In the shadow of the mega franchises like Century 21 and Re/Max, the nation's exclusive buyer brokerage franchises also appear to be growing at a healthy clip, buoyed not only by the strong housing economy but, they say, by an American public that is moving nicely along a learning curve about the benefits of exclusive representation.

Bob Harple, president of the Sunrise, Fla., based Fidelis franchise, reports his company now has 21 franchises open and operating in 12 states.

Fidelis' chief rival, The Buyer's Agent, based in Memphis, Tenn., has 68 offices in 27 states.

Leaders of both companies say their growth this year has been extraordinary. And if National Association of Realtor statistics are accurate, both can expect continued success.

Although currently between the two EBB franchises there probably are fewer than 500 brokers and sales associates, the NAR's recent demographic survey of itself indicated at least 53 percent of its 730,000 members practice some form of buyer agency and about 8 percent -- almost 60,000 members -- say they practice buyer agency exclusively.

Both of the EBB franchises credit, at least partially, a wiser public for the rise of exclusive agency.

"Because this paradigm shift toward separation of agency relationships in the industry is consumer driven, Fidelis will continue to grow at a very rapid pace," says Harple.

"Industry trends point to the eroding value of the listing side in the real estate transaction due to technology and the rapid expansion of the Internet. The future in real estate franchising is in the growth and value of specialization on the buyer's side -- a group largely ignored until now."

Tom Hathaway, president of The Buyer's Agent, also foresees the Internet eroding commissions on the listing side.

"Consumers know the market is hot," Hathaway said. "And they are smart enough to know they can list their own homes on the Internet -- on these FSBO sites -- for next to nothing, so they also know that listings agents aren't paying much to market their homes on the Internet. Listing agents are shaving commissions because of it.

"Instead of the traditional 6 or 7 percent commission, in a lot of areas the market is 4 1/2 or 5 percent."

Exclusive buyer brokerage is a relatively modern invention, with the oldest franchise -- the Buyer's Resource -- first opening its doors only a dozen years ago.

At first, the exclusive franchises -- which represent only home buyers -- had a hard time growing because traditional real estate firms were reluctant to work anyone who was not a subagent of the listing agent.

Over the years, however, subagency has fallen from favor both because of its inherent legal liability and because many licensees actually prefer the partnership implied in working with buyers as their legal representative.

Nevertheless, most real estate practitioners have been reluctant to move into exclusive buyer brokerage -- where agents never take listings -- because they have been fearful of being able to survive.

In the past few years, however, exclusive buyer brokerages have been turning in impressive transaction records -- closing up to 95 percent of their clients and being involved in 12 to 18 transactions per year. Overall, traditional sales associates say they are involved in an average of about five transactions per year.

Published: July 26, 1999

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