A Realty Times reader wants to know if buyer's agency is a good way to distinguish himself. With a slowing real estate market, buyer's agency is an excellent alternative way to do business.
Dear Blanche,I found several of your articles while researching Buyer's Agency on the internet.
I am considering Buyers Agency as a way to market myself. I am interested to know what kind of growth there has been in the recent past. Is there a market for this service currently or is there too much headwind created by agents who see Buyer's reps as "the enemy"? If there is a market, what are the keys to tapping it and who are the players?
I have 30 years experience in real estate. Beginning with construction contracting, then Home Inspection, Appraisal, Expert Witness, Environmental Site Assessment and finally rental property management. I have most enjoyed representing buyers, whether as a home inspector or Realtor. My experience and desire has led me to consider developing a Buyer Agency business. As I search the internet I am surprised at the apparent non existence of such firms in my market -- Green Bay, Wisconsin.
Your articles were certainly helpful and encouraging. Do you have any current guidance you can provide to direct me in my search? Your reply will be most appreciated.
Thank you!
Neal Ewing, President, Mac Ewen Companies
Dear Neal,
Developing a niche is a good idea because you can focus your efforts and marketing dollars on attracting one segment. With buyers, that's half of every transaction!
I personally feel that buyers are underserved by the real estate industry because representing sellers has been more lucrative up until now. Listing agents work smarter, not harder, by acquiring the listing and then putting signs in the yard, entering the home in the MLS, and a number of other strategies designed for a quick sale. In many cases, they can also attract buyers which allows them to represent both sides of the transaction and collect both "sides" of the commission. If a buyer's agent brings the buyer, that's fine with them as the home goes under contract and that's the name of the game.
There's nothing wrong with representing both sides, as the listing agent has contracted with the seller to get the home sold, not necessarily to turn the home over to a buyer's agent to bring the buyer.
Resistance has been strong to buyer's agency until now, just as there has been resistance to all kinds of new business models, but that's not a reason to shy away from it. In fact, your timing couldn't be more perfect.
Listings are the currency of the real estate industry -- but not if they don't sell. Then they become a liability, costing the listing agent time, money and grief. As you may have heard, analysts are predicting a slowdown in housing sales, with an uptick in rentals. That's good news for you as you have experience assessing homes, valuing homes and selling them. You can also be a rental agent -- not bad money.
Another condition that's changed is that more and more companies are entering local MLSs, not as buyer's agents, but as referral companies. Listings may be getting more "exposure," but that's not necessarily putting more money in listing agents' pockets as some of these companies are also working hard at the media and governmental level to make sure that commissions come tumbling down. This strategy baffles me as you would think that referral fee companies would want commissions to be as high as possible. But for others, the strategy behind calling for lower commissions is to get buyers more dependent on their services than on the agents who actually sell the listings.
A new wrinkle in this game is that instead of charging referral fees, which means something has to sell before anyone gets paid, these new MLS interlopers are charging advertising fees, so that agents are paying up-front for marketing costs. This puts even more pressure on listing agents.
A lot depends on how you plan to market yourself. If you want to beat everyone else at the buyer's game, here's what you have to do.
Capitalize on your unique experience. More important than agency is the wealth of experience you can bring to a buyer. Design your logo, marketing materials, business card, and website to reflect your abilities and how they can help buyers. Buyers want to know what's in it for them, so tell them that you can help them buy the right house for less money. Show them through your experience what are cheap renovations and which ones aren't worth the money. Show them the most likely fixtures and systems that will need replacing and at what cost. A house could simply need some cosmetic work and
Educate buyers. According to the National Association of Realtors , 74 percent of all buyers use the Internet in their home search. Most are being diverted by large conglomerates to websites which propose to educate buyers first -- with automated home valuations, online mortgage calculators, and more. You have to get to these buyers before they go online.
Start giving homebuying seminars. Charge admission, with the price refundable if they use you to buy their home. Invite interior designers, kitchen showroom designers, lenders, and contractors to participate. They'll give most of the program, while you talk about the steps to buying a home and which "problems" to avoid.
Use your website to advantage. Put information on your site that is more robust, user-friendly and informative than anything you see on a national or local level.
Develop niches such as investors or first-time homebuyers. Narrowing your target can help you design programs to help these groups meet their goals. For example, first-time homebuyers might want to know what special tax or down-payment assistance they might get for buying a home. Go to HUD.gov and you'll see tons of local programs from "The Teacher Next Door" to local tax incentives to bring buyers to infill areas or historical districts.
Have a make-ready crew. Good real estate agents have excellent contractors on speed dial. With your experience you should be able to overcome any buyer's resistance to cosmetic challenges by helping them get estimates for homes they can fix up.
Become an expert in certain types of homes like ranch-style homes, condos or new homes. The homes that are the hardest to sell are those with the largest inventories, like the ubiquitous ranch-style home. The ranch is coming back into vogue because empty nesters want one-level living and so do young families, after chasing toddlers up and down the stairs. As you know, almost all interior walls are moveable in a ranch but your buyer may not realize how easy they are to remodel, add on to, and improve. That's something no website and few listing agents do to help them sell their ranch listings. Carry a shadow-box or shoebox to represent the ranch. Fold up "walls" and show your buyers how easily the walls can be moved. Make it a visual and hopeful experience.
A lot of buyers don't understand their responsibilities when buying a home that will be managed by an HOA. Condominium living is very different from single-family living, but it's ideal for many singles of all ages, as well as couples and small families.
Working with builders is a specialty, too. As you may know, many aren't very flexible where their contracts are concerned, but you can certainly help a buyer get a better deal by moving them to a different neighborhood where the upgrades they want are already included in the price of the home.
Take before and after pictures of homes you tour. Keep a file of these pictures because the home you saw today could be remodeled and back on the market tomorrow. Having house-by-house knowledge of your farm area is worth a fortune. Keep a scrapbook in your car, so if you have a buyer who is resistant to a certain floorplan, show them a similar house with pictures of how it was redone. You have to put positive images in your buyer's mind's eye.
Make nice with listing agents. Let's face it, they have the inventory. If you don't want to be viewed as "the enemy," watch your attitude. Some buyer's agents get a chip on their shoulders and irritate listing agents because they try to shame the listers into not representing both sides. That's neither realistic nor productive. The whole purpose of the MLS is to provide cooperation, but that doesn't mean a listing agent should back off of getting a listing sold themselves. Help listing agents and sellers by attending MLS tours, open houses and providing constructive feedback on their listings. Get to know all the listing agents by name. Call them and tell them what you are seeking for your clients. You never know. You just might be the first to get your buyer a shot at a new listing. That's cool, isn't it?
Remember, no matter who you're representing, nothing happens unless something's sold. Unlike some attorneys and selling agents who think it is their job to squash every purchase, your job is to make sure the buyer buys something. Your skill at educating them about the realities of the marketplace will go a long way. All homes need some improvement, don't teach your buyers to expect perfection, or you'll lose your clients to builders, whose homes aren't perfect either.
Consider Market Conditions Reports. Realty Times showcases you and your unique services online by promoting you as the local expert. Like the weather report, you give the homebuyer selling and buying conditions in your area. Consumers click through to your website, email, and newsletter and find out all about you and if they like you. No referral fees.
Offer a rebate, if it's legal in your state, to clients who are willing to go under contract with you. The biggest timewaster is the buyer who uses multiple agents or tries to go behind your back with a builder or FSBO to get a reduced price. Nip that in the bud by offering a guaranteed cash-back at closing if they go under exclusive contract with you.
