Jennifer Allan is an author and real estate agent trainer and she penned this post as a guest of Real Estate Radio USA. Her humor and insight are refreshingly to the point.
I’m so sick of hearing how real estate agents can’t afford to work with buyers anymore – UNLESS that buyer has signed a buyer agency agreement AND has an iron-clad loan commitment in hand – because of the high cost of gas. What a crock!
Okay, let’s do a little analysis.
Over the last several years, gas has hovered around the $3.00/gallon mark. Sometimes higher, sometimes lower, but I think that $3/gallon is a reasonable place to start.
In some parts of the country, gas is now around $4.00/gallon. That’s $1.00 per gallon difference.
If your car gets 20 mpg, you’re spending ONE EXTRA DOLLAR for every 20 miles you drive. If you take a buyer out and drive sixty miles with him or her, that’s three extra dollars you spent on him (over and above what you would have spent on him last year and the year before).
Are you really saying that you can’t afford to spend an additional $3.00 in exchange for a shot at a $7,500 commission ($250,000 x 3%)?
Tell ya’ what. I’ll be happy to take your Denver buyers for a ride, whether they’ve signed a Buyer Agency agreement or not. Whether they’re pre-qualified or not.
Because I know that being out in my market with a warm body in my car (and that warm body probably has lots of friends he can refer to me in the future) is a MUCH better use of my time than sitting back at the office congratulating myself on saving $3.00 in gas.
I’ll even pay you a referral fee. So, on top of the THREE BUCKS you saved, you’ll also get $1,875 just for giving me a call!
Good point, though in my experience driving 60 miles is pretty low for the average buyer and you also have to factor in the trips for buyers who don’t buy anything.
Better yet we can start financing terms. I will put up the gas money, you give 30% and my gas money back.
The biggest problem I see is finding an agent that cannot afford the extra 6 dollars and can sell a home. Get back to me with any ideas
AMEN! Especially when having a buyer in your car is somewhat of a commodity these days. Every sales meeting we have, I hear a chorus of “I need buyers!” from all the agents I work with. I’ll gladly pay the money for gas (it also is a goo selling point to tell the buyer that you’ll drive to show them the homes and save them the gas!) I’ve never understood agents who refuse to work with buyers. I usually don’t ask for a buyer agency agreement until I’ve at least taken one trip with the buyer. Who knows if we’re going to get along?? I don’t necessarily want to work with buyers who have unreasonable expectations… I’ll refer those to you, and keep the rest!
Call me arrogant, but it’s not the gas prices, it’s the lack of commitment and preparedness to buy that would keep someone out of my car! If they aren’t interested in a committed agent or want to get to the offer point and then find out they can’t get a mortgage, then it truely is a waste of my time.
As far as gas is concerned – if you have the other two, invent the $$ in gas, it’s worth it!\
Thank you all for the comments…
@Portland Oregon Real Estate – You can never be sure any prospective buyer is actually going to buy something you show them, or buy it from you. Before you take a buyer out and possibly feel like you are wasting your time you may want to qualify the buyer under terms that make you feel comfortable. I am sure if you do not think they are a viable buyer, they can find someone else to show them around.
@Rob – I do not know if I would ask a buyer I just showed properties to for my gas money back. Again, as I said above, if you qualify your buyers before you take them around and find out EXACTLY what parameters they are looking for, you might not have to ask yourselves if the gas money is worth a commission check.
@Eleanor – Exactly… thats the spirit.
@Julie – Right…. QUALIFY your buyers.
These are the questions you might want to be asking, What questions do you ask to qualify your buyer? Under what circumstances would I definitely NOT show a buyer around? Notice I did not say “work with” a buyer, I said show them around. There are many things you can do and information you can disseminate without getting to the showing stage.
Dont’s forget, we are having Jennifer Allan on the show LIVE on Monday, June 23rd at 4pm EST. Don’t forget to tune in.
Time spent searching for good well qualified buyers is time well spent. Any prospective buyer that had not been pre approved before looking is groping in the dark and any Realtor is following that lead. Don’t grope in the dark .
I can get you a financing answer in writing in 24 hours on any serious candidate. The domino effect of not qualifying or not pre approving prospects affects everyone. That means you, your agency, the seller and the listing agent. Be smart, it’s a business.
You know the more I think about it I conclude that you’re right. If they would sell a house instead of complaining about gas prices they would not complain that prices are too high. But then again can we talk about this so boldly? Isn’t it possible that gas prices are still too high?
The Foreclosure Doctor Online
I know this post was a bit ago, but thought I would comment. I sure hope agents aren’t avoiding showing because of gas.
I am a believer though in buyer agency agreements and getting a buyer approved prior to going out in the field. You will just waste a serious amount of time if you don’t take those steps. Besides, taking the time to do a consultation at the beginning (so you can get that approval and agreement done) sets the stage that you are a professional, not just a door opener.
I wasn’t asking the buyer for gas money, I am willing to finance another agent’s gas and I would get a 30% referral fee and my gas money back.
I don’t fret over the price of gas, it is a scarcity mindset. It is what it is, I just work a little harder and a little smarter and I am actually gaining market share as agents leave the industry in bus loads.