Implementation of the NAR Commission litigation settlement is nearing completion. Team leader Carl Medford outlines what buyer’s agents need to know to succeed under the new rules.
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As of August 17 There is no shortage of anxiety, primarily among buyer’s agents, when changes to new regulations based on the National Association of Realtors Council lawsuit settlement will be enacted. Knowing that major changes will be implemented in just a few weeks, those who serve primarily as buyer’s agents should use the remaining time to hone their skills and deepen their knowledge to prepare for the new reality.
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Here are seven key areas for buyer representatives to focus on:
1. Know your worth
As the settlement enactment date approaches, we are already seeing a skew in buyer agent commissions. While not widespread yet, the overall average in our region has dropped, and many believe there will be further declines after August 17.
It seems to me that we are going to see a few months of chaos as sellers decide they should no longer incentivize buyers’ agents based on blatantly false media reviews. However, I believe that once sellers start to understand, it won’t be buyer’s agents who are avoiding their listings; rather we will see a return to the historical norm. If the seller does not compensate, the buyer will not be able to pay its agent at all.
Meanwhile, buy-side brokers will be required to use the Buy-side Broker Agreement from August 17, which includes the compensation required by an agent to represent his or her client. Since this is a new policy in many parts of the country, we expect there will be initial resistance from buyers.
Therefore, a buyer’s agent needs to have clear value proposition They can demonstrate to clients that their compensation is reasonable. Agents need to understand their value as a buyer’s representative and should also take the time to put their value proposition in writing to clients.
2. Know your customers
The days of just randomly showing up at a property and expecting to work with a buyer are quickly over. With buyer’s broker agreements now required across the country, agents need to communicate with potential clients before they begin showing properties.
This requires thoughtful buyer consultation, where agents start demonstrating their value from the outset. Since effective representation is always relationship-based, take the time to get to know your customers, analyze their needs with them, and gather key information to lay the foundation for optimal results and lay the foundation for a long-term relationship.
3. Understand the market
This should be obvious, but I’m always surprised how little our local agents know about the current economic factors in our area. Considerable time should be spent researching the local market, including industry trends, local unemployment rates, upcoming hires or layoffs, current interest rates, local economic trends and proposed government legislation.
And websites like NAR, local state associations, MLS, and TrendGraphix Trends are available, they are always lagged by at least 30 days and show where we have been, not where we are going. While it is important to understand the current state of the market, clients need to know where the market is going in order to be able to make informed decisions.
4. Understand inventory
While buyers often think they know what they want, they often end up buying something else. Effective buyer’s agents need to know the full extent of local inventory so they can offer the widest possible selection. They also need to be able to explain the differences between the various types of properties available and the advantages and disadvantages of each.
Finally, they should understand what is currently out of the market and be willing to scour areas where buyers want to live to identify potential opportunities. Bottom line: Agents need to drive the search process and not leave it to the buyer by default.
5. Understand current loan programs
With the current proliferation of options, buyer’s agents need to know where to direct their buyers to take advantage of the best loan programs. Since no one lender can cover all the bases, this likely means they need to develop relationships with a handful of lenders to get as many options and programs as possible.
6. Understand key negotiation points
Not all sellers are interested in the highest price. Some may want a 60 day leaseback, some may want a longer escrow term, some may be willing to lower the buyer’s interest rate…a buyer’s agent has many potential options and they take the time to negotiate them effectively Negotiate optimally for your interests.
This means taking the time to talk with the listing agent to identify any potential needs and desires of the seller in order to craft an offer that meets both the seller’s requirements and the buyer’s parameters.
7. Understand forms
As a result of the settlement, real estate associations across the country are preparing for what may be the largest single table update in history. To be honest, many of the buyer’s agents we have dealt with over the years do not fully understand the current contract documents and I suspect with the onslaught of upcoming releases, things will get worse before they get better.
If a buyer’s agent wants an offer to be accepted, they’d better Make sure their quote is written correctly Forms that comply with the new standards and include all new requirements. Additionally, they need to take the time to communicate effectively with the listing agent and carefully read the required documentation before committing to it.
We still have some fun days ahead of us. If buyers’ agents want to succeed in this new reality, they need to start preparing now. We don’t have much time left.
