GRI 403: Working
Effectively With Buyers
Participant’s Guide
Sponsored by the
Tennessee Real Estate Educational
Foundation
GRI 403: Working Effectively With Buyers
Course Introduction
This one-day course will cover the full range of activities
involved in serving buyers more productively and effectively, such
as: working with new buyers, counseling them effectively, handling
and negotiating offers to purchase, helping buyers secure financing,
and getting them through the home inspection, repairs, and
settlement procedures.
Our Objectives
Upon completion of this course, participants will be able to:
1. Identify potential sources for new buyers
2. Continue to grow your current business
3. Effectively plan a leads management system for new and
current buyers
4. Determine buyers wants, needs and expectations
5. Professionally counsel buyers on why representation is
important
6. Build your B.S.I. (Business Sphere of Influence) to help
buyers have one-stop shopping
7. Help buyers to understand the home buying process from
financing options through writing and negotiating the offer
through contract and close
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GRI 403: Working Effectively With Buyers
Part 1: Prospecting for Buyers
As a real estate professional, you have to look for business
opportunities all the time.
Buyer Sources for New Business
List ideas of where to prospect and one idea for what to send as
your marketing piece:
(Minimum of two ideas per group)
Previous Buyers
List ideas for following up with your book of business:
(Minimum of two ideas per group)
Leads management systems for growing your business:
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GRI 403: Working Effectively With Buyers
Applications and Websites to assist you with building
your business:
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The key to success is time management for prospecting whether
for new business or previous business.
“Time Blocking” is the key to Success! What is time blocking?
Another key to success is asking for referrals after you have done a
great job for the buyers. Ask for a testimonial from each buyer to
have in your portfolio or a video testimonial for your web site.
Reference to find out what buyers and sellers expect: realtor.org
and check out the “Profiles of Buyers and Sellers” available each
year for the previous year. This is a great survey to study to know
expectations of buyers.
Part 2: Understanding the Buyer Cycle
According to NAR many consumers begin their buying cycle on the
Internet. A good lead is someone who has a need to buy soon.
Many generations begin this cycle many months prior to
needing/wanting to buy. Your job is to capture this lead, continue to
drip marketing until the prospect is ready to be your buyer.

Consumers that find their way to you via the Internet are just
as valuable a prospect as any other prospect:
Yes or No…. Why?

All traditional, tried and true selling skills work as well with
Internet prospects as with any other prospect:
Yes or No… Why?

The faster the agent responds, the greater the likelihood of
converting the consumer into a true lead:
Yes or No… Why?

Follow up, follow up, follow up:
Yes or No… Why?
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GRI 403: Working Effectively With Buyers
Safety Issues For You
Having a policy in place for yourself in regard to meeting a prospect
for the first time is a good practice. Why?
Explain
ADD LINES!!!!
Scenario #1
Prospect says: I am sitting in front of the house and I want you to
come and show it to me now.
Response:
Scenario #2
Prospect calls about an ad/web listing and says: “I just saw your ad
and I want you to meet me there at the house and show me the
property in two hours.
Response:
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GRI 403: Working Effectively With Buyers
C.I.T.O. Script
Thank you for calling and let me share how I work as a Professional.
I would like to schedule ____________________ for you at my
office for an informational session. As a full service REALTOR® I
can show everything in the Multiple Listing system and show both
resale and new construction. By the way, when we find the right
home for you, will you be paying Cash or would you like to know all
the financing options available for you? Are you currently working
with a lender? If no, then may I have one of our lenders call you,
no obligation this evening at 5 or would 6 be better for you?
A good phone number will be _________________. I have
tomorrow at 3 or would 4 be better for us to schedule that
information session?
If yes, say, “May I ask what lender? May I ask did they furnish you
a worksheet or did you make a loan application, and if so, did you
get a Good Faith estimate and a Truth-In-Lending?”
Comments/Changes:
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GRI 403: Working Effectively With Buyers
Prospect Checklist
Lead Source: __________________________________________
Always introduce yourself and ask the caller’s name:
1. What interested you in the ad/property/listing?
2. Share with me your time frame for moving.
3. Are you currently committed to another agent?
4. May I ask if you entered into a written agreement with that
agent?
5. Tell me more about your wants and needs.
6. Do you have any special needs?
7. If we find the right home today what would you do?
Other questions:
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GRI 403: Working Effectively With Buyers
Part 3: Buyer Representation
Code of Ethics
Article 1, Article 3, Article 7, Article 12, and Article 16 all relate to
Buyer Representation
(Discussed in GRI 401 in detail)
Reasons Why Buyer Representation agreement are not signed:
How I work on your behalf:
Checklist:
 Your representation choices
 Buyer Representation Agreement
 Calling other brokers/builders
 Viewing the Property
 Efficiency tips
 Property Inspection
 Writing the offer
 Negotiating
 Contract to close
 Educate
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 Solve sticky situations
A buyer agent understands that:

It is OK to refuse to work with a buyer who will not commit to
you.

Buyer representation allows you to do the best for the buyer.

Without a buyer representation agreement, your risk is
greater.
Asking the buyer to commit to you in a formal agreement is difficult
unless the buyer sees the benefit of committing to you.
Remember: OLD CHARTER
O- Obedience
L- Loyalty
D- Duties to Assist
C- Confidentiality
H- Honesty and good faith
A- Adverse Facts Disclosure
R- Reasonable Skill and Care
T- Tell Market Conditions
E- Ever Watchful
R- Refrain from self-dealing
Disclosure Form about Representation
Insert Exclusive Buyer Representation Agreement
Review paragraphs on Buyer Representation Agreement
Small Group participation to explain how to get the Exclusive Buyer
Representation Agreement signed
PART 4: B.S.I. (Business Sphere of Influence)
List your B.S.I.
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Choosing Lenders
Questions to Ask a Lender
Comparison of Traditional Financing
Conventional





FHA
VA
Credit Scores
MIP/MPI/Funding Fee
Ratios
Non-Allowable
Non-Traditional Credit
Conventional Loan/Calculate Monthly PMI:
(Remember: PMI Factor is dictated by Lenders)
Loan Amount $180,000 and PMI factor
is .65%___________________
Calculate Monthly MIP: (MIP is dictated by FHA)
Loan Amount is $192,500 and monthly MIP factor is
1.15%_________________
There is also an upfront MIP is 1% of loan amount _____________
Calculate: ____________________
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Calculate VA Loan/ Funding Fee and total loan amount
Loan amount is $150,000
Funding fee is 2.15% (For first time use and 3.3% for subsequent
use)
Funding fee is ________and total loan amount is ______________
List special or creative financing options:
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
Temporary Buydown Calculation Worksheet
Loan Amount: ______________________
Note Rate:__________________
Interest Rate 1st Year: _____________ 1st Year P & I:__________
Interest Rate 2nd Year: _____________ 2nd Year P &I: _________
Interest Rate Years 3-30: _____________ 1st Year P & I:________
____________ + _____________ = ______________
Cost 1st year
Cost 2nd year
Total Buydown Cost
To Determine Percentage Paid by seller:
______________ /_______________= _____________%
Total Buydown cost Loan Amount
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Inspection Process
A look by a professional can offer the buyer peace of mind. The
property inspector’s job is to tell the buyer about the property. The
inspector should inform the buyer upfront what they will or will not
inspect and how deep they will probe.
The purpose of the inspection is four-fold:
l. Educate the buyer about ongoing maintenance issues
2. Familiarize the buyer with items that might need repair in the
future
3. Instruct you about the operation of the equipment
4. Inform the buyer about problems that might not have been
known or readily apparent when you looked at the property
Counseling time: Explain in detail how you handle repairs that
appear on the inspection report with your buyers.
Counseling time: Explain in detail how you handle repairs that are
now ask to be repaired by buyer as the listing agent with your
sellers.
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GRI 403: Working Effectively With Buyers
Good Faith Estimate
The GFE is an estimate of the settlement charges for services
required by the lender that the borrower should expect to pay at
closing. This includes the lender’s charges, the title company’s
charges for both owners title policy and mortgagee title policy and
all other third party provider’s charges, like the survey and
inspections. The items that will not be on the GFE include HOA
fees and commission if the lender does not require them.
The new GFE required in 2010 saw significant changes that require
a little more expertise on your part. Lenders are not allowed to
deviate from the new format and are bound in small margin for
variance even if they make an error. If the buyer chooses the
service providers that the lender has recommended in the GFE,
then the costs listed in the GFE for those associated services
cannot increase by more than 10%. If the buyer chooses
alternative service providers, then the lender is freed from
limitations and there can be a greater variance.
The new GFE is three pages, contains detailed information about
the terms of the costs of the loan, and shows options for shopping
for a mortgage, while limiting changes in certain costs so the
estimate survives to closing.
A discussion with buyer is to lock or float the interest rates. It is the
buyer’s decision to lock or float. Questions for buyer to ask lender
is:
1. What happens if the rates go down?
2. Cost to lock?
3. How long can we lock?
Truth In Lending
HUD-1
The general categories are as follows:
 Sales commissions (lines 700-704)
 Item connected to loan (lines 801-808)- origination fee,
discount points, credit reports, etc.
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GRI 403: Working Effectively With Buyers




Items required by lender to be paid in advance (lines 901904)- prepaid interest mortgage insurance, hazard insurance
etc.
Reserves deposited with the lender (lines 1001-1007)insurance tax reserves deposited into the buyer’s escrow
account. This category also contains an aggregate
adjustment if the amount required by the lender to be placed
in the buyer’s escrow exceeds the amount allowed by
RESPA. This figure is year-to-date taxes not yet paid to the
taxing body plus two months’ reserves for taxes, insurance
and any other amounts that will be paid on the borrower’s
behalf by the lender
Title charges (lines 1101-1206- recording fees for various
municipalities, tax certificates etc.
Additional settlement charges (lines 1301-1305)- survey,
residential service contract etc.
The total settlement charges (including costs) from the buyer’s
column and the seller’s column and the seller’s column on the
second sheet of the HUD-1 (line 1400) are carried over to page 1 of
the HUD-1 in line 103 in Section J (Due from Borrower) for the
buyer and line 502 in Section K (Reductions in amount due to
seller).
When you explain a HUD-1 to your principal, it is always easier to
start with page 2 and address the charges to the buyer or the seller
first, since only the sum is carried over to page 1. The skilled agent
will always scrutinize and approve the HUD-1 before it is presented
to the principal. Make sure that you compare the costs that you
estimated for your principal at the beginning of the transaction to
anticipate nay upset that legitimate discrepancies may precipitate.
Your role here is very important because title officers are human
and do make mistakes. You cannot explain to a purchaser or a
seller what you yourself don’t fully understand. Even the most
seasoned agent will question the HUD-1 to make certain that every
dollar is accounted for properly.
For additional information about the HUD-1, you can go to HUD.gov.
Escrow Accounts and Prorations
Many lenders require that buyers set up escrow accounts for the
payment of bills on the property that come due during the year. By
setting up a reserve account, the lender is assured that when it
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GRI 403: Working Effectively With Buyers
comes due, there will be enough available funds to pay the bill.
Some lenders do not require that an escrow account be set up,
relying instead on the strength of the borrower’s credit. Paying the
taxes and maintaining adequate insurance on the property is in the
lender’s interest, because the lender has a considerable stake in
the property in the mortgage.
Escrow accounts are set up with enough funds to guarantee that
when the bill comes due, there is enough money to pay plus an
adequate cushion to be prepared for subsequent years. When the
purchaser makes a mortgage payment, that person pays principal,
interest, taxes and insurance. Monthly taxes and insurance are
1/12 of the total anticipated tax and insurance bill. Escrow accounts
are required on all government loans.
Example
Consider that the buyer closes on May 20. The buyer’s tax bill
comes out in October, but the lender has until the end of January to
pay the bill without any penalty. The seller will contribute to the
escrow account at closing the amount of taxes the seller has paid
while owning the property from the first of the year to closing. The
buyer will contribute two months’ tax reserve. Every month after
closing starting with July 1, the buyer will contribute another 1/12 in
the monthly mortgage payment.
Buyer’s Escrow Account
At closing, the buyer pays for one year of the hazard insurance
policy up front. The buyer contributes two months’ reserves for
insurance into the escrow account and then pays 1/12’s worth of
insurance every month with the house payment. By the time the
premium is due a year later, there will be enough funds to pay for
the next year’s policy.
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GRI 403: Working Effectively With Buyers
Seller Contribution
(Jan.1 to May 20, or 4.66
months)
Buyer contributes the
remaining amount for May
plus two months'reserves
at closing
Buyer contributes six
months' for July through
December house payments
4.66+.34*+2+6= 13
Tax bill is for 12 months,
leaving one month to keep
the reserve going for next
year.
*balance of May
Prepaid Interest
Interest is a time-related payment. Interest is not earned until the
borrower has had the use of the money lent for a period of time. So
the first house payment is paid after the borrower has had the use
of the mortgage for a period of time. Payments are due on the first
of the month.
If the buyer in the above example were to make a house payment
on June 1, that person would be overpaying interest, since the
buyer did not own the house for the first 20 days of May. To adjust
for this at closing, the buyer will be charged a prepaid interest from
the date of closing to the end of the month. If a buyer closes o May
20, he will be charged prepaid interest on the mortgage from May
20 to May 31. This accounts for the partial month’s interest that the
buyer will own on the house in May. Then, instead of making the
first payment due on June 1, it will be due on July 1. When the
borrower makes the July house payment, he will be paying June
interest.
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How to Calculate Prorations
Use a statutory year of 360 days- 12 months of 30 days each. This
is the calculation year required by Fannie Mae and Freddie Mac.
Interest Prorations
STEP ONE
Loan amount
x Interest %
__________________
Total Interest/ 12
________________
Interest/ Month
STEP TWO
Interest /month/ 30
days
________________________
Interest/day
STEP THREE
Interest/day
x Total days (include
closing date)
________________________
Prorated interest
Tax Prorations
STEP ONE
Total annual
taxes/ 12
________________
Taxes/month
/ 30
________________
Taxes/day
STEP TWO
# months
+ # days
____________
Total time
taxes owed
STEP THREE
# months
x tax/month
___________________
taxes for whole
months
+ # days (partial
month)
x interest/day
___________________
Taxes for partial
month
STEP FOUR
Taxes for whole
months
+ Taxes for
partial month
____________________
__________
Total prorated
taxes
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GRI 403: Working Effectively With Buyers
Part 5: Negotiating Skills/ Closing Techniques
Time centered close: When would you like to be in your home?
Open Ended close: Did the first home suit your needs the best or
this home?
Alternate choice close: Does the layout of the first home work
better for your home office or should we find a home with a
separate building?
Assumption close: Example of this close is to begin filling out the
contract form and ask how do you want to take legal title.
Feature and benefit close: Buyer says the property faces West
and you say then the afternoon sun won’t shine on the back patio
so you can enjoy being outside.
Reduction to the ridiculous close: Buyer says the price
countered is too high and you isolate by saying for example buyer’s
top price is $158,000 but the listing is $160,000, 30-year loan at 5%
will be $858.91 P&I and what the buyer will pay would be $848.18 a
difference of $10.73 month.
Handling Stalls and Objections
 A stall hides the reason they are not committing
 A true condition is the real reason the buyer cannot make a
decision
 An objection is the reason that the buyer believes he/she
cannot make a decision to move forward
Reluctance Thoughts
1.
2.
3.
4.
5.
6.
7.
I need to talk it over with my parents
My sofa will not work in the family room
I am concerned about the schools
The carpet is very work
I am worried about being laid off at work
We always pray about major decisions first
We feel we have not looked at enough properties
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8. I am considering a divorce and my spouse does not know it
9. The yard is too small for our dog
10. Our son is going to college and we are worried about our
money
Five Steps for Handling Objections
Step One: Understand the Objection
Step Two: Respect the Objection
Step Three: Change the Objection into a Question
Step Four: Provide a Solution
Step Five: Try to close (using the above techniques)
Part 6: Offers and Multiple Offer Presentations
Article 1, S.O.P. 1-15
“REALTORS®, in response from buyers or cooperating brokers
shall, with the Seller’s approval, disclose the existence of offers on
the property. Where authorization is authorized, REALTORS®
Shall also disclose, if asked, whether offers were obtained by the
listing licensee, another licensee in the listing firm, or by a
cooperating broker.”
(Adopted 1/03, amended 1/09)
This is a great Article and S.O.P. to discuss with your seller clients
and also your buyer clients.
If a broker receives more than one offer, all offers must be
presented to the seller unless instructed otherwise by the seller.
No offer has priority over another. The broker should submit all
offers promptly.
Example, agent receives a written offer and presents to seller at 10
a.m. and seller wants to think it over, then another offer arrives at 3
p.m., the license has the duty to submit the later offer to the seller.
The licensee now has an obligation to let both agents representing
the buyers know there are multiple offers. The same would be true
regardless of the number of offers. Terms and conditions should
be confidential.
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Contract for the sale of real estate must be in writing and signed by
the parties to be charged with performance to be enforceable. The
licensee should be very careful to make no representations as to
acceptance until all parties have signed, initialed if needed and
communicated acceptance.
Seller’s Acceptance
The seller can do any of the following:




Reject all the offers
Make a counteroffer to one prospect and reject all other
offers
Accept one offer and reject other offers
Do nothing
Remember that the seller should never counter multiple offers. A
seller is not bound to accept any offer, even a full price offer. In
refusing a full price offer, the seller may be obligated to pay a fee to
the listing broker. As a licensee you can make the seller’s job
easier by having current market conditions such as absorption rate,
updated CMA, and estimated closing cost sheet available.
A buyer or seller may revoke any offer or counteroffer prior to
acceptance by the other party.
Closing Responsibilities:
1. Attend closing for support to client
2. Be sure to ask to see the HUD-1 prior to closing and
compare to your estimated net sheets
3. Remind the Buyer to bring certified funds to closing (could
also be a seller bringing monies)
4. Ask the loan officer if they will attend with you and the
buyers
5. If the client will give written permission, ask for a video or
written testimonial to place on your web site after closing
6. If appropriate, a closing gift
7. Place this client in your data base for follow up, follow up,
follow up
Remember that your real estate business is built on the theory of
“Get, Keep, Grow!”
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