Know Your Buyer’s Agent Value

Recent headlines have sensationalized the compensation of real estate agents, specifically buyer’s agent value. Silly lawsuits mistakenly accuse every brokerage of price fixing. All kinds of pundits are predicting the demise of the real estate industry. And the media epically failed to convey the simple fact that all commissions have always been negotiable.

Fortunately, this is a great opportunity for professional real estate agents like me to educate the consumer and show our value.

Our Services Are Not Free

When you’re shopping for a house, and you’ve asked a real estate agent to help you find that dream home, for the best price, would you expect that agent to work for free? Would YOU be willing to spend time, expertise, and gas without being paid?

Of course not!

So, what exactly goes into guiding the home buyer through the search and purchase process? I’ve compiled a list of all of the ways we help our buyers.

Buyer’s Agent To Do List

The first part about counseling and preparing the buyer is from the National Association of Realtors (of which I am a proud and accredited member). From the house tour to the closing is my own check list. Hopefully by the end of it you’ll say, “HECK YEAH, Marj deserves every penny she’s asked for!”

Home Buying Counseling

• Prepare the buyer for executing a buyer representation agreement
• Explain agency relationships to the buyer and get state required legal consent to represent, if needed
• Inform the buyer of working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s
  business policies

Building a Relationship

• Learn the buyer’s wants and non-negotiable needs
• Understand the buyer’s budget and what will be needed financially
• Help the buyer understand what property their chosen budget will buy
• Consider having the buyer fill out a home buyer’s checklist
• Assist the buyer in examining how much they can afford to spend
• Provide quality lender choices (at least 3 mortgage brokers the agent has previously worked with)
• Partner with the buyer to locate suitable properties for consideration
• Set up an automated email alert system through their local MLS broker marketplaces that immediately notifies
  the buyer of properties that fit discussed requirements
• Match the buyer’s needs with available property
• Constantly re-evaluate buyer’s needs and refocus property showings to fit those needs
• After ensuring the buyer understands what is done for them, how it is done, and the benefit to them, obtain
  signatures on the buyer representation agreement
• Explain how compensation is paid, who pays it, and what the buyer’s options are for paying it

Educating the Buyer

• Communicate the working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s
  business policies
• Explain Federal and State Fair Housing laws
• Explain what to look for in applicable property disclosures
• Reassure the buyer that their personal information will remain confidential
• Inform the buyer that you will always disclose all known material defects
• In accordance with state law, provide information on checking the sex-offender registry and crime statistics
  for the neighborhood
• Discuss available resources that the buyer can check to learn more about prospective neighborhoods

Preparing the Buyer

• Explain the timeline for house hunting, mortgage approval, and closing
• Explain the local market and how it impacts the buyer
• Show statistics on what percentage of list price sellers in the area are currently receiving
• Inform the buyer on what home features are popular
• Identify current average days on market
• Share the dangers of using the price per square foot to figure home values
• Explain the concept of absorption rate and how it impacts the buying process
• Indicate current listing months of market inventory
• Share estimated potential out-of-pocket costs to complete the transaction
• Assist the buyer in analyzing the loan estimates
• Refer to Qualify the buyer for financial ability to purchase
• Help the buyer account for the complete costs of homeownership
• Share listing info and agent contact with lender
• Assist in comparing different financing options
• Help the buyer select for viewing only those homes that fit their needs
• Proceed in showing homes that fit the buyer’s must-haves
• Caution the buyer on posting information to social media
• Review the sample sales contract so the buyer is prepared when it comes time to make an offer
• (Source: © 2024 National Association of REALTORS®)

Prep for House Tour / Comparative Market Analysis / Offer Research

• Call selling agent for backstory
• Download property field card
• Review property history, seller circumstances, outstanding mortgage, flood plains
• Research MLS trends for area
• Create neighborhood comps from multiple sources
• Create itinerary, request and mange showing appointments (multiple properties)
• Give property feedback to listing agents

Client Manager / Making An Offer

• Send signed Buyers Rep packet to transaction manager
• Download property disclosures and cue up signature packet
• Get sellers wants and needs besides price (timeline, personal property left behind, repairs/As Is, Buyers Agent compensation, Appraisal) 
• Write up Purchase and Sale Agreement, Riders, and Addendums
• Get signature of buyer
• Get authorization for dual agency if needed
• Get specific property pre-approval/qualification letter from loan officer or proof of funds
• Get Buyer’s Attorney info
• Submit offer; trust but verify receipt

When An Offer is Accepted

• Send signed docs to listing agent
• Share executed docs with transaction coordinator
• Help setup Inspection
• Send Attorney info to Seller’s agent
• Get Deposit Checks to Seller’s agent or attorney on time

Keep Sales Process Moving 

• Go to inspection (2-4 hours)
• Negotiate inspection asks with seller’s agent
• Keep on top of inspection repairs, mortgage contingency, appraisal order, and closing dates, and file appropriate paperwork

Closing

• Prepare closing gift / flowers and card for buyer and seller’s agent thank you.
• Set appointment with seller’s agent for walk through
• Accompany buyer to closing

How Should a Buyer’s Agent Get Paid?

In Connecticut, as per our Department of Consumer Protection, all buyers are required to have representation (or paperwork saying they’ve denied it). Since 1996 sellers in CT have been offering to pay for that representation, essentially as a finder’s fee. That offer has never been a requirement to sell property, and of course, has always been negotiable.

But it’s a misleading to say the “seller pays the commission.” The seller isn’t really “paying” anything – the buyer is the one paying the seller and writing all the checks! The seller might have their net proceeds reduced, as the compensation comes off the top of the transaction. But it’s not like the buyer’s agent fee is coming out of the seller’s bank account.

Also keep in mind, a home sold through a listing agent, to a buyer with representation, typically sells for more, and more quickly, than those without.

In the end, the best offer is above what the seller is looking for and covers compensation for both the listing and buyer agents.

The Future of Buyer’s Agent’s Value

The more things change the more they stay the same. When it’s a seller’s market, buyers may have to include their agent’s compensation in their closing costs to stay competitive. When it’s a buyer’s market, sellers will offer it as an enticement. Whether the market is up or down, a professional buyer’s agent will always be able to communicate and earn their value.

Need an Experienced Guide?

I’m never too busy for you or your referrals. Please call me at 203-812-9654!