your office, a real estate

workshop of some kind is being conducted. The workshop could be formal or informal. It ’s sometimes

created by real estate brokers, sometimes developers, sometimes mortgage professionals. In all cases, itis part of a public outreach campaign to educate the public and create leads via word of mouth. You

should be attending these workshops for your own education. Get friendly with your fellows there.

Engage their desire, show interest, and recruit them to be your buyer in the future. Yes, in some cases,

this means you are stealing a lead from the leader of the workshop. But the buyer has a mind of his own

and it is best for the buyer to work with an agent he really likes and connects with.

New Home Builders – Make friends with the players who build homes or fix and flip. These folk are

buyer magnets, but they are not in the business of representing buyers. They are in the business of

selling homes. Let’s say for everyone one property they are trying to sell, they attract 20-40 buyers, a

certain percentage of those buyers do not have representation. Work out a referral system with these

home builders to get your name out there to their unrepresented buyers. It’s an easy relationship to

negotiate because though there is a chance that the buyer purchases another home through you instead

of the home that the homebuilder is selling, yet you are still helping that seller by showing more

properties to clients who may end up buying his property in the end anyway.

Store Owners You Frequent – If you are investing time and energy and displaying loyalty to particular

businesses, chances are good that the owners and managers of these establishments are very loyal to

you in return. Make sure to notify them of what it is you are doing on this planet and how it can benefit

them. Everyone from your hair-stylist, bartender, jeweler, restaurant worker, waiter, chef, psychiatrist,

dentist, yoga instructor---everyone is interested in real estate. Miss no opportunities. Get them into

your book of business and touch base regularly.

Religious, Social or Business Groups – Participating in non-real estate activities for religious or social

purposes is a way to build trust bond with people within these spheres. Just by participating on a regular

basis, you engage in a constant contact campaign. You don’t have to push your services, but you should

announce them. Eventually you will be the receiver of business on the merits of the good deeds you do

in your personal life. This will be high quality leads with trust bond intact and increased loyalty levels.


25/34


Qualifying Buyers

Almost as often as you mention to someone that you are in real estate, you will be asked questions by

the prospect about real estate. You should treat each and every one of these questions carefully and

with enthusiasm---the person who is asking them is your future client. First get to the heart of the

matter by asking them if they are interested in buying property in the future. As long as they bite, you

may launch into a qualifying session.

Use a light qualifying method for folks you meet in public places. Pick and choose your questions to gain

a functional sense of their buying position. Obtain their phone number and email for follow-up. If they

are close to being ready, prepare them for a more in-depth qualifying round by phone call and schedule

them for an in-person consultation that would take place shortly after the qualifying.

Examples of Qualifying Questions

General Questions

Have you purchased property before? Where and when?

What have you done with the property you’ve purchased?

Do you maintain a relationship with a broker?

Have you thought about buying property recently? How recently?

Where are you living right now?

What other locations are interesting to you?

Are you interested in something easy just for you like a condo, or more in depth like a single

family house; or even yet would like to become a landlord and start with a multi-family house?

Are you interested in fixing up places and flipping them for short term profit or buying and

holding for a long-term investment?

Have you taken any first-time homebuyer courses? Fix & Flip workshops? Landlord classes? Have you spoken with a mortgage professional yet?

Do you know what your credit score is? Is it above 680?

If not, have you consulted with a credit repair specialist?

How much do you have to put down?

How much debt are you carrying right now? Debt payments per month?

How much do you earn per month?


26/34


Experienced buyers – Fix and Flip

What type of property did you buy? What were the features?

Did you use a mortgage or are you putting down all cash?

Are you happy with your mortgage professional?

Did you do any of the work yourself or was it all through contractors? Were you happy with your contractor’s work on the last property?

Where did you buy? What was the purchase price?

How did you find the property?

Was it bank-owned? Short sale?

How much did the work cost? How long did it take?

What time of the year did you put it on the market?

How long was it on the market?

What did it sell for?

Are you looking in that price range again? Thinking about a new area or the same?

How many times a year do you want to buy?

Debt to Income Calculation

Debt to Income ratio or DTI is one of the factors involved in determining eligibility for mortgage loans.

Consult with a mortgage professional to get a better sense of what the DTI is for various loan products.

Credit score also impacts the type of loan product available and/or what the DTI can be. You should get

into the habit of finding out the DTI of your clients before you refer them to mortgage professionals for

pre-approval.

To calculate DTI take the clients total recurring debt and divide that by the gross income. Use the

monthly figures. The number you get is the Debt to Income Ratio.

If your buyer is going to use the FHA loan program, for instance, a credit score of 680 will allow a debt to

income ratio of 38%, but a credit score of 720 allows a DTI of 55%. Find the nuances of all loan products

and you’ll be in a great position to consult with your prospective buyers who need mortgages.

Consultation

Consultation is an in-person meeting with the buyer. The purpose of this meeting is to discuss a gameplan for acquiring a particular piece of property, based upon the questions you have previously asked

during qualification. After qualifying but before consultation, you should map out the buying process for

this particular buyer and see clearly how all the steps will go. Find out what is needed. Brainstorm what

you will need to do in the lead-time and what the buyer needs to do in the lead time. Prepare a buyer

representation agreement. Prepare your pitch for becoming this buyer’s agent.


27/34


The consultation should be done with a computer nearby, so you may access on-market listings if need

be. Illustrate what the potential is and then discuss what the process will be to make the potential

reality. Address the gaps in the buyer’s readiness, whether it is the need for contractors or mortgage

professionals or down payment or credit repair. Obtain an agreement for the ideal date of purchase and

then suggest a timeframe for the remedying of the gaps that stand in the way of closing. Lastly present abuyer representation agreement and convince your buyer to sign exclusively with you. Once the

agreement is signed, you may then feel free to open up your services to the buyer.

If a mortgage is to be used, then, before you begin the search in earnest a preapproval must be obtained

by the buyer. If the buyer will purchase using all cash, then you should have proof of funds in hand prior

to the commencement of the agreement.

Preapproval/Proof of Funds

The buyer needs to demonstrate to a seller the ability to buy a property in order to enter a contract with

the seller. Time spent searching for properties with a buyer who cannot first demonstrate the ability to

pay is a poor investment of time. If the buyer needs a mortgage to acquire property, then a preapproval

letter from a mortgage lender is required. If the buyer is going to use all cash, then proof of funds from

the cash sources is required. You must have this in hand before you begin the search in earnest. It will

be required in every official offer made on property. No seller will enter a contract with a buyer who

cannot show proof of funds or a preapproval letter.

Understanding the purchasing power of your client will greatly influence the search process. If the buyer

can only purchase up to $400,000 of properties, your choices of location become limited to the markets

that bear that median. Remember, Size, Location and Price are the Principle factors of every search.Price is the anchor factor. Size/quality and location are the interchangeable factors.

Search

The search for properties is a team initiative, the responsibility shared by you and your buyer. It should

be a team effort. The best method is to recruit your buyer to do some homework about the potential

listings and to call out listings that are interesting to them. Especially with first time home buyers or first

time clients, there is a discovery process that occurs where you essentially learn the truth of the buyer’s

heart, that is, you will discover what type of properties or what locations they truly love.

You should set aside a specific set of time each day where you search for properties for a particular

buyer. As long as the process is carried out daily, the amount of time per day can be small 10-15

minutes. You should analyze at least 10 properties per day for your client. If there isn’t enough on-

market data to obtain this metric, you should advise your client that he is too focused on a seller’s


28/34


market and should broaden his location parameter to include at least a balanced market and perhaps a

buyer’s market.

You should use MLS to enter your client’s search criteria. MLS will pull in listings that match these

criteria for you to comb through and share with your buyer. Each day you want to check in on new

properties, note changes in status and price of old properties, and observe open house schedules. When

combing over the MLS listings, you are trying to decipher if these results actually do match your client’s

profile. Look over amenities, photos, days on market and market history (any previous offers). If you’ve

been studying this market well, you’ll be able to tell if the subject property is a good deal or not, and by

analyzing the market history, you might be able to tell how negotiable the sales price is.

You should be very diligent and aggressive about sharing matching properties with your buyer and

scheduling to have your buyer view properties. Work to minimize the time delay between discovering a

good match and having your buyer view it. Delays only enable competition and strengthen the seller’s

position. Moving fast and efficiently is key in the search process.

A blended approach between sending your buyers unaccompanied to Open Houses and accompanying

them for private viewings may be the best way to serve your client and also protect your time value.

Most brokers in this market will honor your agency agreement and will not try to recruit your buyer

away from you. There are some brokers however that you will hear about who do not honor your

agency agreement and will attempt to subvert your buyer’s loyalty. Be on watch and guard for these

brokers, they stir a pot of confusion in an effort to deny your buyer an objective broker opinion.

Offer and Counter Offer

Once you identify a property your buyer wants, the next step is Offer. Offer can lead to a negotiation

through Counter Offers or could result in a straight deal. Offers must be presented in writing. Standard

Offer forms are available through company resources like E-Forms. You should read the offer documents

on your own time and practice filling them out, so that you can be more efficient in the time crunch that

accompanies the real-live offer scenario.

The pertinent offer documents include:

Mandatory Licensee Consumer Relationship Disclosure

Offer to Purchase Real Estate

Offer to Purchase Contingencies Addendum The Buyer’s Preapproval Letter and/or Proof of Funds

The first step in the offer process is determining the offer price. This process is done through

consultation with the buyer. Use the knowledge you have developed about the particular market in

which the subject property is located. Form an opinion as to whether or not the property is priced low,

medium or high. Determine your buyer’s motivation level for this particular property, i.e. how badly he


29/34


wants it. If his interest is extreme then that would suggest making a stronger than normal offer to

ensure he gets it. Keep in mind your thoughts about how badly other people want the property as well.

You may never know this unless you witnessed acute interest at an open house or the subject property

is showing low days on market and interest is still waxing. Lastly, consider the buyer’s comfort level with

the payments he will face, or the work he will need to do to the property, should his offer be accepted.He has a pre-approved amount at his disposal, if the property needs some immediate work, like

cosmetic or a new roof or something, that will affect the value. The buyer is in the driver’s seat and has

the final say over the offer, but you are his advisor and should give him the best possible advice,

considering all factors. Sometimes you need to go lightly with your advice and other times be forceful.

The more you know about the market in particular, the more clear it is to you which manner you should

adopt.

Once you decide upon the offer price, you’ll need to fill out the breakdown of monies. The first item is

the $1000 due upon acceptance, this is a deposit binder. After that is the money due at Purchase and

Sale. It is usually 4-6% of the Purchase Price less the $1000 from the initial deposit. The 4-6% figure, in

most cases, is what is used for the P&S money amount because it is equal to the sales commission that

the seller pays brokers. It makes it easier for the seller to pay the agents if all he has to do is liquidate

the deposit monies in escrow. Less the deposit binder and the P&S money, you’ll have remaining the

amount of money that the seller must produce at closing. Add all these monies together and they

should equal the full purchase price.

Next comes deciding upon the purchase and sale date and the closing date. The seller will want these

dates to come as soon as possible. Your buyer may have certain situations, such as being on a lease or

needing to sell a home, which may make the closing date problematic. Again, consulting with your buyer

will let you know how aggressive he can possibly be in selecting these dates. It’s best to err on the side

of comfort level for your buyer than to over-extend your buyer in a contract and have the deal fall apart

or become too troublesome later.

Contingencies also need to be decided prior to submitting an offer. Inspection Contingency and

Mortgage Contingency are common contingencies. Offers with too many contingencies are sometimes

automatically discarded, such as a Lead Inspection and Radon/Pest Inspection. The fewer the

contingencies the stronger the offer and higher level of priority it becomes. In extremely hot seller

markets, it is not advisable to include an inspection contingency for On-Market properties, especially for

Multi-Family homes---these types of properties, when priced appropriately, usually draw 20 or more

offers.

Counter Offers may ensue if your buyer’s offer is too low or he is making too many requests in the offer,

or if the dates for purchase and sale or closing are not favorable for the seller, or if there are multiple

offers. In some cases a counter-offer will be made. It is not guaranteed though that a counter-offer will

be made. Sometimes the seller just picks the strongest offer to work with and does not give the lowballs

a second chance. If you are receiving a counter-offer, treat it with respect, for it means that the seller is

willing to work with your buyer to come to mutually agreeable terms. Making a deal this way could take

several rounds of correspondence with your buyer and the seller’s agent. Each counter-offer nullifies the


30/34


previous offer, going back and forth too often has a potential to backfire. There are only so many times

you can touch a butterfly’s wings before it never flies again. But as long as sufficient ground is given on

both sides of the table, then a deal should be made.

Negotiation

Negotiation is likely to occur after the first offer is made but prior to the signing of the offer by the

seller. Negotiation is a game of “Who needs it less” and is an art of conveying opportunity without over-

extending your client’s motivation level. To negotiate you will either present evidence and then present

terms or present terms and then present evidence. It all depends upon who you are negotiating with.

Hot-heads need the evidence first. Cool-heads can handle the terms first. Use as few words as possible,

but do not neglect to firmly state your buyer’s position. Give the seller’s agent something he can work

with and sell to the seller and also make him believe that if he doesn’t sell your buyer to the seller, he

will not make a deal and the seller will lose significant market time seeking another buyer. On your sidein a negotiation is the old adage “A bird in the hand is worth two in the bush.” Make sure the seller’s

agent believes your buyer is a bird in hand. If he doesn’t believe this, the negotiation will be

unsuccessful. If he does belief this, you will reach an acceptance. It’s that simple.

Acceptance and Delivery

Once your offer is accepted, create a deal folder to house documents. Upon verbal acceptance, there’s a

matter of gaining signatures on the contracts. Buyer signs first, seller signs next. Make sure the buyer

obtains a copy of the fully signed paperwork and the office obtains a copy as well. Your buyer will haveto write a check for $1000 as a deposit binder , made payable to the Seller’s Agent’s office, to be

deposited into an escrow account. This deposit binder must be delivered to the Listing Agent along with

signed copies of the offer paperwork. A copy of the deposit binder check should also be kept in the deal

folder. Delivery of monies to the listing agent is your responsibility and should be handled with

diligence.

Contingencies

Whatever contingencies were accepted in the offer must immediately be addressed after acceptanceand deliver. The first contingency to deal with is usually Inspection Contingency. Typically you will have 5

days from the date of inspection to get an inspector into the property, inspect it, and have the buyer

review a report from the inspector. In some inspections, your contingency includes a dollar amount that

damages are not to exceed. If the damages exceed the dollar amount, then the buyer has a right to back

out. Sometimes in executing this right to back out, a negotiation can occur between the buyer and seller

for an even lower purchase price, a credit for the amount of work given at closing, or an agreement for


31/34


32/34


The seller counter signs all four copies and you should receive back 2 original signed copies from the

listing agent, one goes to the buyer, one is held in the office. Sometimes the listing agent retains three

copies and gives you one, in this case, keep a copy in the office and give the original to the buyer.

Appraisal

By Purchase and Sale time the mortgage process should be in full swing. Check in with the mortgage

professional for updates. Sometime after the application is filed, the bank will send an appraiser to the

property to generate its own understanding of the property va lue. The bank’s appraiser will be in

contact with the listing agent for this. You should try to stay in the loop, but you will not need to be

present for appraisal.

Sometimes the bank finds that the purchase price is set too high in respect to the appraised value.

When this happens, the banks notifies the buyer that they will only make a loan based upon the

appraised value and not the purchase value, which means the buyer may need to come up with more

money out of the pocket. In some cases, where the buyer cannot or is not willing to increase the down

payment, a renegotiation with the seller over purchase price may occur.

Mortgage Commitment

Assuming appraisal is fine; the next step in the process is the Mortgage Commitment. The bank has

completed its due diligence and has finally decided it will make a loan to your buyer and sends your

buyer a commitment letter. The office needs a copy of this commitment letter, as does the listing agent.

This must be done by the date indicated in the original offer. If there is a delay in commitment, an

extension must be agreed to between the attorneys. The office copy of the mortgage commitment

letter is housed in the deal folder.

Pre-Closing

Assuming all has gone well in the transaction thus far, you will be good until a day or two from closing.

Final water/sewer readings will need to be taken in order to ensure that the buyer and seller are paying

the appropriate pro-rated amounts. This is the listing agent’s responsibility, but it is a good idea for you

to make sure that it has been done by calling and asking at least 2 days prior to closing. If possible,

obtain a copy of the final water/sewer bill for the office records.


33/34


Final Walk Through

On the day of closing, probably early in the morning, the Buyer is allowed to do a final walk-through

inspection of the premises. This inspection occurs to make sure the property is actually still there, in the

same condition as it was at time of offer, that no fixtures have been removed (unless agreed to

previously in the offer) and that the buyer is generally satisfied with the house. This is your buyer’s final

opportunity to decide if he wants to close. It is a good idea for you to be present at the final walk

through.

Closing

Assuming the property passes final walk-through inspection---it’s time to go to closing. The location of

the closing is usually decided by the attorney, most often the seller’s attorney. Sometimes it happens at

the seller’s attorney’s office, but often it happens at the Registry of Deeds, so that the transaction can

immediately be recorded. Though it’s not required, it is a good idea for you to be present at the closing,

with the whole deal folder, in order to manage any last minute issues that may arise, present back-up

copies of documents if the attorney needs them, and observe any reactions.

When all paperwork is signed, the checks will be issued and passed to all appropriate parties. You’ll

bring home a commission check for deposit and the following week you will be paid.

Total Timeframe

The most costly phase of time when working with a buyer is the Search Phase. This is the time when thebuyer is most cautious and discerning. Once the buyer chooses a property, from Offer to Closing should

take no longer than 8 weeks, unless the buyer negotiates closing date in a distant future. When working

with well qualified cash buyers, deal can happen in as little as 2 weeks. Some deals could take 6 months

to close.

Housewarming

Though not mandatory, it is customary and a sign

sales - an a-z introduction

Documents