From RealSource... Glenn's Blog

I see agents demanding proof of funds before beginning any business relationship.

not a bad idea actually.  in my early years i was caught with my pants down for not verifying funds.

 

you make some good points though :)

Glenn - unfortunately in the eyes of many better = more. From my perspective my business is all about service. There is only so much I can take on and still provide service above and beyond. I hear what you are saying about business in general. Generally speaking I believe most do a pretty good job. Ultimately I believe we are all doing the best we can. To answer your question about who is the best - I would need to know how "best" is defined. If it is top volume producers (speaking for my area alone) I absolutely would not want to do business with them. Many don't return calls and are difficult to do business with due to the lack of communication. 

Words of wisdom.

I see many agents writing about practices that are exclusionary rather than inclusive.  I often wonder if they are using excuses to avoid a new business relationship.

Oh well. 

 

"I see agents demanding proof of funds before beginning any business relationship."  Why is this a problem?  It makes sense.

Glenn - it's a losing battle. But I'm so glad you wrote this and got a gold star! People in our industry have an amazing INability to put themselves in their customers' or prospects' shoes. And I'll bet a gazillion dollars it costs them A LOT of business. A whole heck of a lot more than "we" lose by trusting people and enjoying their company without oaths of loyalty or proof of financial ability in the first 30 seconds.

Could it be similar to a management coach criticizing the people he hopes will spend their hard earned money to hire him to teach them to not do what he seems to be doing?

Is your criticism of us and how we choose to handle clients, by coaching them that they need to be pre-approved, really any different than you coaching us what we should be doing? Just a thought.

I don't mean to be critical of your post, but I've just tired of people who have never sat around a kitchen table with a seller, or loaded a buyer into their car, thinking that they are qualified to tell me or us how to do our jobs. There seems to be a lot of that going on.

You are putting agents who want proof of funds in with cashiers talking on their cell phones?

Some people sell coaching.

Some people sell books.

And some of us sell real estate.

Hi Randy!  As I buyer on my last 4 properties I never had proof of funds and always bought once I found the right deal.  The really good agents knew how to qualify me without a document and without wasting too much of their own time.  In our other business ventures, we call it "mutually qualifiying" the client... for the benefit of all.  Thanks!! G

Hi Kathleen!  I left the definition of "Best" up to the reader.  Who do you admire in another industry?  What makes them great for you?  We love those that are not only service oriented but proactive service.  What their numbers are is irrelevent to the customer in most cases.  That is how I view those that I see as some of the best!   Thanks for sharing!!  G

Hi Lenn!  I agree totally.  Great summary.  Not all people in business are businessmen or businesswomen.  Great comment!!  G

Hi Jennifer!  Thank you much!  I always keep in mind, "Success is not mandatory."  And for many, perhaps they are making more money than they need, so for them it must be working.  For the rest, not sure what the idea is.  Thanks! G

Hello Anonymous Visitor!!  It may not be a problem to require proof of funding.  Maybe potential customers love this idea (which I might add I think is a good idea if done WITH the customer and not simply REQUIRED from the customer).  But why is real estate different.  For instance, how would you like to be treated when:

• buying a car ("sorry, you can't test drive or look around the lot without proof of credit") or
• buying furniture ("we have to check your credit card limit before you can sit on the sofas") or
• ordering dinner at a restaurant ("Show me your cash before I show you the menu please?") or
• buying a house?

Hi Elaine!  Great to hear from you!  I hear what you are saying too.  It is not a criticism if it is successful for you.  It is only my perspective from being a buyer, seller, adviser, student and also seeking out insight from many agents that ARE succeeding in any market.  And I don't even claim to be right, just curious.  Thanks for visiting!! Glenn

Hi Dawn!  Interestingly, more of my income comes from businesses I own in other industries, so I am always curious what makes people in Real Estate approach business as though it works different and that customer are to be treated different.  Maybe because of the dollar amounts relative to the consumer's income.  Something of a personality study you might say.  

One thing I have observed is that the Realtors I see making the most money over many years are the ones that emulate other successful business service models, not try to create new rules about why service and relationships are only after the paperwork is signed.  But, there are always exceptions and there are always customers that don't mind how they are treated.  Thanks for visiting!! G

You make some very interesting points here. As for verification of funds... This is really no different that getting  a buyer approved before you show them homes for sale.  Nothing worse than spending weeks, months or even longer with someone who claims to be a cash buyer and nothing happens. What if you get a cash contract and them when time comes to close, you find out there is no money to be had and the deal falls to the curb.

Proof of funds or a Pre-Approval letter are great... Just my 2 cents.

Wow, Glenn, I had no idea sooo many agents were running into soooo many people who were running some kind of "let's waste the real estate agent's time" scam by pretending to have something they don't have.  I have never run around with any client for weeks or months in the first place and I don't demand proof of anything before I show them property.   Yet, it always seems to work out.

I prefer to build a relationship first.  We will get to the finance part, we always do. 

But, wow, I am just amazed at how big a problem this is for so many people. Who'da thought it?  ;-)

Glenn, I totally agree.  I'm somewhat horrified by many of the comments regarding pre-approval and "pay to show" policies.  I'm grateful for any opportunity to get in front of people and forge a relationship with them.  I'm very cognizant of the fact that I need to earn THEIR business.  I don't know when the tides shifted and REALTORS began to think that Buyers have to earn OUR help. 

Do I waste time with unqualified Buyers?  No.  I don't.  But I'll certainly take a few hours to open a damn door and build a relationship with someone  before I frisk them for their ID, tax returns from the last five years, and their FICO score.

I am dealing with a mortgage person from Bank of America and they won't return a call or email.  Sad

Very well put, Glenn, and congrats on the feature!  It's always gratifying to see a well-written blog get a little extra bling.  ;-)

Seems to me we can waste our time cherry-picking our "ideal clients", or we can get down to business and help people who need our help to accomplish what they are trying to do...buy and sell real estate (or buy a car, or clothing, or a gallon of milk.)

 

 

buying a car ("sorry, you can't test drive or look around the lot without proof of credit") or

buying furniture ("we have to check your credit card limit before you can sit on the sofas") or

ordering dinner at a restaurant ("Show me your cash before I show you the menu please?") or

• Buying a car is the closest example here, but still not really the same. The salesman is at the dealership and the qualifying factor is the person walked on the lot and is willing to risk the encounter with a possibly pushy salesperson. Many dealerships will require some qualifying info before letting you take out a nicer car...you need to look like you can afford the car, and leave a driver's license or credit card or proof of insurance.
• Buying furniture doesn't qualify - the sales person is hourly plus commission. Lookers aren't wasting the salesman's time.
• Ordering dinner is an implied contract. If you can't pay, you can be prosecuted. Or wash dishes.

As for "customers who don't care how they are treated", in real estate we have customers and clients. I only work with clients. And, you aren't referring to any of my clients. I make time for them because they are serious. Even if they can't buy now, I will educate them and treat them like people, not a paycheck.

 

Glenn, aren't we judgemental!  I see many more agents treating their clients and customers with respect and professionalism than not.  Perhaps it's geographic and I'm just lucky to live in such a great area.

Hi Roland!  I agree about qualifying the client.  My point was the challenge of people in any industry that insist on proof from the client of funds BEFORE exerting any effort or any honest attempts to build a relationship.  After all, if your clients were good at all of this, they wouldn't need you!  Where did that get lost.  I thought this was the industry of advisors and consultants for the public in need of trusted advisors.  All the best!! G

Hi Susan!  Yes, I was amazed too.  In fact, I admit I was really unware of this until I read a number of blogs on AR in the last year stressing "no upfront finance proof = no effort yet."   It wasn't worded that way of course but if I were a client, that is what I think it would look like to me.  Thanks! G

Hello Heather! Too funny!  And yet still so accurate. Thanks for the smile!!  G

Russ, yes, "sad" is a great way to express this.  They can't see themselves.  Or do and don't care.  Not sure which is worse.  Hope it gets better for you!  G

Hi Kim, some clients do require more work.  I tell my team that is will balance out but that to expect every project to be super easy is not professional.  In fact, we earn most of our reputation on the hard projects!  Thanks!! G

Hi Dawn,  Thanks for visiting and putting time into your comments!  Great points but I actually think you may be reemphasizing my point instead of contesting it.

For example,

Buying a car is the closest example here, but still not really the same. The salesman is at the dealership and the qualifying factor is the person walked on the lot and is willing to risk the encounter with a possibly pushy salesperson. Many dealerships will require some qualifying info before letting you take out a nicer car...you need to look like you can afford the car, and leave a driver's license or credit card or proof of insurance.

Thoughts.... by the time you take a test drive and produced the documents you mentioned, you've likely looked at the cars and begun discussions with the salesman.  They don't ask for the documents before they let you look or discuss options, budgets, needs.  That was what I was suggesting in my example.

Buying furniture doesn't qualify - the sales person is hourly plus commission. Lookers aren't wasting the salesman's time.

Thoughts... I don't see the difference.  That hourly wage is not much and most of what they live on is the commission (like Realtors).  If the furniture salesman (or the Realtor) is building a relationship and mutually qualifying the clients early on, this seems to still be much the same.... just under one roof and for less money and less paperwork.  But simplier does not mean the comparison is invalid.

Ordering dinner is an implied contract. If you can't pay, you can be prosecuted. Or wash dishes.

Thoughts.... I agree on the implied contract.  However, my point was about the demand for proof of funds prior to even being allowed to see any menu, prices, options.  Not about what happens when you get to the ordering and eating stage.

Sorry I was not very clear and create any confusion.  And I appreciate your time.  And we may agree to disagree.  That is what makes discussion interesting.  If we all thought the same, what would be the point of every discussing anything!  Thanks! G

 

Hi Margaret!!  I see that the same here, it has been the candor on AR that was where I saw so many posts that were to the contrary and even encouraging all Realtors to demand evidence of funds before exerting any effort.  Funny business this is.  Thanks! G

You definitely have it all figured out. Now, if you want to make millions, simply get your license and go out and show your idea of superior service. You'll clobber all the competition. What's holding you back?

Hi Ed, thank you for your thoughts. I appreciate you think I have it all figured out but far from it. 

AR is great for allowing friendly discussions with varying points of view.  After all, if we all believe the same things, what is there to discuss. 

In fact, I'm not really concerned with even being right.  Who's to say what is right.  But I do appreciate a good discussion and those that professionally challenge ideas.  We do this in our office and it makes us all better... and helps our clients too.  But it is never personal.  No reason for it to be.  I also get the impression that maybe you think I've not earned millions. Very Interesting. I was not aware I was holding back.  But I'm sure I can do better.  All the best!  Glenn.

I see people talking alot about consumer centric shifts in real estate, but I rarely see it practiced.

• buying a car ("sorry, you can't test drive or look around the lot without proof of credit") or
• buying furniture ("we have to check your credit card limit before you can sit on the sofas") or
• ordering dinner at a restaurant ("Show me your cash before I show you the menu please?") or
• buying a house?

Glenn, We have to put people in our cars and drive them around for several hours each day until we find the right house.  Car salesmen, furniture salemen, and waiters don't have to do that!!! 

LOL!!!

I submit that you don't have to do that with unqualified clients if you appropriately qualify WITH the client as part of the early relationship process. 

Otherwise, sending them off to get qualified alone likely means they will then go work with the lender's preferred agent!  Maybe that is you but are you sure?

And isn't spending time with customers part of all these jobs, including Realtor?

And all of these other jobs invest time too.  Not as much time, but the payoff is much smaller too.  Just a different scale, isn't it?   Larger investment of time with greater risk for larger potential payoff.  Still the same process.  You can tell me this is incorrect.  Really.

Hi Joan!  I see that too. But when I do see someone that understands how to manage the process, manage their time, mutually qualify WITH the client... I usually see the agent that not only gets the deal but earns referrals purely through their service.  You'd think that would catch on.  Thanks!! G

Hi Glenn!  The more we know, the better off we are!  We earn business because of our service and our expertise.  Some of what agents do is over the edge but wanting proof of ability to purchase is reasonable - especially in this day and time!

Mary

Hmmm to me it's not "demanding to see proof of funds before a business relationship." At least in Florida the default relationship is a transactional one unless the principal and agent agree to change that to a fiduciary one but there is already a relationship once the customer signs a transaction broker agreement.

 In my experience I have never seen or heard an agent demand that the client show them proof that they have money. In my experience they have been nothing but courteous and professional. At least in my area.

Also... IMO it's not a bad thing to pre-qualify buyers. It is a part of our job.

I think think this is a good heads up for many and most are probably guilty of it sometimes.

Hi Glenn~ I always treat my clients and customers like I would want to be treated, period. 

I think a lot of people need to look at themselves real hard in the mirror. If they can't do that, then they need to hire a coach that will be honest with them and show them why they aren't getting the business. It has nothing to do with the amount of business out there, it is just no one wants to do business with you!

I'm with Susan - I simply don't run into buyers who want to waste my time. Their time is precious to them, too. Maybe it's because I don't advertise and so the people who darken (uh, lighten!) my door are a higher-quality prospect (not higher quality people - just more ready to buy), so maybe all my ranting and raving about this is a true misperception of what the "real world" is like. In 13 years, I've NEVER, and I mean never worked with a buyer who I believed was out to waste my time. Did my time get wasted? Of course. But I'd much rather take the risk of wasting time and building a relationship than viciously protecting my time and running people off.

Somehow this conversation always gets twisted into an argument about whether or not you should EVER raise the issue of financing. Of course! It will come up and I rarely have to force it. It just does as a natural course of things. And no decent agent would ever write an offer without an indication of the buyer's ability to buy. I mean, duh!

So, the question I have is: WILL YOU SHOW A NEW BUYER PROSPECT A HOUSE BEFORE HE'S SPOKEN WITH A LENDER, YES OR NO?

Back in 2005 I had tons of investors coming to Oklahoma City to see where to put their money. I would be in a car with all day, and during that time I would get at least 10 calls a day from other investors asking questions. I then had a George of the Jungle Topeka! moment. I quit publishing my cell phone including MLS listings. I have someone full time at the office and everything routes through that. People deserve our undivided attention.  

You wrote: Otherwise, sending them off to get qualified alone likely means they will then go work with the lender's preferred agent!  Maybe that is you but are you sure?

I will simply say here that as a lender, I would never refer any client to a different real estate agent than the one they were already working with.

I am always careful to protect the Realtor who has already worked with the client. This is applicable whether or not I know the Realtor.

Unfortunately, this does not work in reverse. It is often the case that a Realtor feels the strong need to ignore the fact the client has already chosen their "preferred lender", and instead sends them off to someone they know.

I do agree with the premise of this post. There is a very fine line between making certain the client is qualified, and turning them off with what could be perceived as invasive questions. Especially if the client has already been pre-qualified or pre-approved. Might be better to call the mortgage person than to grill the client?

I almost never get those calls. But I have had to fight to retain clients because the Realtors insisted the client use their perferred lender (or suffer some imaginary downside).

I wish this would change in our industry.

Hi Mary, you are right about the value of expertise!  And proof of funds is great early on... but not as a requirement for admission to any discussion.  I fear too many use the request for pre-approval letter as proof buyers are serious or not.  I buy and never have a letter.  Glad Realtors will talk to me.  It makes them money!  Thanks! G

Lana, sounds like you are in a great area!  Prequalify WITH the client is a good thing as part of a discussion.  Sorry if my point was not clear.  Thanks! G

Christine!  Thanks for visiting! G

Vickie... a reminder we all need frequently.  Excellent!  G

Hi George... BINGO.  I hear so many complain about the economy while the successful folks are still making money and preparing for better days.   Maybe not as much money but to blame the economy alone says, "I only know how to do my job when the economy makes it easy."   Great, great point!!  G

Hi Jennifer!  I think the discussion diverted from the original post as soon as people saw I thought "show me proof of funds or I won't talk to you" was not healthy for their business.  Seems many disagree... and even changed my examples so they could claim "it was different."  No, they used different examples and likely reinforced my point if they could step back and really see it all at one time.    I'm glad Realtors I have used in purchases showed me houses without a letter.  They made money doing that!

Joe... so glad you shared this.  If I invest in Oklahoma City (which I admit is not likely right now), your organization just moved to #1 on my list of people to hire.   What a great approach.  Love it! G

Hi Janet!  Great to hear from you again!  You are one of the ones doing it right and showing professional respect.  But the ones that don't are damaging the reputation of the industry over and over again... and many do it, I'm afraid, for the wrong reasons... themselves over the client.  Thanks!! G

Thanks for the post.  It's helpful to take a step back and think about what we are doing in our business.  Sometimes it's easy to get comfortable and not realize how we are coming across.  Thanks for the reminder that everything we do is important.

Morning Glenn,  This notion that a new buyer must survive an interrogation before we allow them to be our customer is outrageous !  Yes, I understand that we need to have certain guidelines and business practices but lets all cut them a little slack.  On the other hand :  if you insist on new buyers surviving a Guantanamo style grilling I will gladly accept your referrals - for there will be many !

Hi Glenn. Stepping outside of ourselves to see ourselves is a very good exercise.

I cringe when I am impacted by someone who is not providing service.  What I notice about myself that needs improvemnt in this category is that I am busy in my head planning what to say next and not truly, truly, TRULY focused on what the guy is actually saying.

Why is it so preposturous to have the "pre-approval discussion" before working with a buyer and especially before showing them houses?  Think about it...what is the FIRST thing you do upon entering a doctor's office for your first visit???

I think that finding out a prospect's intentions and objectives early in the process will naturally clarify funding issues and prequalify them in most other ways. AND most importantly, establish the basis for a course of action tailored to their needs. Time efficient for all.

F Scott Fitzgerald said "Don't worry about flies, mosquitos, insects in general . . . think about 'what am I really aiming at?'"

I love that reminder to cut through all the other issues and aim to help. No selling involved. I'm a consigliore. ;)

 

About this showing proof of funds issue: I've been in this business for a long time. In addition, I read people pretty well. I've never required proof of funds. I merely start asking questions and the answers tell me what to do. If I find out it's a first time home buyer, then I assume they know nothing and educate them and walk them through it starting with calling my loan officer.  If they say they are selling their home and buying UP, I just ask them if they have a lender or would they like a referral from me. Most of the time, they have already talked to their own lender and are ready to go. You don't have to require anything, you just have to be smart and know the right questions to ask so that you don't waste your time. You have to take the time to LISTEN.

Kimberly - now THAT is an intelligent approach! Seems obvious, but so often we get caught up in so much other nonsense.

Hmmmm I'm with Kimberely. Be smart, ask the right questions, listen to the answers and guide them properly.

Teresa, I had to ponder your suggestion of the comparison to the doctors office and at first I thought you had a strong point.  However, at the doctors office, you have arrived requesting services from a vendor that is paid at the time of service, not based on a possible outcome. 

Also, should you be unable to pay, most doctors are required to still see you or refer you to a facility where another doctor can see you at no charge. 

Now if doctors worked on commission or contigency (which is an interesting concept), then perhaps your analogy would make more sense.

I think, however, you missed my point.  My point was not that a dicussion of financing and funds is not appropriate early in the discussion, simply that requiring proof of funds before any discussion seems very anti-customer.  Work with the customer in need of your advice, including about money, early but don't require it as admission to a discussion. 

Does that make sense?  You can tell me I'm wrong.  Really.

I wonder how many of you here on AR would pay to use this site/service IF you had to pay before you could even preview it, look at any of it or see any of the discussions.  Just wondering.

All... many thanks for a great discussion!  While the focus was grabbed by the pre-approval aspects, it seems this degraded into whether this was the right thing to do or not. 

What I was really interested in was not "are your right?" nor "this works best for me!" but "what does the customer see?" and "what helps engage the customer best?"   See the difference in these questions?

So, this thread may have passed on down the timeline of AR but I'd love to hear any final thoughts on this.

Sorry. We are what we repeatedly do. I am from Egypt and learning to speak English, give true I wrote the following sentence: "Jeffco commission and sheriff at odds again.Jeffco lawmakers meet over financial crisis." With love :-D, Odon.