Kelli -

I'm on the fence on this one - somewhere in between.

You need to read people well, and ascertain their level of motivation, interest, potential loyalty, and ability to buy before you take them out.  In other words, you don't operate a taxi cab service.

But "making demands" - you either fax me your pre-approval letter or get out of my face - is a bit harsh.

What I do these days is insist on a pre-showing meeting - even if its at a Starbucks in the neighborhood in which they are interested.  I attempt to "size them up" based on what I perceive to be their respect level for the way we work, their openness to be financially qualified quickly, and their likelihood to be loyal to me.

If I don't get a good vibe, I will show them a few properties, and be courteous - but they may not become my clients.

Again - YOU have to be a good business person here.  In the words a highly-skilled attorney friend of mine, "You don't take the case, unless you really think you'll win!"

Time is money - but poise is the key these days.

And - never compromise your integrity.

My 2-cents, anyway!

DEAN & DEAN'S TEAM CHICAGO

Just curious... 9 1/2 hours with clients without knowing what they could qualify for?  Why would you waste your client's valuable time, your valuable time and your gas to drive people around who don't know what they can afford?  In our market, there are many serious buyers and others who are "just looking" and want a tour guide to show them the area.  I think as professionals we owe it to our clients to help them to be aware of what price range we should be looking in, without showing them properties that they may not be able to afford.  As for agency agreements...such as "exclusive buyer's agreements", I agree with you on that one, but not on pre-qualification.

Kelli- In all honesty I can see where your coming from but on the same hand I can see where the ones who do make those demand from the jump (just don't make them as demands lol). I think a happy median of showing 1 home than going for the prequal and agreement would be fair to you and the clients. My fiancee worked for a broker who also did property management. He would let any client see 1 home before running the #s to see what they can afford, any more than that they had to do the typical credit checks and all... which I think is fair :-\ You don't waste a ton of your time on "tire kickers" I wonder how nice that house is insiders, and they don't waste their own time looking at homes they don't qualify for.

Think of it this way, even if you don't have them sign the agreements and you take them to look at 50 houses, they really like 5, but narrow it down to the one they truely love and "must have"... then they go to get qualified and cannot as it is 10k out of their range (eventhough through your questioning you thought they were fine... darn student loan they forgot about etc. lol), so they go for choice #2 same thing and so on, now not only do they not get their #1 or 2 choice but you wasted your time and theirs and I am sure would feel bad for showing them homes they can't purchase I know I would.

Hi Kelli,

Interesting thoughts. I understand both sides of this issue, and don't have a cut and dry absolute for either a buyers agreement, or a preapproval letter. I do cover these carefully early on in my interaction to prioritize my time.

I think a buyer interview prior to showing homes is good for both parties, especially if they are virtually strangers.

I think handling new clients with a sense of hospitalty and creating a relationship where they are willing to share those things with you is the best way.

It is very difficult when you take buyers out and then find they purchased from another agent, so I understand why some realtors make it a must to sign first. I always ask if they have worked with other realtors prior if I am not sure. I explain ethics are a priority to me, and determine wether or not I need to send them back to agent A, or what is the right thing to do. This discussion of buyer agreements and pre-approval prior to showing could go on forever!

Thanks for posting,

BethAnn in Spokane

Kelli,

I would agree with you. Last year I sold 4 homes to one investor, that would neither sign a buyer broker agreement or prequalify. I did not push the issue and he bought 4 homes with cash. I think most agents know with in a short period of time how ready willing and able a buyer is without a little piece of paper.

Dean~ Hi there! Thanks so much for your comments : ) Have a great night.

Susan~ I had spent over two hours of phone time and emails to find out what they could qualify for. I said that I did not make prequalification a requirement to show them property or to work with them. Additionally, my clients are relocating and contacted me so I hardly consider showing them property and/or the area a waste of time. Thanks for dropping by : ) 

Chris~ I feel like many brokers are forgetting that our industry is dependent on the customers we serve. Part of doing that is taking some chances and some calculated risk. Brokers should definitely draw a line as to what they are willing to do or not do. In 20 years, I have had very few clients that wasted my time or did not result in a sale. For the amount of pay we get, I feel like the odds are quite good and that these additional requirements of prospective buyers don't increase the success level by much (LOL). Thanks for sharing your thoughts : ) 

BethAnn~ I do believe in buyer interviews, both over the phone and in person when possible. You're right, it's not an easy absolute. The decision seems to be based more on one's comfort level than anything else : ) Have a great night.

Dottie~ I'm with you. I think we owe it to our customers to give them the benefit of the doubt. 100 years ago, I learned a REALLY important lesson about that. I was selling jewelry and the "pig farmer" that didn't smell too good, the one that didn't look like he had two nickels to rub together, the one no one else wanted to work with....bought a $15,000 wedding set from me and wrote a check (which was good) on the spot. Still learning after all these years : )

Thanks for the post and I guess I give mine the benefit of a doubt - good luck!

Norma~ Good Morning. It's really just preference. I'm surprised at how many Realtors are willing to put up roadblocks to keep business from coming to them. Have a great day!

I have to get them to prequalify.  I don't have the time or gas money to run around on a wild goose chase for everyone that wants to just look around.......I understand that the situation is different in other parts of the country.  Neat to see how things differ........

Kelli, how funny- EONS ago, I managed a jewelry store in Colorado. After one go-around, we LOVED it when the rodeos were in town- those Kansas people would visit in their down to earth clothing, and throw cash around. Must be why I share your opinion. That, and being blessed with a reasonably good "gut" sense about people- they can answer a few gently presented questions and tell me what I need to know. As I'm the "employee" of the person, it seems like offering a buyer respect is appropriate- rapport doesn't begin with, "do you have a pre-qual"?

People make it work using both methods, with their own experiences as the guide.

Hi Kelli,

First, congrats on your feature!

I'm sort of with Dean & Dean's comment on this. Personally I'll meet with someone and show them once (based on intital pre-qual conversation on the phone) but that's it. After that they need to take some action on their own to demonstrate their willingness to connect with a lender.

BTW, I do not work with a buyer contract, I'm about 99% referral or repeat. Yet have I ever been stiffed? Not that I know of.  

Kelli - This has been the dabate of the week here on AR.  No 2 deals are the same and no 2 clients are the same.  So, hard and fast rules generally don't work.  While I understand the desire to protect our time, I believe that you have to give customer's the benefit of the doubt initially.  It doesn't take too long to figure out who's serious and who's not.  Figuring it out while driving around cultivating a relationship is better than figuring it out by offloading them to a mortgage broker.

Well... I have two thoughts on this.  First, I work in a resort area and we get a lot of people who come in looking for a tour guide, no intentions of buying.  I spend about a half hour and really probe into their ability, timing, money and what it is their looking for.  The last thing I want to do is spend four hours driving someone around that had no intentions or ability to buy a home. I don't ask for buyer agreements or pre-quals until I write an offer, but by that time, I have already pre-qualed them in my head...

Kelly--Though I understand where you are coming from, I like to make certain someone is prequalified for safety reasons. If someone comes in or calls out of the blue, how can you be certain they are on the level if they won't meet with someone to check out their qualifications. Buyer's representation agreements are open for discussion but then I have to be willing to let them go without complaint if they decide not to work with me. Glad it worked out for you.

Kelli, while I will agree with you on the buyer's agreement - I do not agree with the prequailification.  Prequalifying takes no time at all and if a potential client is SERIOUS about buying a home they will take the time and make the appropriate appointment or phone call.

Time is money and Gas costs entirely too much.

Hi Kelli...I read your post and I subscribed.

I just finished posting one fairly similar to yours although mine dealt more with the changing market and its affect on how we are dealing with it and our clients, especially the buyers.

Kate

P.S.  If you would rather I hadn't mentioned my post please go ahead and delete.

Kelli,

It's a fine line when to ask clients to get mortgage pre-approvals etc. before going out with them. Your approach seems to be the more sensible one in most cases. Still, it depends on each unique client.

Great post. I agree with about 70% of your editorial. As a strict policy of mine, I won't show a $2,000,000 listing to a new client who is at best qualified for a $319,000 home. The only way I can be of best service to him/her is to assist with prequalification, which I am happy to do.

At the end of 9 1/2 hours I certainly would have a prequalification plan in place and a client, or not.

Best of luck with your efforts.

www.GeneDexterHomes.com

RE/MAX Integrity

Kelli

I guess this all depends on how much you value your own time. Have you ever figured out how much per hour you really earn? I am one who will not spend my time or gas sightseeing with people who are not qualified or serious about buying. I'd much rather be spending time with my grandson!  Any serious buyer understands the necessity of getting pre-qualified before looking.  I don't present it in a demanding way but I do encourage it and arrange an initial meeting or a phone call to a lender for them. I also ask them a few key questions to see how realistic they are, such as how much they are expecting their payment to be, do they need help on closing costs, etc (this question alone will answer whether or not they have money for down payment!)  If they want their payment to be $1000/mo but want to look at a $300,000 house, obviously we have a problem unless they have a ton of cash to shell out.  I think we should be concentrating on educating buyers rather than just running around acting busy.  After all, we ARE the professionals, aren't we?  Just my 2 cents....

Kelli:

Can I ask you a question?

If you were selling your home and you and your family had to leave so that it could be shown would you prefer it to be to buyer that had been pre-approved with very few conditions (appraisal, title, no drastic changes to their credit score) or to somebody that thinks they can get financed in todays market?

How would you feel if you woke your daughter up from her nap time and your husband from throwing the football with your son so that your home could be shown to someone that couldn't purchase it?
Would you feel that your time had been wasted and the agents had a lack of respect for you?  Also, would it be conceivable that your listing agent let you down by not protecting your time and allowing your home to opened up to just anybody?

One more question if you will humor me...

Would it be conceivable that a buyer might ask you what they should offer on your home?  Would it be possible that the buyer might want to know if they should ask for closing costs?  Or, other real estate advice?  How is that agent going to legally and ethically answer that question without a written brokerage engagement in place?

No, what I think the problem is that many agents lack the proper skill set or training to secure listings agreements and they certainly can't get a buyer to sign one.  A day is coming when the LA will get their brokerage agreement in writing with compensation and the buyers agent will have to do the same.  A day when the seller DOES NOT guarantee compensation to the BA. 

I would start practicing...

There are some great comments here, great post!

We do not do buyers agreements.  But we do ask how they plan on paying for the home if they did find the right one. It they say that they are going to get a loan we ask if they have talked with their bank or a lender recently about the current qualifications that are needed to get a loan. Why we need to know what they qualify for is so that we don't take clients out to homes that they want to see in the $400K range and then find out that they end up qualifing for a home in the $200k range. We didn't help them or the seller when this happens.

If I have a good relationship with the Buyer I don't insist on a Buyer's agreement, but I do explain that I am trusting them to commit to writing their offer with me.

If I don't know them at all, I have them meet in my office and we have a get-acquainted meeting.  This is for my safety as well as my paycheck!  If it feels like we can work together toward their goals, then I commit to them by signing the Buyer's agreement.

I insist that my Buyer's get pre-approved early in our relationship.  This is especially important in this market.  I would be wasting my Buyer's time if we are looking at properties that they cannot buy--for instance, if they need downpayment assistance.  After all, I'm the pro who is supposed to guide them through a smooth and satisfactory transaction.

I am also wasting the time of my other clients if I am devoting my time to clients who cannot perform.

So I guess I'm saying that the Buyer's agreement is a good tool, but it doesn't have to be used all the time.  But I am a great proponent for getting a pre-approval.  I need to know their lender and how I will have to structure their offer.

So far I have never had a client who refused to sign a Buyer's agreement.  I have had meetings with leads whom I would not ask to sign an agreement because I don't want to commit to them.

Life is short!  I work with the people I enjoy! 

By the way, why doesn't your brother have a referral to a Portland agent from you?  I'm sure that would increase the level of customer service he is experiencing!

IMHO many people aren't taking advantage of a lot of opportunities. I think some folks are down in the dumps and lulled into indifference. 

My own son is buying a home, called 4 insurance agents and only one called back.  One emailed me yesterday (8 days after the fact) asking if I was handling his transaction, not calling him to ask.  Little did they know the kid finally called my "go to" agent and was quoted and signed in a matter of hours. 

We just need a little more action and a whole bunch more of do the dang job.

I agree partially with your post. I will no way jump in my car anymore and go show, without first asking many questions and better yet, meeting with them first.  Most of us have a "fairly" good judge of character and know what questions to ask. HOWEVER, we have all been fooled a time or two.  I would show a couple of houses and then insist on a prequal.  So many buyers truly have no idea of what they qualify for, especially in the changing mortgage industry.  They need to know what they qualify for and it's not fair to sellers to be dragging folks thru that we don't know for certain can proceed to purchase. 

I do not require a signed agreement. Never have, never will. 

Hi Kelli - Like most above, I agree with most of what you've said.  Well composed piece, by the way!  Anyway, I'm 7 years into the business.  Not a rookie, but certainly not the most experienced around here.  Up until last year, I did as you do, which was "read" the person, ask the right questions, set up the showings, and went on with loyalty alone.  And it worked.  I was only burned a couple of times, and I realized it was my fault, not getting that signature.  But here in Maine, as of July of last year, ALL agency relationships are to be in writing - buyer, transactional, dual.  Definately changed the way I do business.  I don't like it, but I get it.  And like the person above said, it isn't just my time wasted, but the time of the sellers as well.  It is unfair, especially in this marketplace where showings are few and far between, to get a homeowner all excited and then find they can't buy the property, or, if there is no paper in place - your buyers opt to go straight to the list agent and bypass you "because they just didn't KNOW". (Yeah, been there!)

In a way, the legal requirement has made things a bit easier.  It paves the way for the qualification question as well. I can now "blame" the state.  Though many of us will show at least one house before they sign on the dotted line - not only may they not like me, but frankly, if we aren't a good fit on the other side either, I'd rather pass!  I still say, building a relationship with loyalty is a lot more fun!

I think the buyer needs to be pre-approved before showing property to him or her. I would not waste the seller's time, my time, or the potential buyer's time. It's just that simple. As for buyer's agency agreements, well...everyone has their own opinion on that one, don't they?

Good Evening All~

First off...  I'd like to THANK THE MODERATORS for the featured post. I love those little golden stars !

Next, I'd like to preface my comments by saying opinions are like well, ...... belly buttons. Everyone has one. I'd also like to clarify that I do prequalify my clients, over the phone, in person, by whatever means I have available at the time. I DO NOT require a letter of prequalification to show them property. I personally think it's tacky and bad for business. Again, my opinion.

The name of the blog is "Are you open for business?", not "Are prequalification letters and agency agreements right or wrong?" The content is directed towards a conversation about the message these kinds of "requirements" send to buyers.  

Most of the comments here have been respectful and engaging. Some comments however, imply that I am doing less of a job by not requiring letters of prequalification. Again, just my opinion but I absolutely disagree. I have NEVER had a deal fall apart because my buyers did not qualify for the house they picked. I've been doing this for 21 years so apparently, I must be doing something right. Do what works for you and let's not create an industry standard here tonight.

I APPRECIATE ALL OF YOUR COMMENTS SO VERY MUCH! THANK YOU FOR STOPPING BY !

In Maryland, buyer agency is "presumed" in the absence of a signed agreement, but we MUST have a signed "Understanding Whom Agents Represent" form signed before we ever engage in real estate business with a buyer.  As someone else mentioned, this being a state law makes it easier than it otherwise might be. 

Being pre-approved by a lender is about more than a buyer's financial qualifications - it's about someone I know and trust verifying that a buyer is who they say they are.  It's a matter of my personal safety, and it's not negotiable. 

I try to make light of it by saying something to the effect of this:   "In the off-chance that you're an axe-murderer, I can't show you homes without an independent party verifying that you are who you say you are.  I'm sure you understand.  For that reason, I'd like to spend our first appointment talking about your wants and needs here in my office, and we can start looking at homes as soon as I receive an "ok" from a lender."  'Been doing this for years - never had any buyer resist. 

Hey Kelli, great post! I am amazed at the differences here. Everyone really has good points too. I'm just parking to see what others are going to say.

Well, I have never used an agency agreement....even in great booming times but instead of the 'do you have a prequal?" I start with...well our first step is to ..... so we know what price range to look in.....you may even qualify for a half mil...but does your monthly budget for mtg payment fit this price range?

P.S.  I'll go along with Margaret's safety qualification too. :)

Also, haven't seen you around much! How are you?

Hi Kelli- I'm new to AR and this is my first response. I have worked both ways, sometimes I feel good about them and we go looking but other times I ask them to call to a lender. I feel like I have failed as the professional if I show them homes that they can not qualify for. I hate asking for a Buyers Agreement but sometimes I do. It's a hard call to make.

Kelli-

I'm one of the " on the fence" posts. I like the post above about showing one house, etc.

I do soft qualifying when talking to them. Asking questions in a conversational way. if I get a red flag,I might step up the qualifying. I've worked with coaches that have scolded me for not having the formal meet at the office prequalification session.

I don't use a buyer/broker agreement at this time.

Ultimately, if I'm going to work with them, the prequalifying will be stepped up.

nice to see you around in the rain........   and I couldn't agree more

For the most part I agree with you. I feel once you sit down with possible buyers you should learn a lot and go from there.

For the most part I agree with you. I feel once you sit down with possible buyers you should learn a lot and go from there.

1. Signed agency agreements are the LAW in my area.   Many seem to ignore said law but  I don't.  They sign the agency agreement or we aren't going anywhere. Many buyers thought that they were being represented by the listing agent so the requirement makes sense.

2. I'll do one set of showings without the pre-approval. After that they aren't getting in my car without it.  Why? Because more than 80% want to see far more house then they can ever possibly afford! I mean they are off by over $100k in many instances.  Some of this has to do with the credit crunch - some of it is that they just "assume" they can afford "X".  But I work Westchester and its very expensive here.   I don't see this as being difficult.  I think whetting someone's apeitite for something they can't have is cruel not  kind.  It also can cost me sales.  When  they see what they "wanted" and compared it to what they "can have," many rush back to their rentals or decide to "stay put."

Knowing what someone can afford BEFORE taking them all over the county is simply good business practice.

P.S. Anyone who has balked at the pre-approval has never bought anything. You don't lose business this way. You just sort out those who are ready, willing and able from all the rest who are missing one of those key components.

we don't insist on either of those docs up here.  most vacation buyers are overqualified financially, at least that's how it was. now, we're eager for any activity we get, but most of that is..., you know, waiting.

Keli - I do see your point and it's not like there aren't times when I make an exception. But, I honestly am "Closed for Business" if I have the least little notion that somebody is spinning my wheels. I have worked hard to establish a good enough reputation and I have people who come to me wanting to work exclusively with me. I also have had sellers who after finding out I was away on vacation or getting ready to leave have been willing to WAIT for me to get back to list their homes. That being said, I have earned the right to demand things according to the book. Yes, I do things by the book and this week a caller on one of my high end listings who wanted to see it even told me he understood my reasons. He said, as an attorney he knew I was acting in the most ethical way, following a protocol and working in the best interest of my clients. How fair is it for sellers to spend their time cleaning and uprooting themselves for an afternoon just for the real estate hobiest to show up. An agent who is not bringing qualified buyers is doing a diservice to the sellers (regardless of who is representing the homeowner) - it's a very unfair thing to do. Ask yourself - how would you like it? If you've ever sold a home of your own then you should understand.      

Great Post - You got to go with your gut feeling - everybody is different.

I don't  need a buyer agency agreement but I do require that buyers are pre-approved. I have heard a lot of people talk about having a ready willing and able buyer. But,If they haven't been to a lender, they may be ready and willing but able, who knows, In this market with tight credit, most people have no idea if they can get a mortgage or how much they can afford.

I don't think asking for a pre approval letter is too much

In CT you must establish your business relationship prior to showing homes. By operating in the way you are suggesting, CT agents are breaking the law - they must establish their business relationship with a buyer. A represented buyer can see all the listings on the MLS. The unrepresented buyer can only see listings that the agent's brokerage has - because the only other person the agent can represent in this scenario is the listing client. The agent must disclose this. Buyers do not understand agency - as a licensed, professional realtor this is your job to educate them on how agency protects them.

And if a buyer doesn't want to sign exclusively with you - because they don't know you - treat this like an interview and let them know how important it is that they feel comfortable working with you. Then ask them to sign just for the properties you are going to show them - and that if they want to make an offer on one of the properties they understand it will be with you.

As for the mortgage situation you describe - it sounds pretty unprofessional. The mortgage originator in our office earns business - just like everyone else. Which is why she is ranked in the top 10 in the county. She cares about doing the right thing for the client.

If people are going to act like snake oil sales people - its no wonder the public has a hard time trusting us.

And stop driving people around with no idea of what they can afford. Real buyers want to know what they can afford - and for you to provide the very best service and help them find something real you need to understand their ability to purchase. And ultimately real buyers want to work with someone who has integrity, works hard, and protects their interest.

I would agee that the pq issue may depend on the situation. Is your buyer the 40-60 year old professional or the 20-30 year old newlywed. But in any case i would show a couple of properties just to make the connection, then evaluate. I would never spend 9 hours showing without some concrete infomation as to there ability to buy. As stated you  are not doing them proper service without the knowledge of their ability.. I;ve used this approach to a husband. The last thing that you want to do is for your wife to fall in love with a home that you cannot afford to purchase.

Thank goodness!  I was beginning to think i was some kind of crazed meanie.  But, I've had too many people totally unqualified for what they wanted to see.  THey are so far off the mark these days - I have to know before I take them out more than once.

I know what your saying as it has been drilled so deep in our brains to have everyone prequalified (like that means anything), but I still believe in the basics of nature and instinct. What ever happened to just talking? I know how to do that and do ask my own prequalifying questions. I'm working with a very good buyer that no one would give the time of day to because they may not have liked his demeanor. Those other agents didn't take the time to talk to him, he has cash in the bank that I've verified with his permission. We wrote an offer today and I will get something to work and I'll have a client for life.

I hear what you are saying.  I usually spend some time "investing" in the relationship.  I do make it very clear that they will have to get thier ducks in a row before we can really do anything seriously.  I typically won't go out a second time without some type of indicationt that they are serious buyers.

Kelli, I'm not sure I'm "up in arms" on this, but I do disagree with you. 

I've done my fair share of "wasting time" at the beginning of my career with buyers who weren't qualified.  Now, after a short conversation on the phone, I have my Mortgage Lender prequalify them. 

I just recently took a great course on getting your buyers to sign a BA and I am working on implementing it.  Up until now, I've never done so and while I have had many loyal clients, there were also the ones that bought elsewhere, something they would not have done had we had a BA in place.

Time truly is money.  I can't waste mine on unqualified and uncomitted buyers.

But you and I can agree to disagree =)

For heaven's sake- I don't think that Kelli is suggesting that anyone ignore intial agency disclosure. To indicate in writing, as required, that you are representing the buyer (or, heaven forbid, seller) is common sense. What I interpret from this post is the absurdity of requiring, at that juncture, that a contract be signed, or an agent demanding an in writing prequal, when it can be accomplished through dialogue, without offending a buyer, through the course of developing a relationship.

One more agent from Connecticut here - by state law, we must have a signed buyer agency agreement before showing a prospect another broker's listings.

However, I make the following accomodation if buyer's are resistant - I'll sign a one day or property specific contract, fully explaining to them why, and if they feel I'm not a good fit, they are free to move on.

I at a bare minimum have clients pre-qualfied but my experience is that if a buyer hasn't spoken to a lender before seeing houses, the chances that they are not properly qualfied or not serious is much higher. 

Being in Mortgages and seeingthe more stricter guidelines, I do understand why Realtors want pre-qualifications or even pre-approvals. Any person can make a pre-qualification, so you also have to know that the client who brought this paper went to a reputable lender to get this.

All you work, could be weeks would not pay off if that client came in with a 560 FICO with no money down. Or a 700 FICO with income that did not support the house price.

I would rather see pre-qualifications , then see countless hours wasted.

Experience is the key, and I don't mean Real Estate experience.  If you have been in the public such as sales, waitress, or even bookkeeping, you have and learned to read people enough to know when to ask those important questions or if they are "just looking"  I think agreements are a must but agree that its in the approach and first impressions is everything in our business

I agree with you about building rapport, and I totally believe in not making it a prerequisite to helping them, however, there are so many tire kickers out there that we have to use some soft prequalification system with questions and then create the value for them to use us. After that at some point it does make sense to see how committed they are to working wit you after you have made some effort at helping them and asking them the rright questions to learn about what is important ot them.

I agree with you Kelli, I always felt weird the few times I had people sign buyer agency agreements and since those were new clients I only made the agreement duration for the day we were looking anyway - why would they want to get tied down to someone who they might figure out after a few hours together was not the right agent?  As a buyer, I wouldn't.

Same with pre-approval - you do learn to read people, and if they put off contacting a mortgage broker right away that's a huge red flag - but most of my clients were not pre-approved the first time we looked at homes.

In nearly 9 years of real estate this worked for me - I never lost clients except as a new agent, when I wasn't used to reading people and learned the hard way when people were not serious.  (Good training - but I'm glad that's over! :)

Each of us does business our own way, that's the beauty of being self-employed.  With that said, when my husband works with buyers, he'll show them no more than 3 properties - to see anymore or spend more time and money on them, he requires 1) pre-approval from a reputable mortgage lender and 2) a buyer's agency agreement.

In this market, it's foolish NOT to work with these items.  People do not have any clue what it's like in the lending world and how hard it is to be qualified now days.  They also don't realize how quickly things are changing (daily) and how quickly a buyer needs to act when they find the house they want.  Homes that are well priced sell quickly and with multiple offers, buyers must be ready to act.

Additionally, it's fooishness on the buyers part (although way too few understand this) to be calling up listing agents and talking to them and going and seeing properties with them.  Why?  In the state of Idaho, there is no 'implied' agency - it's only written.  In other words, if a buyer comes along and shares things with us and sees the property - then decides to use someone else, you can bet as the listing agent we will share every thing with our seller. If, on the other hand, the buyer works with us under a contract, we will share agreed upon information to the seller.

I guess I think you have to crazy to take a buyer out without a pre-qualification letter....have you ever shown a buyer a home they can't afford ? Have they fallen in love with the sizes of the rooms and the features to find out it is beyond their financial reach ?   The market condition should have zip to do with preparing a buyer to buy....to buy what is realistic and affordable.

Hello Kelly, Congrats on your feature.  I don't use a Buyers Agency Agreement at the get go.  Do have them sign a Consumer Information Statement.  If they want to be loyal and work with me they will, if not they will float and would have floated anyway.  I do like to have them pre-qualified, always have, that way they know what price range they can look in. 

Thanks for the post and I understand your reasoning.

Hi Kelly,

Great post! I intially have everyone sign an Agency Disclosure/Information About Brokerage Services, as required by the Commission. If they are serious, you can usually tell, then we proceed to other documents, prequals, agreements, etc., before they make an offer.  However this may be after I've shown them a house or two. I don't mind because I love seeing houses. And also with various cultures you have to be patient until you gain their trust. I've been burned maybe a time or two, but overall the good has outweighed the bad, especially with investors.

I always work with an agreement and I have only had 2 clients in 11 years refuse to sign.  They all attend a counseling session of a minium of 1 hour.  I have loyal and committed clients that way.  It is just like on the listing side -- you are simply listing the buyer --

If I'm going to spend a lot of time with someone, I want to be sure that they are "able" to buy.  Sometimes you just can't tell from a conversation.  If they are "just looking" and state that, I can ceratinly give them information that will get them started on their research.  If someone is going to put an offer on a property, its important to be able to let the seller know that buyer is at minimum prequalified should they go into escrow.  There isn't just one answer or one way to do business.  I think its important not to be insulting and to let clients know up front how you run your business.  ~Evelyn

It's kind of a catch 22 for a lot of Realtors I think.....bottom line is...you'll know which ones need an agreement and which ones won't.

One thing I have learned is to face each situation on an individual basis.  I've been really fortunate that I haven't run into any objection on the agency agreement when it comes to buyers who expect to be shown many homes.  I have always had them prequalified first, before we even meet, so by the time they have that information I guess they have gotten excited about the process and just sign up.  I realize this has been unusually lucky.  If they are unable to prequalify they just go away, but I've have some of these come to me again when they have worked on their credit and are better able to make a purchase.