Over the last 20 years, the real estate industry has changed drastically when it comes to buyer representation. We’ve gone from an environment where buyer agency wasn’t even legal to one where 59 percent of buyers are represented, according to NAR’s most recent Profile of Home Buyers and Sellers. Notably, 40 percent of represented buyers had a written agreement with their agent in 2014, a figure that has held steady for the last five years.
As a broker, you know how important it is to formalize the buyer-client relationship in writing. However, your agents may encounter buyers who are unaware of the benefits of a written agreement. I wanted to offer a few tips for encouraging your agents to get the agreement signed, because in the end, it’ll help your business.
- Acknowledge client concerns. Some buyers may feel uneasy making a commitment early in the home-buying process. The key is to listen to their concerns, and then suggest options that address those specific concerns in ways that make everyone feel comfortable with the arrangement. If buyers feel that an agent will listen to them, there’s a better chance that they will want to sign an agreement.
- Clearly explain the benefits of a signed buyer rep agreement. Misunderstandings are less likely to occur when both parties fully understand their roles and duties to each other. By deciding on specific terms of services, duration, and compensation ahead of time, the home search process can proceed without the disagreements that may arise when terms are left vague.
- Suggest a trial period. Agents may tour a few properties with buyers before signing an agreement. This allows all parties to get to know each other before making a commitment to working together. With this arrangement, agents also have the opportunity to determine whether they want to establish a relationship with the buyer.
- Propose a short-term agreement that can be extended. Create an agreement that lasts for two or three weeks with a clause to extend if all parties wish to continue the arrangement. NAR research shows that it takes buyers approximately 10 weeks to find a home. Be sure that agents communicate this estimate to buyers prior to deciding on a short-term agreement, as an extension will almost certainly be necessary to complete the home search process.
- Provide a guarantee. Offer the ability to cancel the agreement if specified terms are not met. Agents should include a description of their duties and services to the buyer in the written agreement. If a guarantee is offered, buyers have the right to end the agreement if agents haven’t fulfilled any part of the written services.
By allowing a buyer to choose an option that they’re most comfortable with, agents show they have the best interests of the buyer in mind. This establishes a level of trust between parties that’ll serve the working relationship well. Equally important, these options communicate that your agents are confident in their abilities to deliver excellent service to buyers. Confidence and trust are key components in a strong buyer-representative relationship, and will establish your agents’ reputations as exceptional, buyer-focused professionals.