- Real Estate
The Myth That Buyers are Liars is Not True
The Mentor Meant Well
On the first day of my real estate career, I was introduced to Thomas (name changed to protect the innocent). Thomas was the mentor assigned to teach me everything I needed to know about being a real estate agent. Thomas directed me to the training room where Thomas sat on one side of the beautifully finished conference table and I sat on the other side, facing the man who was about to show me how real estate is done. The first thing Thomas said to me was, “Marlene, consider this the most important thing you need to know about real estate.” He paused as if he was preparing to say the most profound thing I have ever heard in my life. Then he leaned forward, cocked his head to the side, looked me straight in the eyes and said, “Buyers are liars. Sellers are storytellers.” I sat in shock for the longest moment I can remember, not knowing whether Thomas was serious or just joking with me. His facial expression and body language suggested that he was dead serious about his statement. To conceal my uncertainty, I simply picked up my pen and jotted his statement down on my notepad. I allowed Thomas to carry on with the lesson he had planned for me that day.
Thomas’ infamous statement was my introduction to selling real estate and the basis of how I was expected to form relationships with clients from that point on. Thomas meant well, after all, Thomas was the company’s top producer and was to be compensated with a healthy portion of the company’s commission for every transaction I closed for the next six months. So, it was in Thomas’ best interest to teach me well. In fact, Thomas did teach me well about the business of real estate, but I ignored most of what he taught me about people and real estate relationships. Call me a rebel, but I had a difficult time treating people like commodity. Putting labels on people, calling buyers liars was not something I was comfortable doing.
The Premise of the Myth That Buyers are Liars
Thomas based his premise that buyers are liars on the feeling that buyers never tell the truth about anything. He felt that buyers either exaggerated or neglected to tell the whole story about things. Thomas identified three major things he felt buyers lied about the most: #1 - Their income, #2 - The cash they have on hand, and #3 - When they want to buy.
As I talked with other agents, I learned that Thomas was not the only agent who felt that buyers lie. Many agents expressed the same sentiments as Thomas. But, my experience with buyers was different. As I worked with buyers I discovered that the myths about buyers were unfair statements about buyers. The buyers I worked with were nothing like the description other agents used to describe them. Let me share the three most common myths being told about buyers and the truths that dispel the myths.
Gross Income is income before taxes and expenses are taken out. Net Income is income after taxes and expenses are taken out.
- Myth #1: Buyers Lie About Their Income
Truth: Buyers don’t lie about their income. Some buyers don’t really know what their income is. People who are paid sporadically, such as contract workers and writers may have no idea what their income is until the end of the year and they are forced to tally it all up for income tax purposes.
Finally, when agents ask buyers what their income is, agents need to be clear whether they want the buyer to state their gross income or their net income. Those two numbers can be surprisingly different.
Liquid Cash is money that is immediately available, such as money in checking accounts or regular savings accounts.
I once had a client who did not know that she could use the money in her retirement account without being charged a penalty. She talked to the account representative and discovered that buying a house was one of the few reasons she could use to take money out of her account without a penalty.
- Myth #2: Buyers Lie About How Much Cash They Have
Truth: Buyers don’t lie about how much cash they have to buy a home. Sometimes, buyers don’t know how much cash is required to purchase the home. They may be planning on using liquid cash, or cash from an inheritance, or cash from a settlement that they have not received, but are expecting. They may even be thinking of taking cash from a retirement account. But, as in the myth about income, buyers may not know how much cash they have available to use.
To get the full answer, agents need to ask more questions about the money buyers intend to use to purchase the house. Ask the buyer if they will be using cash from their checking account, money hidden under the mattress, savings account, stocks, bonds, retirement accounts, or their rich aunt Mary. Just ask more specific questions about where the money will come from.
Myth #3: Buyers Lie About When They Want to Buy
Truth: Buyers don’t lie about when they want to buy. Buyers just don’t know the best time to buy for the most favorable outcome. Or, circumstances change for a buyer from one day to the next. An agent might ask, “When do you want to buy?” It's a good question, but the answer might be different from one day to the next. Consider the buyer who just got married. He and his wife have no children and don’t plan to have children for a few years to come. But, the buyer arrives home one day and learns that his wife is going to have their first child. Now, instead of the one bedroom, one bath home that the buyer originally told the agent he wanted, the buyer now wants to buy a three bedroom, two bathroom home so he can have an extra room for the grandmother to visit. The buyer didn’t lie when giving his original answer; life changed for the buyer and now the buyer’s needs are different. Instead of wanting to wait to buy a home, the buyer wants to buy the home now before the new baby arrives.
Agents need to ask the buyer more questions about the buyer's desire in their home buying decision. The best question is, "Why?" Then listen to the answer.
Ask the Right Question to Get the Right Answer
At the end of the day, buyers are not liars. Buyers answer questions to the best of their ability. How agents ask questions determine the answer they receive from buyers. How agents interpret those answers determine the outcome of how the agent proceeds to work with the buyer.
To make it simple, agents should assume buyers do not know all about real estate. Agents should ask questions in a way that helps buyers understand the questions fully so that buyers are able to give informed and reliable answers.
No, buyers are not liars. They just aren't asked the right question.
"Real estate information; clear and simple!"
Although retired from actively selling real estate,
Marlene Bertrand maintains a current Broker/REALTOR® status.
Calif. Bureau of Real Estate Lic. #01056418.