When it’s a hot seller’s market, like it often is in Silicon Valley, it is challenging to be a home buyer. That means it’s also hard to be a buyer’s agent, since it may require writing several offers (and a lot of time and energy) before the clients get into contract. Since Realtors are usually only paid when a property closes, that means it’s not too hard to go broke if a real estate professional focuses a lot of time with buyers. In other words, in a market like this, most agents would prefer to work with sellers rather than buyers, because it’s more likely that they’ll make a living.
What can you do to increase the odds of finding a great Realtor who will take you seriously, work with you and for you, and give it a good effort even if it’s an uphill battle? First, let’s understand what a real estate licensee is looking for a client – at least in most cases.
Usually, the savvy agent doesn’t want to waste time with people who are not serious, not ready, or who will not be loyal. The smart Realtor knows that without these three things, it’s unlikely that they will be able to sell that person a home, or at least not in a reasonable period of time.
Serious home buyers:
Only about half of all home buyers will likely buy in the year they think they might, so it’s important for real estate professionals to try to make sure that they don’t spend months on someone only to have him or her remain a permanent renter. The agent must qualify the client to make sure it’s worth the risk of spending time with him or her.
Clues that the buyer isn’t serious include these:
(1) Comments like “I may have to look at homes for a year or two” or “I may need to write a hundred offers to get the right deal” or “I’m in no rush” indicate that this isn’t a big priority for the buyer (so maybe it shouldn’t be for the agent, either). This buyer is able, ready and probably also loyal – but not serious. Some, though, will clarify with a time frame and this is a game changer. “My lease is up in July, so ideally, I’d like to get into contract in March, close in April and move in May. But if I find the right house sooner, I’ll buy sooner.” That works!
(2) If there are two decision makers, having only one do most of the house hunting and the other showing up at distant intervals often indicates that it’s a priority for one but not both. Sometimes that’s not the case, but it is a red flag. Both need to be serious.
These home buyers may be serious in the long term, but aren’t necessarily super motivated. If they look for more than a couple of months, they will probably not get a ton of the agent’s time because it’s unclear that they are going to buy any time soon (and an agent cannot go “full bore” for a very long period of time).
Able & ready home buyers:
Able and ready buyers have or are willing to get pre-approved right away, they have their down payment lined up and are capable of carrying housing costs (they’re employed, among other things). Sometimes home buyers want to look for months or years before their down payment is saved. Unless they are just casually visiting open houses, this is a waste of time, because the homes for sale now will not be available when these folks are ready. And the budget may not be appropriate, either. If you take too long to buy, particularly in a market like this, it’s not uncommon to become priced out of the market.
Having poor credit, low down payment or the need for certain types of financing can hurt your odds of success in home buying in Santa Clara County right now. It remains challenging (but not impossible) to be a buyer with VA or FHA backed financing. Some real estate agents will feel that you are not able if you do not have 20-25% down. This is not really the case, since many factors go into the selection of which buyer wins out in multiple offers. Sometimes the sale goes to the buyers and their agent who seem most serious or solid rather than the one with the largest down payment or even highest price.
Loyal home buyers:
Loyalty does matter a lot to Realtors because if they work for you for hours or days or weeks or months, it is with the plan of getting paid in the end. If home buyers do not appear to be loyal, there’s not a lot of reason to expend much energy on them! (I’ve heard people say “I have a few Realtors because I want one for Los Gatos, one for Campbell, one for Saratoga…” – These are areas adjacent to one another, so it makes no sense to have multiple agents. It only makes the buyer disloyal.)
Where I see this a lot is when someone approaches a listing agent and wants him or her to write up an offer on the listing. That buyer doesn’t care at all about the agent, or about developing a long-term relationship with him or her. If that particular house falls through, then the buyer will find another house and another listing agent. Zero loyalty. Of course if the seller wants the listing agent to act as a dual agent, it’s imperative to help that buyer to write up an offer and so on.
A growing trend is the use of buyer-broker agreements. Just like home sellers sign a contract when hiring a Realtor to assist them, a buyer-broker agreement is a contract employing the real estate agent to assist the buyer. This contract helps with the issue of loyalty when that is a concern (or when the buyer wants his or her Realtor to locate properties which are not offered on the mls.)
If you want to purchase a home in this hot seller’s market, it would be wise to get a real estate professional in your corner t o represent you. If you’ve been casually looking and have reached out to some agents and not gotten an enthusiastic response, please consider these important traits and ask yourself if it’s clear to the Realtor you’d like to hire if are projecting that you are serious, ready & able, and loyal. If you can get these in order, you’ll have a far better chance in this market.