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Why a buyer consultation is even more important today

By
Real Estate Agent with Realty ONE Group Advocates 484-237-2055 PA License - AB067198

Real estate is changing, it may not be obvious to everyone, but not only has the market changed the last few years with less inventory and rising home prices as well as rising interest rates but the rash of lawsuits is causing agents and brokers to examine how they do business.

Whilst you would never list a home without a listing contract, many agents have worked with buyers without a buyer representation contract. The plethora of lead sites, Zillow, Realtor etc., have caused many agents to turn up at homes to open the door to people they have never met and do not legally represent.

As a listing agent we ask questions, determine the motivation, and many other things of our potential client. But with buyers many agents have left representation slide and generally offered their services as "FREE" because they got paid by the listing broker.

Well, those services were never "FREE", the buyer was paying for them all along in the price offered for the home they were buying. Now, the system and method of payment may be changing and agents working with buyers will need to explain their value and what they do for their clients.

NAR did come up with a very handy printout called 105 More Ways agents who are Realtors are worth every penny of their compensation.

This may be useful as a guide for a buyer presentation but initially you need to build rapport the same as with a seller, asking questions and building knowledge about this potential client before simply asking them to sign a buyer agency contract.

Many first time buyers have no understanding of the process, or what is needed to buy a home in todays' market. As agents we need to show our worth by educating and explaining what is required. The client needs to gain confidence in us and in their knowledge of the process so they can make the correct decisions during the transaction.

What is this all worth? Well that is negotiable, guided by your broker who may set certain guidelines and if not by what you consider your value. I grew up in the United Kingdom, we have no MLS, no buyers agents and homes are sold for 1.25-2%, sometimes even 1% depending on value. Buyers contact multiple real estate agents to find the home that they wish to buy. They generally meet the seller when they go to see the house as the seller tours them around. Nowadays, sellers provide an energy audit of the home which they purchase and provide to buyers. This system is very different to the United States and buyers from other cultures and countries may not understand the value of a buyers agent initially.

It is our duty and requirement to explain that value and negotiate with these buyers how we are going to be compensated for the work we do on their behalf. 

Would you consider charging an upfront fee, like an attorney to represent a client, maybe this is a partial payment or retainer that goes towards the total compensation you negotiate. Would this make buyers more loyal, and remove the potential of buyers walking into new construction or an Open House without you and making a purchase. It used to be in Pennsylvania that $1,000 was submitted with an agreement of sale as a good faith deposit. Nowadays, that initial deposit is much more. Would buyers be willing to pay $1,000 as a retainer to their buyer agent towards the final compensation.

How are you going to handle the new real estate market moving forward? Is your broker considering this, or still holding on to the ways of the past. What if these current lawsuits require change, why not make changes now and get comfortable with the new normal before it is required.

Posted by

 

Nick Vandekar
Nick is a Tredyffrin Easttown Residential and Commercial REALTOR selling The Main Line, Chester, Delaware and Montgomery Counties.

Giving you the confidence to make
the right decisions.

225 W Uwchlan Ave
Downingtown , PA 19335
Office 484-237-2055
SellingTheMainLine.com
Mobile: (610) 203-4543 [call or text me]
Email Me

 

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If you are buying or selling on or around
Tredyffrin Easttown or along the Main Line, 
I can help you, contact me.

Comments(12)

Mark Don McInnes, Sandpoint-Idaho
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

Lots of changes in the wind no doubt and the dust not even near settling yet.  It will be interesting.  m

Feb 08, 2024 08:47 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Nick and I did not see this 105 points from Nar for a hand out and I need to take a look at it.  Yes so many changes in the last 5 years and we all need to learn and change ourselves.

Feb 08, 2024 09:43 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Hi Nick,
Being retired and knowing what I know (after 30 years of working as an agent, broker & property manager), I would NEVER sell or buy a home without the professional representation of a local experienced licensed agent. Period!

There is one additional aspect that is rarely addressed, and that is the legal blanket of protection that comes with working with a licensed, insured fiduciary.

Feb 08, 2024 10:03 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Mark Don McInnes, Sandpoint-Idaho very true, and it never hurts to be prepared.

Will Hamm it is a good thing to have to hand when you meet with a client for that buyer consult.

Carol Williams I agree with everything you say. I have a landlord who called me this week to say how happy his attorney is that he used me and I used a PAR lease as it gives my landlord client extreme protection. Made my client very happy.

Feb 08, 2024 11:56 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate (435) 632-9374 - St. George, UT
St. George Utah Area Residential Sales Agent

We have had the buyer broker agreement in place, (much longer than I have been an agent) and it must be signed by buyers before an offer is made on a property. The industry is always evolving and we need to keep up to best serve clients, Nick!

Feb 08, 2024 04:34 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Nick we have had Buyer's Broker Agreements for decades, when I did not trust the buyer I would pull it out.... and they ran the other way.... recently I get buyers asking me to send them the Buyer Broker Agreement, go figure times change:)Endre

Feb 08, 2024 10:14 PM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Nothing in life is free, so the people who think that someone should work for them for free usually don't end up with the best representation, haha.

Feb 09, 2024 04:54 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Wanda Kubat-Nerdin - Wanda Can! I understand, but in this new world, we need to discuss with our clients how we are going to get compensated and therefore that Buyer Agency Agreement is even more important.

Endre Barath, Jr. my old manager always said new agents had less trouble getting buyer agency forms signed than older, more experienced agents. Well, I think the public is more aware and having the conversation about compensation and bringing it to their attention makes the process more transparent.

Brian England very true, but it is nice when someone else supposedly pays for you, if you don't understand they would have no funds without your purchase.

Feb 09, 2024 11:06 AM
Roy Kelley
Retired - Gaithersburg, MD

It is going to be interesting to see the changes that will take place in the real estate industry. Much changed during my career which began with the opening of my first real estate office during the summer of 1961.

Feb 12, 2024 10:35 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Roy Kelley I think that the future is going to be interesting and challenging for many.

Feb 12, 2024 10:49 AM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse Advisor

Great post. In Manhattan we have only enacted a buyer's agreement as of Jan 1 of this year- so while we had heard of these agreements in other markets- it's a new process for us. I know there are a lot of agents that are freaked out. I started in this business as a buyers agent- and now that I have been in the business for awhile I am starting to see my past buyer's now become seller's and they are all coming back to me now. I am not concerned about this new process, as I have been able to provide buyers with demonstratable value. I am sure that a lot of the weak players will have a different experience if they can't adapt.

The NAR list, is a great summary. Despite the marketing, you don't need to be a Realtor for these items to be true. Since we use REBNY in Manhattan rather than NAR (our market is unique enough to justify an entirely different trade organization), the only agents that are also Realtors that I know of also work outside of Manhattan in areas that NAR is relevant. 

Feb 13, 2024 09:30 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Adam Feinberg that is very interesting, I would have thought you fell under a state organization and would have used Buyer Agency forms before now. As much as brokers encourage seasoned agents to use them and get them completed from the beginning, they often do not. New agents do not seem to have a problem. Interesting.

Feb 13, 2024 12:27 PM
Adam Feinberg

Nick Vandekar, 610-203-4543 I have only been in the business for about 8 years- so I don't know all the underlying reasons on how this came to be prior to our new environment. What I can offer is that REBNY, our trade organization, previously required in their standard contract, that commissions were split evenly between buyer agent and seller agent. Since most of our sales are co-op's- and the buyer's agents have lot more work pre-qualifying a buyer (bank pre-approvals aren't meaningless, but they don't have the same weight here as in other markets since co-op's tend to be far stricter than banks) and then once in contract, the buyers agent is responsible for creating the board application- which far surpasses what a bank would need to qualify a buyer. As a result of all these additional steps- it's kept commissions high and stable here. Once a buyer gets a sense of what is truly involved in purchasing here, I haven't had any issues with buyers straying (it's usually only in the early stages of looking where the buyers aren't as sticky) - so buyer agreements weren't deemed necessary.  With REBNY de-coupling buyers agent commissions, no longer requiring commissions get split 50/50-  only now are these agreements becoming the new norm. 

Feb 13, 2024 01:19 PM