Bettina's San Francisco

The importance of Timing

Bettina Clairmont CPA (Bettina Clairmont) — Wed, 10 Oct 2007 18:45:43 -0500

I am planning a marketing campaign for next year aimed at first time home buyers. I'm just not sure about the timing.

One side tells me to wait until March / April when the season really starts. However, knowing that most home buyers will select the first agent they call/meet I'd like to be that first agent. Therefore I'm tending towards starting my campaign earlier, mid January to be exact.

My thinking is that I'll be able to attract all those "new year's resolution" buyers, before they start looking at open houses and select an agent they meet at an open house. Is there a danger to starting that early in the home buying season? Could I be attracting all those buyers that have all these good intentions but run out of steam within a month?

What to do or not to do, that's the question ...

Client thinks there's something fishy about this house

Bettina Clairmont CPA (Bettina Clairmont) — Wed, 10 Oct 2007 18:03:31 -0500

I viewed a property for my clients, and thought it fit all their criteria. It's listed at $900k. When I mentioned it to them they told me that they had seen it two years earlier and really liked it but at the time they couldn't afford it. Now they can.

The thing is, as soon as they heard that the current owner bought it for $950k two years ago, they weren't interested anymore. Since the current owner put it on the market for less that what she paid, my clients think there's something wrong with the house. They won't even consider the possibility that the current owner might be in a difficult financial situation and has to sell, or that pricing it at $900k is just their pricing strategy, since properties in the right neighborhoods in San Francisco still sell above asking price.

Is it just me or are my clients setting themselves up for failure? I get the feeling that they think that since it's priced within their range, there must be something wrong with it. Is it time to let them go? I've worked patiently with them for a year.

The problem with electronic newsletters

Bettina Clairmont CPA (Bettina Clairmont) — Wed, 10 Oct 2007 09:59:41 -0500

I send out a monthly newsletter to all my tax clients and real estate clients by email. Every month I add another personalized article, rather than just choosing one from the list the newsletter company provides.

The way the newsletter arrives in my clients' email inbox is as a link. And that seems to be a bit of an issue. I have noticed that many of my clients don't click on the link. They feel overwhelmed with the flood of email they receive every day and just discard emails with links. The reason I know this is, because when I meet with my clients and mention my newsletter to them they give me a blank stare.

How do other agents get around this dilemma? Do you send out newsletter in print? Or do you use a newsletter company where the email shows the newsletter directly rather than showing a link to it?

Comments are greatly appreciated.

If you don't ask, you don't get

Bettina Clairmont CPA (Bettina Clairmont) — Fri, 05 Oct 2007 08:26:06 -0500

Whenever I browse other agents' websites I see that many of them have a page for testimonials for clients. Why didn't I? Frankly, while my clients are always very thankful for my services and express this freely to me whenever we see each other, none of them ever thought of putting it in writing.

So, this week I started emailing my clients to ask them if they could write one or two sentences about their experience in working with me, so that I could place these testimonials on my website. Everybody was more than willing to give me a recommendation. Now I'm collecting them all and will be uploading them to my website soon.

Here's a particular nice one I received from Dr. R.S. and Dr. J.H.: "To say that house hunting in San Francisco is difficult is an understatement. Bettina made the process of buying a house much more reasonable. She assuaged much of our anxiety by giving us an unbiased financial analysis of what we could reasonably afford, and then systematically took us through several properties over several weeks. She had already critically reviewed the properties before we saw them. It wasn't long before we found the house we wanted, and Bettina was very good at coordinating all the details that led to a very smooth process of inspection, acceptance of our offer, and closing of the sale. She was available 24/7, and her attentiveness to detail saved us many headaches, valuable time, and money. We wouldn't hesitate to recommend her and utilize her services again. We moved into our new house this summer and haven't looked back."

Just goes to show: you don't ask, you don't get!

Get your listing sold!

Bettina Clairmont CPA (Bettina Clairmont) — Mon, 01 Oct 2007 08:31:10 -0500

Want to get your listing sold? Here are a few tips that would help the buyer's agent getting their clients to view your home and have a positive experience:

1. Enter your open houses into the MLS by Friday - many buyer's agents run the open house report on a Friday to prepare their clients for the weekend.

2. Install a lockbox if possible - it's so much easier for us to show your listing, if we don't have to make an appointment.

3. Stage the property or leave it completely empty - either situation is generally better than a cluttered place. If the owners still live at the property, make sure they declutter. Many buyers can't look past the furniture and decorations of the owner.

4. Make sure the property smells nice. I don't know how many times I entered a property and was greeted by some weird smells. If I don't like it, my clients probably don't either.

5. Make the disclosure package available early - either online or in paper form at the property. My clients often ask me what's "wrong" with a property while we're viewing it. If I've already seen the disclosure pack I can confidently tell them about all issues.

Many thanks from your Buyer's Agents!

The things I learned from Real Estate (and not from the movies)

Bettina Clairmont CPA (Bettina Clairmont) — Sun, 30 Sep 2007 14:42:56 -0500

1. It's ok to fire a client. Don't forget, you're the boss.

2. Don't take sides - stay out of the discussions between husbands and wives or it'll bite you in the rear eventually.

3. Somebody has to lead - make sure it's you.

4. Be polite, but be firm - nobody likes a doormat.

5. Set deadlines - without them most people don't feel the need to act.

What have you learned?

Setting Goals

Bettina Clairmont CPA (Bettina Clairmont) — Sat, 29 Sep 2007 10:49:51 -0500

For my first full calendar year in real estate I had set myself a financial goal. I wanted to make a certain amount in Gross Commission Income.

Looking back at that first year I admit that at times I didn't think I could ever meet my goal, but at the same time used this seemingly unattainable goal to motivate myself. It worked. In my first year I actually exceeded my set goal by 10% !! Before the year was out I set goals for years 2, 3, 4 and 5. The goals are ambitious, but that's what they have to be --- a goal that's set too low leads to being lazy and complacent.

Here are some tips:

1. Set your goal high enough to motivate you, but not too high as to discourage you.

2. Your goal has to be measurable --- don't say, I want to be successful. How would you quantify this?

3. You have to set the time frame --- be specific. Set a date. "Soon" is not a date.

4. Examine setbacks --- why did they happen? How can you avoid them in the future?

5. Look back at the first goal period. What worked, what didn't?

6. Look forward -- set your next goal. Don't sit on your laurels!

And then, live a little ...

About advertising a service, not a listing

Bettina Clairmont CPA (Bettina Clairmont) — Sat, 29 Sep 2007 10:36:12 -0500

I don't have any listings, but rather I provide a service to my clients namely to give them a free financial and tax evaluation before they start looking for a home. It's designed to help them find their comfortlevel of how much they can afford, and calculate what their tax break will be.

I'm working on trying to design an advertisement that will convey this service and the value this service represents to buyers. At the moment my ad looks pretty much like this: Text on the top, with my picture, then a few pictures of houses where I represented the buyers on the purchase. Who else out there is advertising their service rather than a listing and has had good experience with something similar?

I'm planning to run this in one of the local glossy real estate magazines.

FREE Tax / Financial Evaluation for potential Home Buyers

I will calculate your maximum purchase price, your itemized deductions, your tax savings, and your new take home pay and compare it to your current situation. This will help you decide whether buying a home is right for you. You will receive a printout of all calculations at various purchase prices for you to take home to make your decision in your own time. When you're ready to start looking for a home, come back to see me and I will help you find the place that meets your needs.

Talk about buyer's market creates wrong expectations

Bettina Clairmont CPA (Bettina Clairmont) — Fri, 28 Sep 2007 17:47:38 -0500

While it is a Buyer's Market in virtually all parts of the country, it doesn't feel like it in San Francisco, at least not in the halfway decent neighborhoods. Only, my clients don't seem to believe it.

A couple who is unfortunately completely unrealistic about what they can afford, and what they think they can buy a particular property for just won't listen to me. They watch TV and hear report after report about the housing crisis and that you can buy a home for way below the asking price and get a real bargain. I show them the comps in the San Francisco neighborhoods they are interested in and the comps don't support those reports. On the contrary, the good properties in the good neighborhoods still get multiple offers at or above asking price. Yet, they want me to put in offers at way below asking price, and even then they can barely afford what they are bidding on the adjustable rate mortgage they qualified for.

What should I do with them? How can I talk sense into them? I've done calculations for them showing them exactly how little money after tax they'd have to live on if buying the home of their dreams, but they don't seem to understand that they are exactly doing what so many others did before them: get into a house they can't afford. Do the examples of other poeple not teach them anything?

What would you do in my situation?

Bookmarking Blogs

Bettina Clairmont CPA (Bettina Clairmont) — Wed, 30 May 2007 15:18:17 -0500

One of the comments I recently got on one of my blogs was, that somebody was just "parking" there to see what other comments I would get.

However, there's a much better way of doing this. Whenever I see a blog that I want to keep for reference purposes I bookmark it by clicking on BOOKMARK just before the comments section. Blogs just cycle through so quickly that you just won't be able to find them again unless you bookmark them. Then you can easily access them from your MY HOME page anytime you want to. It's a great tool to use.

A day in the life of an Exclusive Buyer Agent

Bettina Clairmont CPA (Bettina Clairmont) — Wed, 30 May 2007 09:45:16 -0500

As an Exclusive Buyer Agent with my own business, I have a lot of freedom of how to organize my day. Here are some of the things I do on a typical day:

Check my emails and weed out the junk mail folder --- careful, sometimes a legitimate email from a genuine lead will creep in here.
Look through my auto-prospecting folders to see which properties are new and are worth previewing for my clients
Spend some time on marketing issues such as updating areas of my website, drafting a new ad or flyer or post flyers in the neighborhood or replenish business cards in prominent areas
Visit several properties that came up on my clients' searches -- I love it when they are on lockbox, so I can go whenever it pleases me
Check out disclosures for properties that meet my clients' needs --- nowadays it's so easy because most of them are available online. I like to check out disclosures before I actually visit the property with my clients, so that I can already point out issues
Contact my clients to let them know which properties are worth looking at and arranging time with them
Visit properties with my clients
Meet new prospects for their free financial and tax evaluation

What I love about my days is that they are so varied and no day is the same.

Unique Visitors vs. Visitor Counter

Bettina Clairmont CPA (Bettina Clairmont) — Tue, 29 May 2007 19:18:28 -0500

I'm really confused. I have a visitor counter on my website. I also have webstatistics I access from my website provider which shows me "unique visits".

What I don't understand is, for example my visitor counter would go up by 5 in a day, but my unique visitors on my statistics would show that I had 45 for the day. How many people really came to my website? Who's got experience with this?

Poaching Clients

Bettina Clairmont CPA (Bettina Clairmont) — Tue, 29 May 2007 18:55:45 -0500

Recent comments from my clients made me listen up: other agents are out there to poach clients.

Generally I don't have a written buyers agency agreement with my clients, because my relationship with them is based on trust. Only sometimes it makes me feel a little uneasy.

Lately when my clients have been going to open houses they have been getting the same question: "Are you working with someone?" And when my clients then dutifully say that they have an agent in San Francisco, they figure that the conversation would end then. But no, it doesn't.

See, my clients are looking for property in Marin County, just north of San Francisco, where I am also a member of the local Association of Realtors. But somehow the other Realtors feel that I'm encroaching on their turf. They tell my clients that they should be using a "local" Realtor and that I would not be able to find them the right property.

When my clients asked "Why?" a very surprising response came back from a perplexed Realtor who obviously hadn't expected the questions: "Well, we use different forms here!"

The price of Sun

Bettina Clairmont CPA (Bettina Clairmont) — Fri, 25 May 2007 16:24:59 -0500

Sitting in the fog of San Francisco's Inner Sunset looking out of my office I wonder whether it's sunny in Noe Valley. And it could be. San Francisco is one of those amazing places with many microclimates. And these microclimates influence the price of property in the city.

In Noe Valley, where it is generally much sunnier than in other areas of the city, median prices are much higher than in the Outer Sunset, where you could be at the beach --- that is if you could see it through the thick fog.

Here's the comparison of Single Family Homes sold in April 2007:

Noe Valley (15) Median Price $1,437,933

Outer Sunset (7) Median Price $835,794

Looks like the price of sun in April was $602,139.

Greetings from the fog ...

San Francisco MLS adds cool new features

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 24 May 2007 12:34:51 -0500

The San Francisco MLS recently added some cool new features that are now available to clients.

If you currently have searches set up through me (or any other SF Realtor) and receive automatic emails with new listings you will have received an email from your Realtor inviting you to access your own "Client Portal". Your Client Portal consists of three tabs: Newly Matched Listings, Saved Listings and Rejected Listings. You can navigate through these tabs and listings with the click of your mouse, save listing or reject them. You can even make comments on these listings which will then be sent to your Realtor.

Your Client Portal is constantly being updated with new information. For example, if a listing sells, the status of the listing will update to "sold" and you will be able to see what the sale price was - just click on "view details" and then look for the Sale Price (SP) in the top left hand corner. This is an extremely useful feature if you try to keep up to date on market movements, or even if you're just curious about how much a property sold for.

Save the link from the email in your Internet Favorites and click on the link whenever you want to access your Client Portal.

If you currently have no searches set up, but would like to watch a particular segment of the market, such as your own neighborhood or a neighborhood that you're interested in, I'll be happy to set up a search for you and send you a link to your own Client Portal. Just contact me.

Marin is new stomping ground for San Francisco Real Estate Agents

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 24 May 2007 12:27:54 -0500

Finally a reciprocal agreement has been reached by the San Francisco MLS and the North Bay MLS to give brokers in both areas access to each others listings. This is great news for San Francisco agents who previously had to refer their clients to other agents once their clients were ready to move out of San Francisco and up into the relative tranquility of Marin.

What does this mean for buyers? A buyer who's still unsure about whether to buy in San Francisco or Marin now only has to engage one real estate agent in the search process. No more juggling between two agents! Having two agents, one in San Francisco and one in Marin, often meant that none of the agents really put a lot of time into finding a suitable property for the buyer, because all this time spent could result in nothing if the buyer finally decided to buy in the area the agent didn't service.

This problem has now been eliminated. It will of course still take some time for many agents to get familiar with the additional market areas, however all necessary tools are now at their fingertips.

I personally am already starting to familiarize myself with Sausalito, Corte Madera and Larkspur and will add more areas according to my clients' needs. If you are ready to start your home search, contact me and we will start with a complimentary financial and tax evaluation to put you on the right financial path.

MLS provides great map for San Francisco Buyers

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 24 May 2007 10:34:18 -0500

The San Francisco Multiple Listing Service provides a great map for home buyers to help them narrow down their search to specific areas. Whenever I meet with a new client for the first time I use these maps to figure out exactly what area my buyers would like me to search for property for them.

Here's the link:

http://www.sfarmls.com/docs/areamaps.htm

Does your MLS provide these maps?

Direct mailing - results?

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 17 May 2007 08:40:19 -0500

Has anybody used www.usadata.com and can comment on how good their mailing lists are? It found it on the internet and it looks like you can really drill down to the type of address you want, ie. specify household income etc. Does anybody have experience with mailing lists and can give me an idea of their effectiveness? Return on investment?

Real Estate is less transparent in Germany

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 17 May 2007 08:35:04 -0500

As many of those who know me know, I was away for three weeks visiting my native Germany. While there I couldn't resist to probe my friends and family for information on German real estate. What I found made me appreciate the US system, which is much more transparent than I previously thought.

In the United States real estate brokers cooperate by placing their listings on the Multiple Listing Service (mls) of their area, thus making their listings accessible to all other brokers who might have suitable buyers for these properties. In exchange the listing brokers shares their commission with the broker who finds the buyer.

In Germany no such system exists. Brokers do not cooperate with each other. Therefore, if you are trying to buy a house in Germany, you will have to visit many different brokers because each of them will only show you their own listings, thus limiting the number of homes you can see. In effect you'll never be able to see a true picture of all the properties for sale in your desired area.

It took my cousin and her husband over two years to find a house in a suburb of Munich because each broker would first show them their stale listings and pretend their was nothing else on the market. Absent a comprehensive listing of properties for sale, it took them two years and many trips to many different brokers to finally see some decent properties and then their dream home.

While a Multiple Listing Service might not guarantee you ever finding your dream home, it makes the likelihood much stronger since the service is accessible to the public and a broker can't hide any properties from you.

The next shocker in German real estate was the commission: 7%. In California the commission in now generally 5% and paid entirely by the seller. In Germany, the buyer pays half of the commission, as does the seller. The broker always represents both sides of the deal. I'm not sure how comfortable I'd feel about being represented by the broker who also represents the seller. Whose side will he be on? Will he have my best interests in mind?

But the final straw was what my little sister told me: a listing broker arranged for her and her husband to see a house. The problem was, he had trouble finding it. My sister found out quickly why: he had never even seen the property! The seller had visited him in his office and asked him to sell his house. The seller had also told him how much he wanted for the property, and the broker promptly advertised the property without ever viewing it. Well, this wouldn't fly in California, where a broker has to have viewed the property and prepared the disclosure documents for it. Disclosures are also unknown in Germany and it is still truly CAVEAT EMPTOR - Buyer beware.

Is it worth taking the Home Office Deduction?

Bettina Clairmont CPA (Bettina Clairmont) — Thu, 17 May 2007 08:32:19 -0500

Many taxpayers nowadays have home offices and often work from home. While it is relatively easy for self-employed individuals to qualify for the home office deduction, employees often have difficulties qualifying for it.

In order to qualify for the deduction and lower your tax liability, taxpayers must use part of their home (owned or rented):

- exclusively and regularly as the principal place of business

- exclusively and regularly as a place to meet or deal with patients, clients or customers in the normal course of the trade or business

If the taxpayer is an employee, the home office must also be for the convenience of the employer, not the employee. This is often the most difficult rule to meet.

To meet the exclusive use test, a taxpayer must have a specific part of the home (not necessarily an entire room) set aside and use it regularly and exclusively for the business. However, if the taxpayer uses this area also for personal use, even only occasionally, the home office deduction is denied.

Once you qualify for the deduction, you have to make sure you know which expenses are allowed and up to what amount. The home office deduction is limited to income from the home-based business, but any allowable expenses in excess may be carried forward to future years.

The order in which to apply the allowable expenses is as follows:

- mortgage interest, real estate taxes and qualifying casualty losses (or rent if property is rented)

- direct expenses such as repairs to business equipment and supplies

- insurance, utilities and general repairs

- depreciation

Any depreciation taken as part of the home office deduction will have to be recaptured upon the sale of the property, ie. in the year of sale it will become taxable income.

Self-employed individuals take their home office deduction on Schedule C for their business, however, employees will have to report the home office deduction on Schedule A (Itemized Deductions), where they are subject to a 2% floor of adjusted gross income. This makes the deduction much less valuable than it would be to a self-employed individual. Employees who don't already itemize their deductions will reap very little benefit if any from the home office deduction.

If you are in doubt whether you qualify for the deduction, please contact your CPA.

The Ins and Outs of Rental Properties - from a tax standpoint

Bettina Clairmont CPA (Bettina Clairmont) — Tue, 15 May 2007 15:55:08 -0500

Imagine you are suddenly offered a job in another city, but don't want to sell your house or condo just yet. Should you rent it out for a while? The answer to this question depends not only on your feelings about becoming a landlord, but also on financial and tax considerations.

First of all, rental income is taxable on Schedule E of your individual tax return. Luckily, there are many deductions you can legitimately take:

Mortgage interest
Property taxes
Condo/Homeowner's fees
Insurance
Utilities (if you pay them instead of your tenant)
Repairs (but not improvements to the property)
Management fees (if you use an agent to rent out the property)
Other incidental expenses related to the property and its management

A word about depreciation

The IRS states that you may depreciate your residential rental property over 27 ½ years, which is a little over 3.6% annually. Your depreciable basis is your purchase price, improvements or renovations you've done since you purchased the building. However, the land value of your property is not depreciable. By the way, when they say "may", they mean "must", even if the depreciation does not give you a current tax benefit.

Please keep in mind that once you sell the building you will have to recapture depreciation as income subject to income tax of up to 25% in the year of the sale.

Real Estate Rental Losses

Since losses from real estate investment have long served as a tax shelter for the rich by reducing their taxable income, the IRS changed the law on who may take how much in losses on rental properties. If you actively participate in the rental activity, which the IRS clarifies as owning at least 10% of the property and having substantial involvement in managing the rental, then the IRS allows an annual loss of up to $25,000 against your ordinary income. This loss is subject to a phase out, ie. the loss allowance of $25,000 is phased out by 50% of the amount by which your Modified Adjusted Gross Income (MAGI) is above $100,000. The allowance is completely phased out at $150,000 MAGI.

Especially in places like San Francisco you are very unlikely to command rent, which covers all your expenses, and will likely produce a rental loss. Any losses not used in a tax year will be carried forward and may be offset against gains in future years or gains from other passive activities in the same year.

Whether or not to become a landlord depends also very much on your own feelings about the subject. Being a landlord can be a great experience if you have a proactive management company, which takes the day-to-day worries off you. However, if you intend to manage the property yourself and land the tenant from hell, you can step into many legal and financial problems. Don't make this decision lightly, but weigh up all pros and cons first. And as always, consult your financial advisor if in doubt.

Check your Withholding Taxes before Buying a Home

Bettina Clairmont CPA (Bettina Clairmont) — Tue, 15 May 2007 11:38:19 -0500

Many people assume that as soon as they buy a house their taxes will decrease dramatically. This is not necessarily the case. What are the components that will reduce your taxes, ie. what can you itemize?

1. Mortgage interest on a loan of up to $1m and a home equity loan of up to $100k

2. Property taxes

3. State taxes

Neither condo fees, homeowner's insurance, nor repairs or maintenance are deductible. Of course there are other deductions, but we'll just concentrate on the big ones here.

"I pay a huge amount in mortgage interest, property taxes and state taxes. So why do I still not get as high a tax deduction as I thought I would?"

Reason 1: Because you would have gotten a standard deduction anyway - as a married couple this is $10,000. Therefore your first $10,000 of deductions don't make a dent in your taxes at all.

Reason 2: The dreaded AMT. Under the AMT neither property taxes nor state taxes are tax deductible. For people who have high income and high deductions (and therefore are prone to fall into AMT) this means that only their mortgage interest will actually reap any reduction in tax for them.

It is therefore optimistic to assume that if you are in the 25% Federal tax bracket and the 9.3% California tax bracket you'll get 34.3% of tax back for every dollar you spend on mortgage interest and property taxes. Much more complicated calculations are necessary.

Before purchasing a home, it is also important to establish whether your withholding taxes are accurate. In many cases, where both spouses work and have high salaries, current withholdings are often not sufficient to cover their tax liability, because jointly their income moves them into a higher tax bracket than their withholdings assume.

Therefore withholdings taxes should be reviewed before you purchase a home in order to make correct assumptions as to the tax savings a home purchase will really provide you with.

So what should you do? Before buying a home, please contact me to go over your taxes with me and have me provide you with a realistic estimate of what you can afford and how it will change your taxes and your after-tax income.

Buying a home is probably the largest purchases you'll ever make - shouldn't you get some advice before taking a leap?

What can an Exclusive Buyer Agent do for you?

Bettina Clairmont CPA (Bettina Clairmont) — Tue, 15 May 2007 11:34:55 -0500

Traditionally real estate agents have always represented the seller in real estate transactions. By law the listing agent owes fiduciary duties to his client, the seller, and has to get the best price and terms for his client. This often comes at a price for the buyer, namely that the listing agent may reveal anything about the buyer to the seller, including the maximum price a buyer is willing to pay. Revealing such information to the seller reduces the buyer's negotiating power. The buyer is treated as a customer, not a client.

So what is a buyer to do? A buyer should always seek representation by his own buyer agent. By entering into an agreement with a buyer agent the buyer becomes the client of the agent, who then owes the client fiduciary duties. These are:

· Undivided loyalty • Confidentiality • Lawful Obedience • Due Diligence • Protection • Counsel • Negotiation in the buyer's best interest

The buyer agent will keep the buyer's information and financial situation confidential, and will share all information he or she has about the seller with the buyer. This is the exact opposite of what the listing agent will do. By protecting the buyer's bargaining power the buyer agent is able to truly negotiate in the buyer's best interest.

While a listing agent has to point out any material facts about the property, the buyer agent will go one step further and point out things that, while not material, might influence the buyer's decision to purchase or not to purchase. These may be: traffic patterns, noise and parking shortage in the area, lack of sunlight or excessive fog, or anything else that the buyer might consider an obstacle to the purchase of the particular property.

A buyer agent will be the advocate of the buyer. But how about going one step further and hiring an Exclusive Buyer Agent?

An Exclusive Buyer Agent works for a brokerage which does not list properties and never represents sellers. Using an Exclusive Buyer Agent has the added advantage that the agent will never steer the buyer towards in-house listings, thus eliminating potential conflicts of interest. Buyer agents often require the buyer to sign an exclusive right to represent agreement. It establishes the duties of the agent as well as the compensation structure.

So will it cost more if you use an Exclusive Buyer Agent? No. In 95% of all cases the buyer agent still gets compensated by the seller through a commission sharing agreement established by the Multiple Listing Service. The only time where the buyer might owe a commission to the buyer agent is when dealing with a For-Sale-by-Owner property, where the seller is unwilling to pay a commission. However, lately many sellers who sell their property without a listing agent have recognized the importance of offering a commission to a buyer agent. The instances in which the buyer needs to pay a commission to a buyer agent therefore have become rarer.

If you want to find out more about Exclusive Buyer Agents and their Code of Ethics, please visit: www.naeba.org

I am currently the only San Francisco member of NAEBA.