Being a buyer’s agent has always been and still should be a pleasure. Landing a client who wants to buy a home is not unlike making a new friend, albeit with an expected happy ending. It’s all smiles and excitement for you and the homeowner hopeful, with a little nervous energy added in. It’s amazing how free and easy everything goes when money isn’t immediately required. A buyer agent’s commission was almost always already baked into the equation. If a client bought something you showed them, you would then split the commission with the listing agent.
Well, it looks like things are changing, and not for the better for buyer agents. As Burnett vs. NAR proved, and with many more lawsuit filers trying to do likewise, buyer agents may need to first determine their compensation from clients in a way that has no history for guidance.
Suddenly, you may have to convince potential new clients why they should invest money in having you be their representative. How much will you charge? What will they get for their money? Will the fee be hourly, daily, weekly, monthly? How can you know what other agents are charging? What if a new client wants a guarantee of some sort?
Instead of being happy to take clients to see homes for sale immediately after the introductory shaking of hands, there may have to be some sort of negotiation, financial terms specified and a deal signed. You are suddenly their employee. What’s next, asking for holiday pay?
Industry executives and agents have expressed both bewilderment and acceptance of the trial and its fallout, understanding that no one knows for sure how buyer agent commissions will be affected.
“I’ve been keeping a close eye on the Burnett trial, understanding that its outcomes could bring about a major shift in how we structure agent commissions,” says Adrian Provost, principal broker and president of Realty ONE Group Terminus in Atlanta, Georgia. “The verdict has sparked quite the conversation, and many of us are bracing for how this might change our brokerage operations.
“Among my peers, there’s a lot of talk about the future of commissions and a growing demand for transactional transparency. The trial’s emphasis on how we structure commissions has ignited discussions about fair practices and protecting consumer rights. I can see our profession evolving, perhaps moving toward more flexible commission models and focusing more on the relationships between clients and agents.”
Melissa Hoff, with The Hoff Group at Compass in Fort Lauderdale, Florida, also sees a new normal on the horizon.
“The industry is going to change, the market is shifting, and the strong will survive,” she asserts. “The trial forces brokers/agents to have serious conversations with their sellers and buyers to educate them on the market and the benefits of working with a real estate professional.”
Paul Ekstrom, with Realty ONE Group Choice in Andover, Minnesota, adds that the ratio of agents in the business will also change.
“I see the market of listing agents getting significantly more competitive, while buyer’s agent numbers start to dwindle,” he says. “I also predict less freshman agents entering the industry as a result of this year’s events.”
Debbie Lang, a REALTOR® with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Princeton, New Jersey, has the opinion a great many other agents have as well.
“I do not understand why this case that began in the Midwest in 2019 has gone even this far,” she wonders. “Buyer commissions have always been negotiable, and sellers have always had choices when it came time to pay commissions.”
10 buyer-broker strategies
You’re already a professional, so all of these tips won’t be new to you. But a few may, and with the competition for buyer clients likely to heat up, you’ll need to bring your A-game every time you make contact with a potential homebuyer. Here are 10 must-knows to seal deals:
- Have much more information than potential clients can find on any website. Schools, businesses nearby, comps, inventory, etc.
- Follow up consistently and persistently, but not overwhelmingly. Not getting called back doesn’t mean they’re not interested. It means they’re busy. Keep trying.
- Offer a free home-buying consultation. Assume buyers know about the lawsuits and their ramifications, so make the first meeting free and go from there.
- Have your references ready and hopefully able to provide a glowing recommendation. Make sure references offer specific ways you provided expert advice.
- Explain that you are available anytime for at least a phone call. Expect competitors to be doing the same, so it’s part of the job. Most clients won’t call at 3 a.m.
- Ask as many questions as potential clients do. Interview them to find out exactly what they are looking for. You will sound like a pro because you are.
- Know what the lawsuits have been about if asked, and stress how important a buyer’s agent is in the home-buying process.
- Stress the importance of getting a mortgage pre-approved or at least pre-qualified. It’s almost a given that sellers will require it before taking a bid seriously.
- Be an expert on types of loans. Assume homebuyers will ask. There are many more than the typical 30-year fixed-rate mortgage.
- Ask, and hopefully accept, what commission they are willing to pay. It is imperative to begin the relationship with positive vibes.