By Mike Bodeen · 2 June 2024
Last week we began to probe how a real estate agent’s life will radically change come August 17th, 2024, the date when the “Sitzer…” decision becomes the mandated practice for MLS’s (Multiple Listing Service’s) across the country. And to reiterate, it’s the buyer’s agent’s compensation that will most be effected.
We left off asking the question, “what is the financial value of a buyer’s agent?” Does a buyer even need an agent to represent them? Real estate companies right now are trying to figure out how to convince the public of what that worth is.
So, this week, we’re going to enumerate what a buyer’s agent “should” do to professionally represent their client – emphasis on “should.”
And I would argue, that if buyer’s agents professionally perform the following acts and duties in representing their clients, that the previous payment structure of 2.5% to 3% to the buyer’s agent’s company would be reasonable, and honestly, this amount may turn out to be a bargain for the buyer.
On the other hand, how low (financially) would we go to represent buyers that don’t have the resources that many others have? Every client is different, but it’s our heart to help any and all seeking our professional services. In one way or another we’ll do everything we can to make it work.
So let’s look at what a professional buyer’s agents duties can occur in a given transaction.
Initial Consultation to Determine Buyer’s needs and wants – Being an Active listener!
Thoroughly Discuss Responsibilities and Expectations in the Transaction
Execute the state mandated Realty Agency Disclosure (Who We’re Representing)
Execute Written Buyer-Broker Agreement (Post 8.17.24)
Initially Qualify Buyer’s ability to purchase – Refer to Top Lender
Have the Lender Prepare a Pre-Qual Letter (PQF) required with an offer to purchase
Discuss Current Market Conditions (e.g., hot seller’s market with multiple offers)
Research Comparable Sales in the Buyer’s Target Buying Area
Determine Value of Buyer’s selected home (Just like an appraiser appraising a home for a lender, a professional buyer’s agent prepares a market analysis for their buyer client.
Be Commission Blind When Preparing homes for Buyer Viewing, Don’t Restrict Showings Based on What We Will or Will Not Get Paid.
Wisely communicate with buyer, lender, seller’s agent, home inspectors, Title Company, etc.
Be Physically Present to Conduct a final walk-thru. Verify All Agreed Work Receipts of work performed.
Negotiate. I could write a dozen Snapshots on this one. We negotiate:
Price
Home Inspection findings
Appraisals
Closing / Occupancy Dates – Move in and Move-out Logistics.
When any problem, difficulty or changes arise.
Understanding and Communicating What the Contract Says. Some Agents Shamefully Don’t Understand It Themselves.
Answer all Contract Questions, or seek one who can. (Mike’s Note: We are NOT attorneys. We always let our clients know they’re welcome to seek the advice of an attorney, though few ever do)
Be Prepared to Refer Excellent:
Lenders (two or three)
Title Company (Be Present at the Closing Signing)
Honest and Experienced Home Inspectors, even if they can be deal killers
Be Physically Present for the Inspection Wrap-Up. Clarify and Counsel Client on findings.
Contractors, tradesmen who can design, remodel, and repair following the close. (Many of our clients still contact us years after a deal seeking a referral, which we encourage)
Movers, house cleaners, packers
A little more than just opening a door, huh?
You may have noticed that I’ve not mentioned anything about the nuts and bolts of finding that “right” home, which to be honest is what buyers want most, and if we don’t accomplish that, we’re paid zero. Does a buyer care about all the above if they’ve not found “the one?” I’d say, Happy wife, happy life, right?
We’ll look at that major task in the weeks ahead.