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.
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