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I'm an Exclusive Buyer's Agent: My business model wasn't chosen to maximize my income.

By Paul Howard

Real Estate Broker/Owner 8639604

March 29, 2009 02:25 PM

To many in the real estate industry my chosen way of operating my real estate brokerage business makes no sense - at least financially. Consumers that buy homes understand and embrace it -eventually-but don't realize the financial sacrifice that comes with the territory.

Comments from agents:

"You are giving up half the business."
"If you don't have listings - how do you attract buyers?"
"What do you do when people want you to list their house?

Comments from home buyers:

"You are an EXCLUSIVE buyer agent - right?"
"How do you get paid?"
"I never knew that real estate companies representing only buyers existed."

The half of the business I (and other exclusive buyer agents) give up -the sellers - is the half whose interests are in conflict with the half we have chosen to represent - the buyers.

All informed agents know that if a real estate COMPANY represents both the buyer and the seller in a transaction, that company is acting as a dual agent - and as long as the buyer and seller agree, it is legal to do so. Well, it is legal in New Jersey - but not in all states. All agents in New Jersey represent the side or sides that their company represents. That makes for a lot of dual agents.

Exclusive buyer agents (EBAs) take representation very seriously - so seriously that they are willing to make a financial sacrifice to be able to work for their CLIENT without the risk of dual agency. No agent can give full representation to a buyer and a seller in the same transaction - no matter how 'comfortable' that agent has made them feel. Indeed, given that for many agents a major source of business is listing the homes of their friends and relatives, they may find even acting as a dual agent impossible, to say nothing of acting as a buyer's agent.

I opened my business (NJHomeBuyer.com Realty) at the Tarragon Office Center in Cherry Hill, NJ in 2002 as an exclusive buyer brokerage. I can't say that it has been easy, but, we are still here and making some progress. Like most exclusive buyer offices, a major part of my business comes from referrals from past clients. The only other exclusive buyer brokerage with an office in the state of New Jersey, that I know of, is Buyer's Advisors in North Jersey. It is clear that the industry, as a whole, doesn't place idealism and consumer advocacy over financial interest, so I don't expect a rush to copy my business model any time soon.

There are only about 300 exclusive buyer offices nationwide. Still, that I have been able to survive 7 years is an indication that the business model is viable for someone that believes in it in their heart.

Hopefully, as more buyers learn to distinguish exclusive buyer agents, who have no potential for dual agency, from agents in companies that list homes, companies like mine will thrive - not merely survive. As more buyers learn of the existence of EBA brokerage services the demand will grow - hopefully leading to wider adaption of Exclusive Buyer Brokerage as a business model - and far better representation for home buyers.

As a home buyer searching for that perfect home, having an advocate that is REALLY on your side (and won't all of a sudden become a dual agent) can offer a lot of peace of mind. The decision to buy a particular home really does affect your life. It impacts the people you will meet and become friends with. The cost and future appreciation of your home has a great impact on your lifestyle and what you can afford to do as you live your life.

If you would like the peace of mind that an exclusive buyer agent can offer and you are looking for a home in South Jersey - contact me, interview me, ask me for references, ask me how I'm different, ask me how I get paid. If you like the answers - let me work for you to help find your home.

Paul Howard, Broker
NJHomeBuyer.com Realty (member of NAEBA)
Cherry Hill NJ 08002
856-488-8444
Paul@SouthJerseyHomes.com

Follow me: twitter.com/paulhoward
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Laura Degiovanni

Home Buyer's Agent of Ann Arbor - Milford, MI

Milford Exclusive Buyer Agent

Paul,

I love your post and I was just thinking about this exact thing over the weekend—wondering if the question we (EBAs) should ask buyers who are agent shopping is "Why do you think I would choose to give up fully half of the potential business out there—especially when it tends to be the easier half?” Most agents (if they are honest) would agree that working with buyers is usually more time consuming than working with sellers....

I need to earn a living and I love being a REALTOR but morally, I can only work with one side or the other. Listing homes and working for sellers is a perfectly honorable job and the best listing agents are great salespeople. Admittedly, I am a terrible salesperson—but I am a great buyer's agent...and thankfully, I don't need to "sell" homes to my clients. The main problem I have is that I still need to "sell" my service to potential clients....

So, how do we distinguish ourselves from every other agent out there who calls themselves a “Buyer’s Agent”? People seem to be MOST suspicious of those who claim to be morally superior to others—so where does that leave those of us who really believe that home buyers deserve the same representation that sellers have always enjoyed? How do we prove that we usually make LESS money when we do our jobs well—and that that is OK with us?

I can’t think of ONE selfish reason for giving up half of our money making potential and choosing to work with buyers only. Am I missing something? Buyers, what worries you about our business model? Maybe we should ask “buyer’s agents” from traditional agencies why they DON'T choose to work out of an Exclusive Buyer’s Agency....

Apr 20, 2009 11:41 AM

Paul Howard

Cherry Hill, NJ

Paul Howard Realty, 856-488-8444

Great response Laura: Great minds right.

Seriously - I'm in it for the money (and with a clear conscience). I don't think buyers are really worried about our business model- I think they don't completely realize the implications of it - the benefits - for them.

Partly that is because you have so many agents in traditional brokerages misleading consumers with web addressess and website content that imply they are going to work with them as a buyer agent and that the consumer can count on that.

Unless the brokerage office is an exclusive buyer brokerage that meets the requirements of a national organization like the National Association of Exclusive Buyer Agents (mine does and so does yours - I checked) the consumer definitely can not count on buyer representation because the office is representing sellers and trying to get the list price for the homes they listed for a seller, from a buyer that expected -and did not get - representation.

Laura, when buyers seem skeptical that you will work to get them a lower price resulting in a lower commission - give them an opton with a commission structure that enables you to make more when the sales price is less than list. I give this option then tell them it is a waste of their money because I'm not motivated by it. This business would be no fun at all if I couldn't get my buyers a deal.

I see signs that home buyers are getting off the fence and I think part of that is the realization that we are near the bottom with prices and interest rates both. AND, the realization that if the first time buyers wait till the last minute to try and collect the $8000 first time buyer tax credit - they have till the end of November to settle---they may end up in a rush and not get the best deal on price while competing with other buyers doing the same thing.

Apr 20, 2009 01:06 PM

Nannette Martin

RE/MAX Integrity - Salem, OR

Your Purple Shoes Real Estate Pro at RE/MAX

Excellent post, Paul and great comments from Laura.

We do face a challenge in distinguing ourselves as Exclusive Buyer Agents. I'm working hard in that area. Coming in as a consumer who had a bad dual agency experience, I really understand the issue from the clients point of view. Most consumers are not even aware there is a problem and they haven't even heard of Exclusive Buyer Agents.

I believe we can also educate sellers as well and I have done that on my website. We miss a lot of the market because we do not believe we can help sellers. But we can refer them to ethical, professionals that we have worked with and gain a referral fee. We can educate them on the risks that dual agency presents to them as well.

When I list my home, I will stipulate the listing agent can't represent the buyer. As soon as buyers AND sellers know there is a better, more pure way to be represented, they will demand it.

May 05, 2009 05:55 AM

Nannette,

NAEBA (www.naeba.org) is doing a lot this year to push agency disclosure legislation on a state and national level. It helps that John Sullivan (NAEBA's president) is in Washington and has easy access to the hill.

It also helps a great deal when folks like you speak out in blogs and websites. The message is being heard.

Have a great year. (by the way, you might find some great social media tips at naebaforums.com) - and you can always contact me since you are a memeber.

May 05, 2009 08:39 AM

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