- Only a fraction of all interested home buyers actually buy in the year they attempt to do so. For various reasons they decide to keep renting, or move away, or give up, or simply don’t write offers that are selected (they may chronically low-ball)
- Some home buyers are very serious but also very time consuming, and if it takes them a long time to buy, it can be draining for their real estate agent, and if prices are rising, it can shrink the odds of success.
- Many Realtors prefer to work with sellers when the market is hot – which it nearly always is in Silicon Valley, since most homes do sell (while far fewer buyers buy).
- Buyers who want to enlist a strong Realtor will need to be serious about home buying, able and ready (have the money and a pre-approval in place), and loyal as the starting point. Your real estate licensee may ask you to sign a buyer-broker agreement, just as home sellers sign a listing contract.
- To keep your great buyer’s agent on your team, it’s imperative that you allow that Realtor to guide you, whether it’s getting preapproved with a strong lender, deciding on priorities (must have versus nice-to-have list), or moving quickly to view houses, or taking the paperwork seriously – or any other major step. You need to be as motivated as your agent!
And communicate openly if there’s an issue. I’ve had clients tell me that the pre-approval needs to wait until they’ve been at their new job until a certain date. Whatever it is, ignoring requests given to help you without explaining the backstory won’t be good for your teamwork and could get you fired as a client. (Yes, Realtors sometimes fire their clients.)
- If you fail to do these things, your agent may not feel like your odds of buying a house are good, or that the stress associated with doing so will be higher than necessary if you stall on taking the proper steps.
- Put another way, if you hire an agent because of her or his knowledge and track record, but then don’t heed that agent’s professional advice, the relationship may not do well over the long run. Think of it like a sack race: both people have to be going in the same direction, carefully working together, or it’s not possible to move well (if at all).
Below, we will go over in more detail how to get and keep a great buyer’s agent in a seller’s market or in any market, for that matter.
Helping buyers in a sellers market is no easy feat, even for the great buyer’s agent
First, what is a buyer’s agent in real estate? This is a real estate licensee who works with the home buyers in purchasing their home. Often they also work with sellers and list homes for sale.
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 and they aren’t actually buying.
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 great buyer’s 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. And that’s just the starting point.
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.
(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).
When you first reach out to a great buyer’s agent, tell them your name and why you are calling or emailing them. Be respectful and transparent about wanting to chat with them on the possibility of working together.
Able & ready home buyers:
Able and ready buyers have or are willing to get pre-approved with a good lender 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. 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.
That said, the odds are stacked against buyers with these government backed loans, so it would not be my first suggestion to target that type of financing.
Loyal home buyers:
Loyalty does matter a lot to great buyer’s agents 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 or to suggest a capable agent to do so.
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 multiple listing service.)
Your Realtor is not an order taker, but a fiduciary
Hire well. There are many licensed real estate salespeople and brokers out there (most of them are also Realtors). Your agent has a fiduciary relationship with you and is not just someone who opens doors or writes numbers into forms so that you can buy the house or condo. Hire someone you respect, someone you trust to lead and guide you through the process. Then let him or her do their job and give you that guidance.
If you want to purchase a home in this seller’s market, it would be wise to get a real estate professional in your corner to represent and to guide 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 and looking to get guidance, negotiation help, and all the rest from that person.
If you can get these in order, you’ll have a far better chance in this market.
Once you start working with a great buyer’s agent
If you’ve found and agreed to work exclusively with your great buyer’s agent, it’s time to discuss how you will work together, your available hours and your agent’s, how your agent will get paid (you may elect to buy a home not on the MLS and pay the commission, but often the buyer’s agent fee is paid for by the seller), and many other details.
Part of the buyer’s agent responsibilities is to help you to prioritize and narrow your search so that it is possible to find and bid on a property that will work in your budget.
- decide on the desired home type, location / area, approximate home size, and budget
- make sure that financing is decided (chosen lender with a pre-approval in hand)
Sometimes buyers get excitable and after they decide on these first things they start looking at wildly divergent properties, areas, or price points. I briefly worked with a couple interested in buying a home that was over $3 million, and a week later wanted to see something half that much and in a different city. That is a red flag for the Realtor that the basics are not yet settled.
On average, home buyers in the U.S. are ready to write offers after seeing 10 homes. Here it may be with fewer properties since we get so much information upfront and many will be eliminated before being seen.
After you’ve seen a few properties, but probably before you get to 10, a great buyer’s agent will ask to go through the offer paperwork with you. This is in your best interest and also in your Realtor’s since doing so when there’s no pressure of a looming offer deadline.
Writing an offer is stressful. Writing it in a big hurry is miserable. Something that can be done well in advance is the review of the paperwork. Procrastinating on it insures more stress than is necessary in an already stressful time. For Clair and me, it is our standard of practice to do this within the first 2-4 weeks of working with clients so that they are more ready when it is time to write an offer.
Most of our clients are highly analytical and detail oriented, and they welcome the “first look” at the paperwork when there’s no pressure. It can take anywhere from 1 – 3 hours to review the lengthy contract and related disclosures.
Sometimes, you fall in love with a home and need to move fast to write an offer because the “due date” is soon. It can take many hours to put together everything. When there’s no spare time, it’s an awful experience to have to rush though the contract because it’s crucially important that you know what you are signing. To avoid this unnecessary added stress, it’s imperative to get the contract review done upfront.
We prefer to have at least 24 hours between when you view a home and when offers are due. That’s a luxury we cannot guarantee, so it’s hugely helpful to do what can be done when there’s no pressure.
If you’re hiring a seasoned Realtors, you can be sure that your great buyer’s agent has been through this process many times before and any requests to help you to narrow your search, or to sit down and discuss whatever may need discussing (disclosures, inspections, the contract, your options etc.) is not going to be a waste of time. Allow your agent to guide you, or find one that you are willing to have guide you.
If you don’t, your your great buyer’s agent will perceive that professional advice is not being heeded, and he or she may wonder if it’s worthwhile to spend time trying to help you absent that cooperation.
Related Reading on our various websites
(over 2000 articles in all!)
What is a preliminary title report? Why does it matter? (this site)
Silicon Valley real estate market predictions (this site)
List of Los Gatos neighborhoods (on the Live in Los Gatos blog – articles on many of them!)
Where are the natural hazards in Los Gatos? (on the Live in Los Gatos blog)
Evaluating your priorities (on popehandy.com)
Deciding what to look for in a Silicon Valley home (on popehandy.com)
Market reports for 3 Silicon Valley counties (on Move2SiliconValley.com)
San Jose districts and their values (on Move2SiliconValley.com)
Buyers agent vs real estate agent (on Realtor.com)