By Alan Shafran of Showing Suite and the Alan Shafran Group.
I would first like to thank everyone for the kind words and feedback from my previous article. It’s nice to know that I am touching on some key issues in our industry and I hope that I can continue to be a good resource.
The Buyer-Agent Relationship
From traveling across the country, lecturing at real estate seminars and meeting professionals from a wide variety of real estate markets, I have become fascinated by the quandary our industry faces as it relates to creating professional relationships with our buyers. To enhance the image of our industry and ensure that we are being compensated for our time, we need to band together as REALTORS® and make the signing of buyer broker agreements a standard operating procedure.
As agents, we have been taking positive strides in the areas of buyer management and representation, but we still have a long way to go. The lack of loyalty among buyers and buyer’s agents is a source of a great deal of frustration in our industry. Over the past 20 years, I have heard numerous anecdotes from my peers and experienced first-hand the aggravation that comes from poorly-defined buyer agent relationships. The names, faces and situations change, but the themes are always similar:
“Gee Alan, I’m confused, I didn’t realize that you would not be compensated after you spent so much of your time showing me 100 homes, then my sister wrote the offer.”
“Hi Alan, I just called to let you know that I had the listing agent for 209 Madeline write an offer for me. I would have asked you to do it but I felt bad about asking since you already spent 200 hours driving around showing me property. Hope this helps!”
“Hey, thanks Alan for your diligence and patience over the past few years in helping us view condos and homes all over Carlsbad and San Diego. I just wanted to touch base with you to let you know that my wife’s sister’s ex-roommate is a REALTOR® and we will be using her to write the offer, even though we’ve never met her personally and don’t know anything about her experience or skills.”
It could be amusing if it wasn’t so outrageous and irritating. The frustrating thing about it is that, when it happens, we really don’t have anyone to blame except ourselves. Unless we take the time to establish a set of parameters with our buyers, or provide them with an explanation about how we are compensated, then we cannot expect them to understand the nature of our business or feel that they should be loyal.
Our business is literally full of dedicated people who constantly work to further the interests of their clients and increase the integrity of their professional relationships. Their effort and tenacity bring a tremendous amount of success to every transaction in which they are involved. With the number of educated and intelligent people we have working in our industry, it baffles me that there continues to be a lack of guidelines for buyer-agent relationships.
We Do It For Sellers – Why Not For Buyers?
When it comes to listings, we seem to have no problem presenting a legal document for all of the involved parties to discuss and sign. Why not for buyers? Having a listing agreement in place prior to the marketing or sale of a home is the status quo in our industry—it should be a standard business practice when we are representing buyers.
If we took the time to have all of our buyers sign an agreement stating the nature of our relationship, it would not only save us a great deal of time, money and frustration, it would also ensure a superior standard of representation for our clients. With the listing of a property, which person receives a higher level of service, the seller that has a number of agents working for him with no priority, loyalty, or marketing investment, or the seller that has one agent with a vested interest in the sale of the home providing everything?
We all know the answer…why should our relationships with buyers be any different than our relationships with our sellers?
The competition for listings can be fierce and the terms of the agreement are typically defined in the very beginning. Sellers will usually interview several agents before they choose one to represent them during the sale of their home. There are numerous consultation meetings, where we describe the services we offer and review our payment structure. We compete for the job and everything is up front and on the table. There should be a similar procedure when we are representing buyers.
Present, Commit, Show – In That Order
I’m certainly not saying that I invented buyer broker agreements. About 10 years ago, my frustration with the behavior of buyers led me to seek out and consult with the best buyer agents I could find in the country. I was fortunate enough to learn from them, and then I worked hard to improve the process to the highest possible level.
When I am hired to lecture or speak at real estate seminars and conferences, I teach that buyers should receive a strong initial consultation, where the agent helps them review their finances, analyze their needs in real estate and evaluate their long-term goals. We should utilize our people skills and ask questions to learn everything about our buyers that we can, to ensure that we can effectively serve their needs. During the initial consultation, the multitude of services and agencies that are offered in the industry should be thoroughly explained, and the buyer should be pre-qualified to purchase.
All of this should happen prior to looking at properties.
With buyers, I ask them to make decisions about who they would like to work with and teach them about the benefits of having one loyal agent that will fight to the death for them. I explain our payment structure and describe the services I will provide. And similar to when I present a listing agreement to a seller, I present my buyers with a buyer broker agreement, a legal document that outlines the time period in which we will work with each other, commissions and services rendered.
As agents, we would love to get every listing we interview for, but a wide variety of factors, from pricing strategies and personalities, to qualifications and experience, keep us from getting them all. The buyer brokerage process is no different, we simply won’t get them all—we aren’t right now, even without asking for a signed agreement—but at least we will know who is being honest with us and who has good intentions.
Having a buyer broker agreement in place is simply a more professional way of conducting business. Even if a buyer decides to work with someone else after we have described the amount of time, effort, energy and knowledge that goes into effectively serving their interests, at the very least we have avoided wasting our time and money. I have a great deal of faith in the integrity of the buyers that are out there. If we institute this process, where we explain and demand working parameters, we will enhance the image of our profession and earn the business of highly qualified potential buyers.
In addition to demanding more from us as agents, for having the ability and commitment to sit down and consult with our buyers, having a buyer broker agreement in place provides a better overall standard of representation for our clients. Imagine a world where buyers interview three or four different buyer agents and then sign an agreement with one of them. It’s a fantastic concept that could quickly become a reality if we would just unite together as agents and establish this practice as a common procedure.
Technology’s Impact on Buyer Services
Now that we have identified the urgent need to implement buyer broker agreements on a national basis, the question becomes, how do we convince buyers that we are of value to them? What systems should we use to serve their needs?
Consumers are getting smarter and more well-informed every day. They are demanding a comprehensive suite of services from the agents they hire. Learning how to use the best realtor tools that are available and the most advanced technology available today will help you stand out from your competition.
I use a variety of systems, technologies and realtor tools, and recently made a strong commitment to increase my mobile IDX software technology and services, by hiring Mobile Card Cast. Their advanced solution gives me the ability to offer my buyers IDX software on any of the popular cellular web platforms, including the iPhone, Android and Blackberry. It allows my buyers to look up anything on the MLS, find the 10 nearest properties according to the GPS on their phones, and receive information from anywhere.
Since all of the services and technology I offer can be accessed from my website, all my clients have to do is visit www.AlanShafran.com, and Voila! To me, the most beneficial aspect of having everything linked to my site is that my clients only have to remember to visit www.AlanShafran.com, no matter what internet browsing device they are using, and they will either see the full version of my site or the specially built version created for mobile devices—it can’t get much easier than that.
Implementing technology will help you stay on top of the industry by impressing your clients and showing them that you are a valuable consultant. During the initial consultation, all of the services and technology you offer should be carefully explained, as well as the potential impact of your expertise on what is often one of the most significant decisions of a person’s life. If you perform your consultation properly, and express that showing a home is just a facet of the entire process, the buyer will cut you off and ask where to sign…. and isn’t that a great feeling.
Last but not least, please remember that change takes time and commitment. If you plan on making this change, you might feel like it is not working out when a buyer does not want to meet with you before seeing property. Be proud that you stood up for what is right for yourself and our industry, and encourage others to do the same. Redefining who you are willing to work with will shape your future happiness and overall success. So don’t give up, and practice your buyer presentations with your friends, family, and colleagues until you are 100% comfortable. Then go out there and find buyers that will appreciate what an incredible decision they made in hiring you!
These articles have space constraints and although I can’t get into intricate detail here, I hope I will see many of you at my future talks, classes, and real estate seminars. I will also be expanding on this topic in further detail in my upcoming book, “Blueprint for 100 Deals,” which will be available via Showing Suite later this year.
Alan Shafran is in the top 1% of Prudential agents worldwide, the President of Showing Suite and the #1 agent of Prudential California Realty in San Diego. For more information please contact him at Alan@AlanShafran.com.
Also published by RISMEDIA for Real Estate Magazine
Image courtesy: homesbythomas