I imagine there will be a flurry of opinions weighing in by those who read this article. And that is a GOOD thing, because as professionals we should be thinking about our responses and responsibilities and privileges and accountability about everything that we do in our real estate business.
Considering that a large part of what we do is assist others in spending a large part of their FUTURE wealth, how involved should we allow ourselves to get in offering advice?
May I share a story with you before you answer that question please? It might possibly allow deeper insight into why the question is being asked and maybe even change how you choose to respond.
In 1991 I passed the test and suddenly I was licensed to sell real estate. We all know that doesn’t mean we “know” the business, but that we are just getting started in going about learning the business!
My first client was a friend of a friend. They were excited about buying their first home. They were celebrating their second wedding anniversary – and their first child on the way! I was excited about making my first sale!
They both had pretty good jobs and a fair amount of savings. The lender qualified them for a substantial mortgage amount and we began our house hunt. They were a friendly couple, comfortable with me. Since we shared a mutual friend they shared many personal dreams with me as we spent time together.
This mother to be wanted very much to quit work, stay home and raise their child and the father to be agreed wholeheartedly. They also wanted more children. And he dreamed of starting his own business in the near future. They had plans, big plans, young new family plans that they never thought twice about eagerly sharing with me; because it was clear they trusted me. They trusted that I was on their side and working specifically for them, not just to show them homes, but to help them make their best decision.
They were first time home buyers counting on me to know everything they didn’t know and trusting me to share that information with them. I was a new agent, uncertain of what was and what wasn’t my fiduciary responsibility to them, but knew only that I had such a responsibility!
I realized that if they bought a home for the maximum monthly payment they had been approved for they would very likely experience some difficulty executing those great plans they had for their new family.
The loss of her income had not been considered in their pre-approval. The cost of raising more children had not been taken into account. Continuing their savings plan so he could take the risk of starting his business had not been factored in; along with utility payments and unexpected expenses that hadn’t even been thought about by anyone!
As a mother of three myself and working hard to make ends meet these were real life situations I fully understood. As a brand new real estate agent I had no real point of reference to turn to for guidance. Right or wrong, my heart insisted I bring this subject up with these clients.
Here's what I ended up doing with this special couple; my very first real estate clients.
I simply mentioned some relevant thought processes for them to consider in the course of conversation while viewing the next home we went to see. I asked if, in their financial planning for their future, had they taken the additional costs and decreased income into consideration? Were they making their own decision about how much they could afford, rather than basing their purchase only on what the mortgage company was willing to lend?
There are some who would counsel that this was outside the scope of my duty as a real estate agent. And there are those who will applaud the choice I made to “get personal” with a client.
All these years later, (it's 2016 as I write this) I still treasure the letter I received from them after we closed on the much less expensive home they choose to purchase. A letter that essentially told me “Thank you for thinking about our need rather than your commission check.”
Having gone on from there to a full and rewarding real estate career, I still consider that one of my finest moments as a real estate agent.
What would you have done?