Did you know that the NAR (National Association of Realtors) is the largest trade association in the US? With 1.3 million members, the NAR is a major proponent for home ownership and property rights.
NAR's national publicity campaigns have promoted a more professional image of Realtors(R) helping buyers find just the right house, and helping sellers market their homes in the most effective way.
I was not big fan of the previous campaigns that stated "You have a life. Real estate is our life." Nonetheless, it did make the point that Realtors are prepared to work hard and ethically for the public.
Everyone knows that a Realtor will show homes to buyers. Everyone knows that Realtors have sophisticated marketing tools for selling homes. Here's my question: Why hasn't the concept of Buyer Representation received more public emphasis from the NAR?
Many buyers start their research on the internet to look for a home. Almost invariably they start out by looking at the homes that are listed in what they calculate should be their price range. After narrowing the field down to a controllable number, buyers often assume that they will do better by contacting the listing agents for each listing, and having each agent describe the features of their particular listing, and show the home if it sounds good to the buyer.
The buying public is woefully unaware of the fact that they are unrepresented as they go through this process. They often feel as though an agent is an adversary to be tolerated since the agent is the one with the keys to the homes!
Nothing could be further from the truth! But NAR, with its public megaphone, has largely ignored the aspect of promoting Buyer Representation. Everyone know that sellers will have an agent tasked with the responsibility of representing the homesellers' best interests. But what about buyers? Do they know the difference between being a customer and a client?
Unfortunately, many buyers don't know what they don't know, and the National Association is in an ideal position to educate the public. There is little emphasis on the importance of choosing a competent Realtor to represent buyers before the choice of a property is made.
An agent representing the buyer can offer objective advice about each home, including possible reasons NOT to buy a particular house.
A Realtor representing a buyer can be an experienced negotiator, keeping the buyer's negotiating position confidential.
A Realtor representing a buyer can provide due diligence in suggesting specialized inspections that may be indicated, or provide advice on the advantages or dangers of various financing options.
A buyer can have representation in most cases for FREE. Why wouldn't every buyer want to take advantage of a service that could give them so much protection and value - and even save them a great deal of money - for NO COST TO THEM?
As an Accredited Buyer Representative in Lancaster County, PA, I am very much aware of the need for more public education on the subject of representation. If you have any questions about buyer representation, I would be happy to answer your concerns via email, or call (717) 951-5552.
Copyright2008BrianSchulman©
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Brian Schulman offers expert personalized real estate representation and services in Lancaster County, PA. To contact him, visit http://www.FindLancasterHomes.com/ |
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Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA. To learn more, visit http://www.FindLancasterHomes.com/ |
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A better question, in my mind, is "Why don't more AGENTS elect Single Agency?". Here in Florida, where transaction brokerage is default, few agents bother with getting a client to sign anything. It is easier to just run off into the sunset showing homes willy-nilly and hoping for an outcome.
While this is a recent change to my approach, I think that Buyers Agents have a leg up in the process we are dealing with on REOs and Short Sales. I have not had any serious buyer turn me down when I offer Single Agency. It did flush out a couple of lookey-loos when they were faced with making a decision on their direction.
Jim, I think the operative rule should be that agents should only represent a single party in a single transaction. I don't think we're doing our previous buyer client any favors if we refuse to represent them later on when they're ready to sell the home they purchased through us.
Your comment opens up another discussion for another day.
Good question, Brian.
I think CREA (the Canadian version of NAR) promotes buyer agency a bit more than NAR does, however it still isn't enough.
When you consider that a buyer can have their own representation at no cost to them (since we are paid via the mls agreement on the property by the seller), it's one of the absolute best and most under-rated services available to the public today!
Jo
Hi Jo,
You make an excellent point! A buyer can have representation for FREE. Why wouldn't every buyer want to take advantage of a service that could give them so much protection, value - and even save them a great deal of money - for NO COST TO THEM?
It's a matter of the topic not having had enough public advocacy.
Brian, I agree with 98% of your post. I just completed the NAR online survey about the two "ads" that NAR is running. I cringe when I hear NAR stating that property values have doubled in the last 10 years, something that is far from the truth in most areas of Ohio. The emphasis seems to be geared toward misinforming sellers what their property is worth.
The 2% I disagree with? The buyer pays the brokerage fee... even though it comes from the seller's net sheet. Buyer doesn't bring a wheelbarrow of money to closing? No completed transaction. However we could debate that forever, and get more and more mixed up.
Jim, I've been through this discussion with different people many times. I agree that you can make a case either way for which side actually pays the agents (on both sides). My opinion is that homes are already priced with a fee built into the price.
The price doesn't come down because the buyer doesn't happen to be using an agent who represents him or her. The price doesn't even come down if the seller isn't using an agent at all - because the main reason sellers go For Sale By Owner is to save the commission for themselves - not to pass on the savings to a buyer.
Brian...this can't be mentioned too much! Buyers still don't get it. And I agree NAR doesn't stress the benefit of using a Realtor to a Buyer. They seem to stress the Listing side.
I would love to see a series of ads stressing Using a Realtor to Buy and using one to Sell. Representation!
(Congrats on the feature!)
Not all companies have the same programs, charge the same, or behave the same. Clearly, there is an advantage to the buyer to utilize the services of a Buyer Agent. However, in or MLS for example, we have a specific place to notate "VR or DR", which stands for Variable Rate or Dual Rate. That means the listing broker has an "if, then" scenario. (Mr. Seller, if the buyer comes through our company we will charge x$ (a reduced rate or waive one side commission) . If the Buyer comes through a cooperating agent, we will charge X$.
We are supposed to use this notation so that Buyer Agents will have a heads up that their offers will need to beat the listing agent's offers by X% or X$ in order to have the best net for the seller. From reading the above hyperlinked FTC report, I personally would not ever tell a buyer that their representation is free. Nor, would I tell them that the listing company will keep both sides of the transaction. I am aware that some companies do not "double dip" if handling both sides of a transaction. That said, I support single agency and believe buyers' benefit when having a personal REALTOR/Advocate.
Perhaps the "Buyer Education" should come from the Specialists rather than an organization. I have met Buyers who are educated and still prefer to deal direct with the listing agent because they believe the listing agent knows the property best. Some buyers believe that they are competent enough to research and negotiate offers on their own.
Wayne, thanks for commenting.
Suzi, I have no problem with educated buyers who prefer to work directly with the listing agent. My point is that many more buyers have misconceptions about being represented, and would benefit from increased awareness.
Brian -- There seems to be so much hostility toward designations among some AR members that it doesn't surprise me more agents are not pursuing the ABR.
Great Point Brian!
It amazes me how many unrepresented 1st TIME HOMEBUYERS I come across, that are absolutely convinced that they don't want/need a Realtor. NAR needs to really take a look at this, even at a local level with our State and County Associations.
Wonderful post Brian. The answers to many of our questions are well known to many of us who have been dedicated buyers agents for many years. I'll post something later to give some history for some of the new agents. We do have a lot of REALTORS who became licensed and members during the "boom" years of 2003-2006.
The gravy train has left the station now and folks can benefit by learning our business beyond the "meet, write, close" of the boom years.
I rarely write about buyer's agency on ActiveRain because it's complicated and I get so tired of hearing the ever trite "I treat everyone fairly".
In reality, the NAR has gone a LOT farther to promote Buyer's Agency than they ever wanted to.
Eric, I haven't come across any hostility toward designations - in fact, just the opposite - I get and give respect for those practitioners who have gone over and above the minimum standards, to strive for the extra effort and knowledge it takes to achieve these professional designations.
Have you encountered designation hostility from other AR members or from the public? The only running hostility I have observed is the ongoing argument about whether single agency for a single transaction is best, or exclusive buyer agency where listings are never accepted.
Bryan, first time home buyers often seem the most resistant to being represented. It's not that they don't think that they need the help. It's usually insecurity about having to make a commitment to any agent.
You're right - further public education by all three levels of Realtor associations would be very helpful for both buyers and the Realtors who are ready, willing and able to represent their best interests.
Lenn, "I treat everyone fairly" is the typical response of practitioners who don't specialize in buyer representation. As you say, it sounds good but it doesn't properly appreciate the difference between being represented and not being represented.
In fairness, the NAR has indeed come farther than in previous decades, particularly by incorporating the ABR curriculum into their certified designations.
I'll look forward to your analysis of the history of buyer representation. I was one of the earliest ABRs, barely missing the coveted "first 500".
Brian. I get in so much hot water on ActiveRain with "hard core real estate talk". However, nothing stirs more passion and anger in this real estate broker than the treatment of those of us who believe that the entire system is quite fixed and is not likely to change in the near future. No doubt, when I do post something, it will be disputed by many dual dudes and dudettes. With any luck and I have an abundance of this luck, it won't be featured and few will even notice.
Brian - Not to hijack here, but I just posted on the subject of designations last night. I did so because I read another post by a young lady last week on AR who was simply asking which designations she should pursue. She got bombarded by responses that designations are "worthless" and far too easy to acquire.
Getting back to the subject of your own post, I like the ABR because it has a production requirement. ABR applicants must prove a sales track record as a buyer representative. Like the CRS, requiring proof of closed sales adds a dimension to the achievement of a designation that coursework alone does not offer.
It is important to NAR that the idea of "Buyer Agents" be a little "fuzzy". If it wasn't then buyer's would recognize the potential trap of working with an agent whose company lists homes. The trap being, "Oh, now I'm a "DUAL AGENT". Another concept kept fuzzy for buyers because if they really 'got' it they would go with a single agency company. There are few of those around. For seller's there is not even a national organization of companies that pactice single agency. For buyer there is the small but growning National Association of Exclusive Buyer Agents (www.naeba.com). NAEBA members follow a code of ethics that is more strict than the NAR COE.
NAR is not going to push single agency and antagonize the big franchise companies.
I think it comes down to the power structure in the NAR being tied up by those that look to double side transactions. The "old-timers" all talk about ways to increase the transactions where we double side the sale to earn more money. And it isn't just the NAR.
And, since the power agents seem to be listers, they would love to not have to deal with as many buyer's agents... certainly don't want to promote the idea.
I think that one way to get more buyers seeking agents is to give them another incentive to do so. I know, they really don't need anymore incentives in realtors eyes. They are already getting a free service paid by the seller, and they have someone that is looking out for their best interests. This is just how people are though.
Eric, those supposed professionals who feel that professional designations are worthless have either not bothered to improve their knowledge, or slept through the classes. I personally would not, as a consumer, work with an agent who had such an attitude. It's unfortunate that the young lady you mentioned should be getting such misguided advice.
I agree with your opinion that the ABR is even more valuable because a certain amount of experience has to be proven by the applicant before the designation can be received.
Paul, you may have an interesting point there. I don't know what the politics of advocating buyer agency would be for NAR. I belong to a small independent brokerage. Therefore the chances of my being in a position of disclosed dual agency for the particular needs of my buyer clients are quite small.
In any case, with the larger companies, designated agency can be used to create a "firewall" between two agents with the same company, regarding confidential information of either buyer or seller.
As Lenn Harley has mentioned more than once, sometimes the comments on our blogs are more interesting than the blogs themselves...
Lisa, thanks for stopping by!
Mike, I tried to promote "buyer listing agreements" before the ABR designation existed, or the idea of buyer representation was widely accepted.
Jason, not only do I agree with you, but I wish more lenders would recommend that their borrowers find and work with a good buyers' agent.
By the same token, when I start working with a new buyer client, the first thing I want them to do is to get preapproved by a good lender - before we start looking at properties!
Just this week I insisted that one new prospect get preapproved before I set showings for the properties she wanted to see. She ended up getting approved for only two thirds of the price she thought she was qualified for. We were able to avoid the disappointment, embarrassment and trouble we would have had to go through if she had made an offer on a property that was out of her price range.
Jason, not only do I agree with you, but I wish more lenders would recommend that their borrowers find and work with a good buyers' agent.
By the same token, when I start working with a new buyer client, the first thing I want them to do is to get preapproved by a good lender - before we start looking at properties!
Just this week I insisted that one new prospect get preapproved before I set showings for the properties she wanted to see. She ended up getting approved for only two thirds of the price she thought she was qualified for. We were able to avoid the disappointment, embarrassment and trouble we would have had to go through if she had made an offer on a property that was out of her price range.
Lane, you're right, the "power agents" are mostly listers. Listing agents certainly have an incentive to sell their own listings and double their commissions. There's nothing wrong with that, as long as the buyers understand who's representing whom. However, NAR's responsibilities go to the public as well as the companies and agents that NAR represents.
If buyers want to deal with a listing agent, so be it. But they should do so only with an understanding of whom the listing agent is representing (hint: it's not THEM).
Anthony, what kind of incentives would you like to see Realtors offer buyers to encourage them to use buyers' agents in general, or a particular buyer agent?
I hope you see my response and give me your suggestions!
Patti, I'm not a big fan of "all services under one roof". I think that many agents are pressured to encourage their buyers to use the in-house lender and title company, regardless of the relative merits of alternative providers.
And I certainly don't like, and have personally refused to participate in, schemes where the agent is providing their own mortgage services. Not only is it a conflict of interest, it's quite likely that such an agent isn't providing the optimum mortgage service, experience and terms.
Michael, thanks for your comment.
Robert, exactly my point. They don't know what they don't know. And they could benefit from a campaign that at least encouraged buyers to consult a Buyer Agent and learn more about the subject!
The answer to your basic question is simple. This is a commission driven business. NAR was founded by brokerages that understood the philosophy of "Buyer Beware". It has always been about controling the listings, knowing that buyers must come to the listing company if they are not better educated about the options that are now available to them, such as Buyer Agency. This old style of business as usual is designed to push as much business as possible to the listing company. That is what NAR was founded on.
NAR is all about numbers, large numbers of dues paying members. Without the support of large companies that focus on listings and getting the most out of the commission based business model, their numbers would drop, and their pot of gold would begin to shrink.
NAR has never really been supportive of any business model (such as unbundleing of services, discount brokerages, buyer agency) outside of the "listings are everything" type operations.
If NAR is to support ALL kinds of business models, the membership must speak up, just like you have done, loud and clear.
If NAR doesn't do that, then more of us need to write posts on our blog doing our very best to educate our local buyers of the advantages of the way we personally do business and our philosophies.
PS: I hope most of the words are spelled correctly, because once again some of the AR features have failed on the weekend, which has become normal lately. I just got this error mesage when I did the spell check:
'Could not execute AJAX call, server didn't return valid a XML"
Brian,
I completely agree and wonder who NAR thinks they are representing? One of your responses says that NAR "sold us out to Realton.com", and I completely agree. NAR has forgotten who they represent, and who pays them every year----and it is not a little payment, either.
Thanks for the great information
Gini Moran, Realtor/Partner
Keller Williams Realty
www.ginimoran.com
ginimoran.realtor@yahoo.com
Don, thanks for your thoughtful comments. Many of us who represent buyers belong to brokerages that take listings. We pay dues just like listing agents do - in fact as single agency practitioners, we may represent buyers or sellers at different times. We pay our dues just like the listing agents do.
Our own need for representation by our national trade association is just as valid as for any other Realtor!
Kathy, I agree that that's what we as buyers agents need to do. Generating more general public awareness is a goal that our national and state associations could help us with.