Buyer Representation in Real Estate

1
Buyer Representation in Real Estate

• Third Edition

2
Chapter One - Objectives

• Evolution of buyer agency
• How buyers benefit
• Duties of a fiduciary agent
• Creating the relationship
• Define agency options

3
Lets Begin

• Key Terms
• Why so much attention to buyer agency?
• Major reasons for buyer agency

4
Buyers Who Must Be Represented

• Agent purchasing for own account
• Buyers who want to remain anonymous

5
Buyers Who Should Be Represented

• Current seller clients
• Former clients
• First-time buyers
• Out-of-town or relo buyers
• Close friends

6
Regulations

• Common law of agency created confusion
• Laws passed to clarify role of buyer agent
• Abrogation of common law
• States dictate disclosure and
• contract requirements

7
Risk Management

• Licensees must know common law of agency and
  state statutes that address buyer representation

8
Fiduciary Agency

• Obedience
• Loyalty
• Disclosure
• Confidentiality
• Accounting
• Reasonable Care and Diligence

9
Risk Management

• Agent should avoid exaggeration,
  misrepresentation, concealment of pertinent facts
• Agent should recommend use of outside
  professionals

10
Imputed Knowledge

• Common law concept
• What the agent knows AND
• should have known

11
Vicarious Liability

• Principal may be responsible for, and may be
  bound by, the actions of his or her agent

12
Creating Agency Relationships

• Oral agency
• verbal agreement
• Implied agency
• words and actions of the parties
• Written or Contractual
• documented in an agreement
• between the parties

13
Contracts in Writing

• Required by some states
• Required by NAR code of ethics
• Article 9
• Reduces risk for agent

14
Termination of Agency

• Completion of task
• Agreement expires
• Mutual agreement to terminate
• Death of one of the parties

15
Termination of Agency

• Broker files bankruptcy
• Death or insanity of principal or agent
• Actions of agent warrant cancellation by principal

16
Statutory Agency

• State law replaces common law as basis for agent
  principal relationship
• Duties may vary from state to state

17
Chapter Two Objectives

• Understand reluctance to enter into an agreement
• Respond to buyers questions
• Determine service option
• Describe consultation meeting

18
Starting Out

• Key Terms
• Reasons some purchasers are reluctant to enter
  into representation agreements

19
Service Options in Office Policy

• Types of agreements
• Agency options
• Types of fees

20
Service Options in Office Policy

• Multiple buyer clients
• Agreements
• Services for self- represented buyers

21
Buyer Consultation Meeting

• Should follow an agenda
• Check for existing buyer-agency agreements
• Prepare interview questions

22
Sample Meeting Agenda

• Confirm basic data
• Introduce concept
• Elicit wants and needs
• Identify features they desire

23
Sample Meeting Agenda

• Identify urgency and barriers
• Review financing issues
• Identify actions that you and buyer are going to
  take

24
Responding to Buyer Questions

• Agent must be confident
• Avoid confronting buyer
• Focus on buyers concerns
• Buyers must be comfortable with commitment

25
Chapter Three Objectives

• Identify components
• Explain compensation options
• Describe types of fees
• Discuss areas to be negotiated
• Understand importance of a
• signed agreement

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Type of Agreements

• Exclusive-Right-to-Represent
• Exclusive Agency
• Open Agreement

27
Discussing the Agreement

• Buyer disclosure
• Purpose of the agreement
• Brokers duties
• Buyers commitments
• Compensation

28
Discussing the Agreement

• Start and end dates
• Disclosed dual or designated representation (if
  applicable)
• Equal opportunity clause
• Multiple-buyer clients

29
Compensation Options

• Contingent fee
• Non-contingent fee
• Buyers are reluctant to accept obligation to
  compensate agent
• Listing broker often shares
• fee with buyer agent

30
Methods of Paying Fee

• Fee due from buyer at closing
• Receipt of funds from a third party
• Acceptable fee range
• Retainer fee
• Hourly rate

31
Determining Compensation

• of sales price
• Flat fee
• Hourly rate
• Cooperative fee credited to buyer

32
Self Represented Sellers

• Inform client that property is not listed
• No fee available from another agent
• Buyer must decide whether to pay agent directly
  or to include in offered price
• Agent must inform seller

33
Retainer Fees

• Amount must be the same for all clients
• Refundable
• Creditable
• Stated in representation agreement

34
Presenting Buyer Agreement

• Buyers are often concerned about selecting the
  wrong agent
• Issue of exclusivity is best resolved by creating
  a strong relationship during consultation meeting

35
Presenting Buyer Agreement

• Exclusivity
• Fees
• Fair housing issues
• Multiple-buyer clients
• Limitations to representation

36
Negotiating the Buyer Agreement

• Length of term
• Exclusivity
• Compensation issues
• Shared representation issues
• Termination options

37
Chapter Four - Objectives

• Showing properties
• Duties after property is selected
• Preparing the buyers offer
• Responding to counteroffers

38
Chapter Four - Objectives

• Ancillary services
• Critical issues
• Resolving conflicts
• Effective communications

39
Getting Started

• Key terms
• Components of a well established agency
  relationship

40
Mutual Task List Agent

• MLS, newspaper, and Internet search
• Preview properties and schedule showings
• Place searching for ad in local newspaper

41
Mutual Task List Purchasers

• Apply with lender
• Confirm ability to extend lease, if necessary
• Gather documents for loan application

42
Property Research

• Locating properties
• Showing properties
• Narrowing the search
• Controlling emotions

43
Property Research

• Determining property condition
• Providing pricing assistance
• Performing resale analysis
• Uncovering use restrictions

44
Creating and Negotiating the Agreement

• Disclose what you know about seller
• Establish priorities
• Advocate for buyer (unless in dual agency)

45
Creating and Negotiatingthe Agreement

• Creating reasonable offers
• Adding contingencies
• Presenting the offer
• Handling counteroffers

46
From Contract to Closing

• Property inspection and re-negotiation, if
  required
• Environmental inspections
• Appraisal contingencies
• Survey

47
From Contract to Closing

• Termite, infestation, or moisture inspections
• Title inspection
• Eliminating contingencies
• Final walk through

48
Client-Care Program

• Help them handle paperwork
• Spell out client obligations and timeline
• Establish communication system
• Pre-closing review
• Turn closing into a celebration

49
Closing the Property

• Resolve walk-through issues
• Review HUD-1
• Identify post-closing tasks
• Thank clients, other agents, and the seller

50
Beyond Closing

• Call 10 days after closing
• How are things going?
• Any problems?

51
Beyond Closing

• Visit client 30 60 days after closing
• See what youve done to the property
• Here is a gift for you
• Do you know anyone else who
• might benefit from my services?

52
Chapter Five - Objectives

• Generate buyer leads
• Develop effective marketing message
• Conduct effective buyer seminars
• Survey clients

53
Lets Get Started

• Key terms
• Success requires discipline
• Prospecting
• Quality service
• Obtaining feedback
• Adjusting service delivery

54
Generating Opportunities

• Receiving referrals
• Converting incoming buyer calls
• Conducting buying seminars

55
Web Site Outline

• What our clients say about us
• What our clients bought
• How we do the job

56
Buyer Seminars

• One of the most effective tools
• Schedule on a 12 month basis
• By written invitation
• Written thank you notes and mail the day after

57
Effective Marketing Plan

• Define your vision
• Create the plan
• What do you want to say?
• What benefits do you offer?
• What is your message?

58
Differing Purposes for Marketing

• Awareness or Corporate
• Targeting specific buyers
• Performance testimonials, statistics etc.
• Prospecting

59
Marketing Mistakes to Avoid

• Copycat marketing
• Confrontational marketing
• Promising more than you can deliver
• Failing to convey value
• Underestimating the
• cost and effort

60
Generating Referrals

• Past buyer clients
• Must have a plan
• Discuss at initial consultation
• 75 of business should come
• from past client referrals

61
Client Feedback

• Every transaction should be surveyed
• Conveys message that agent cares about service
• Different buyers require different service plans
• Written or oral
• External company is best

62
Chapter Six - Objectives

• Using technology to locate potential clients
• Using technology to analyze market for them
• Providing client-level communication

63
Farming for Clients

• Primary activity for all buyer agents
• Use Windows-based database software
• Pre-designed templates
• Consider purchasing data lists

64
Farming for Clients

• Gather e-mail addresses
• Permission-based marketing is best
• Consistency is critical
• Professional should create

65
Farming for Clients

• Submit address to search engines
• Abide by the Can Spam Law

66
Analyzing the Market

• Maintain data base of contacts to match with
  properties
• Use market analysis software that downloads from
  MLS systems
• Use MLS systems for reverse prospecting

67
Analyzing the Market

• Maintain profiles of clients needs and desires
• Cross-match new listings to internal database

68
Meeting Clients Needs

• Selecting community
• Data bases from government sources
• Geodata sources display maps
• Agent should have ability to access Internet
  everywhere

69
Contact Management

• Voicemail
• Fax machine
• Fax modem
• E-mail
• Contact management software

70
Maintaining Profitability

• Regular training and reinvestment
• Personal tech trainer
• Train in small increments followed by continuous
  practice
• Be patient

71
Establish a Budget

• Technology changes often
• Equipment is outdated in 36 months
• Establish a technology budget