Real estate transactions are unnecessarily complicated for buyers. Use these suggestions for preparing informative forms and flyers to help your clients understand the acquisition process.

Information induces insight for effective decisions

As a real estate agent, you’ve likely spent a great deal of time explaining a transaction’s processes. Clients lack a real estate agent’s experience in maneuvering a property from the owner’s intent to sell to a buyer’s intent to purchase and on to a closing. Thus, you’re the one who needs to preempt your client’s needs by volunteering relevant information they may not know.

Preparing informative materials to bring your clients up to speed before they begin the buying or selling process significantly improves both their experience and yours.

Your cash-poor buyer and financial flyers

First things first: Your buyer needs to be financially prepared or you won’t move forward and close a transaction with them. However, your buyer typically doesn’t know all the steps they need to take to qualify themselves to buy and own a property.

Some insight will endear them to your brand. To inform them, compile facts and tips regarding the financial aspects of buying a home, including:

  • credit scores;
  • mortgages;
  • market pricing by location;
  • downpayment and acquisition costs;
  • cash reserves after closing;
  • income tax subsidy for owning; and
  • budgeting property ownership expenses.

The buyer’s quick course in mortgages

Start with the basics. Let your buyers know that a high credit score helps them qualify for less expensive mortgage terms, a long-term cost reduction in exchange for prior planning. Also inform them that adequate savings or other sources of cash are needed for a down payment, closing costs and reserves (their money accumulated) to qualify for the lowest mortgage rates.

Then, include information your buyers may use to determine what type of mortgage is best for them. Provide mortgage worksheets for a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM), and discuss the different payment risks involved.

Your buyer uses the mortgage worksheet as a questionnaire checklist to fill out when meeting with lenders as lenders do not volunteer information on what they are selling in a mortgage. To your buyer’s benefit, lenders expect one-third of all borrowers will shop different lenders to compare rates and terms. [See RPI Form 320 and Form 320-1]

Costs of ownership disclosures

Once your buyer has decided on a mortgage type, inform your buyers of acquisition-related costs they need to pay in cash, including homeowners insurance premiums, property inspections, mortgage origination and escrow fees and more. Provide your buyers with a closing cost worksheet so they can keep track of these cash requirements. To further assist your buyers, give them advice for selecting a homeowners insurance policy based on your experience with closings. [See RPI Form 311]

Next, your buyer only has sufficient information to decide to buy when they know what costs to expect for owning and operating a home. You need to prepare and review a property expense report with your buyer. With it, they are able to budget for the costs of utilities, maintenance, property taxes, insurance, HOA/solar/bond payments and of course the mortgage payment. [See RPI Form 306]

Net sales proceeds estimate

For sellers, a common hang-up is the tendency for them to cling to unrealistic pricing for their homes. Always prepare and review a comparative market analysis with your sellers. They need to be confronted with pricing factors and see how similar properties in their area recently fared on pricing. This sales information generally dissuades overzealous sellers from grasping for sticky or accelerated pricing, if not immediately on listing the property, then most likely when a reasonable offer is received. [See RPI Form 200-1]

Sellers need an estimate of the net proceeds they will receive since that is the sum total they will be left with on the transfer of their property. When considering a listing or offer price, the net proceeds disclosure eliminates future surprises and disputes at the close of escrow. A net sales proceeds estimate gives your sellers an awareness of the dollar amount to expect as their net sales proceeds when a sale at the price under consideration closes. [See RPI Form 310]

Flyers for selecting homes

Once your buyer is financially and psychologically prepared to become an owner, the next step is to focus on locating a property.

First, provide your buyer with a home shopping wish list. This will help you and your buyer pinpoint the ideal features they are looking for in a new home.

Volunteer some tips on how they may use a home viewing to their advantage once you have located a few homes for them. Buyers need guidance to ascertain critical information about the property before deciding it is suitable as the home they want to live in.

You may also find it helpful to provide your buyers with an open house interview sheet so they will know what to look for when viewing a home. [See RPI Form 320-2]

However, be sure to advise your buyer you need to be present at all viewings, even open houses. If buyers visit an open house without you, they put themselves at risk of being misdirected by a listing agent – a bad situation for them which causes conflicts for you.

The listing agent’s priority is to sell the property. They likely will not advise your buyer about the ramifications of disclosed or observed property conditions, that explanation being the duty of the buyer’s agent. Your employment agreement signed by your buyer indicates your responsibility for accompanying them to a viewing and ensuring they know all material facts necessary about the property. [See RPI Form 103]

Flyers for showing homes

Give your sellers tips on how to spruce up their property – staging – before you start showing it to potential buyers. A checklist for sellers may include:

  • general repairs;
  • ways to enhance the property’s curb appeal;
  • tips for storing valuables;
  • furniture arrangements;
  • cleanliness and odor control; and
  • tips for escorting buyers through the home and answering their questions.

For example, information you provide to sellers may suggest the client take their pets and children to a neighbor’s house while viewers are in the home.

You might also advise your sellers about how to time a sale. Sellers may not be aware of seasonal increases in home sales during spring, or tax benefits available to them if they sell after a specific period of ownership and occupancy of the property.

Advise your sellers on property information you need from them for properly marketing the home to prospective buyers or their agents when requested, including condition of property disclosures and home inspection reports. Be sure to include these items in the marketing package you prepare for each listed property. [See RPI Form 304 and Form 130]

General explanations

In addition to specific forms and tips, it may help to provide your clients with basic definitions or explanations of different aspects of the buying or selling process. The CFPB’s toolkit for agents will help you provide the most accurate information for your clients. For example, clients may have a general idea of what a purchase agreement says or what happens in escrow, but a little clarity boosts their understanding and thus their confidence.

Include any other forms or flyers you think may expedite the process for you and your clients. Communication is key to informing and negotiating an agent’s facilitation of a free-flowing transaction. The more informative you are with your clients, the more they appreciate your time and talent. All this translates into future business by referral – the best way to succeed in a real estate practice.

Need a specific flyer? Request a FARM letter! Visit our FARM letter page to let us know what you need and we will design it for you.

This article was previously posted in 2015, and has been updated.