Tag Archives: buyers

Some Things are Worth Second Chances: My Return to NAEBA

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As of this week, I officially reinstated my company with NAEBA, or the National Association of Exclusive Buyer Agents. The change of heart came after a few years of going it alone with the encouragement of peers who were kind enough to keep in touch with me. After speaking with a few peers and Kim Kahl, who is the executive director of the organization I learned that many things have changed for the better. I am excited to see all of the new changes taking place, and I look forward to joining a committee and contributing my energy to the goals of the organization.

New Low Mortgage Rates May be Out of Reach for Some Buyers!

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New lower mortgage rates are out of reach for many buyers because of new stringent qualifying requirements. In a December 3rd article by David M. Dickson, a writer for the Washington Times discusses significantly tighter credit standards, new qualification criteria, and how mortgage rates dramatically dropped after the Fed announced its plan to “spend $600 billion dollars to purchase debt and mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae” (Dickson).

To read entire article, click here: Mortgage Rates May be Out of Reach for Some Buyers

Multiple Offers: To Engage or Not to Engage, the Answer is up to You!

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I recently came across an interesting discussion among peers regarding the dynamics between buyers, sellers, and their agents and whether a buyer’s offer is kept secret when presented to a seller and his or her agent. While the discussion was technically not about multiple offers, the discussion evolved to include this subject because the original post mentioned some of the things a seller’s agent might do when there are multiple offers on a home; for example, when the author said, “Often the seller will counter the most qualified buyer with the higher price of another offer from a less qualified buyer. Technically they didn‘t ‘reveal’ your ‘offer,’ but they used your price as the counter price to a different buyer.”

These are the kinds of things that buyers need to be aware of before deciding to engage in a multiple offer scenario because ultimately the goal of a situation like this is to get the highest price possible for property. Depending on the situation, and the people involved, this scenario often leads to compromising the strength of a buyer’s negotiating position. A good buyer’s agent should work to shield, inform, and protect a buyer’s negotiating position because through this strength a buyer has the best chance of negotiating the best deal possible. A compromised negotiating position means that a buyer has lost all of his or her bargaining chips and must now deal on the seller’s terms if he or she wants to pursue that seller’s property. Some agents might argue that some homes are worth pursuing in a multiple offer situation, but the decision of “worth” is ultimately the buyer’s to make once they fully understand the rules of engagement because a situation like this truly falls under the seller’s rule. Instead of negotiations, the transaction will seem more like an auction and the multiple buyers involved become levers in the seller agent’s quest to get the highest selling price possible for their seller. In my opinion, buyers should not oblige, but it is up to the buyer whether or not they wish to engage.

A multiple offer situation is the best possible scenario for a seller, period. Indeed, it is quite the opposite for a buyer. Even under the advice of a buyer’s agent of whether or not to engage in a multiple offer situation, the choice to engage is still the buyer’s decision to make.

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United We Stand, Divided We Fall: Buyer Agency and the Fragmented World of Real Estate

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In a recent Accredited Buyer Representative class, it came as no surprise that out of approximately 36 attendees, there was only one exclusive buyer‘s broker in attendance. Although most of the information presented in the class was informative, insightful, and the content was well-delivered, it was alarming when two Realtors announced to the class–on two separate occasions–the "old saying" that "buyers are liars." The first thought that came to mind was, "why?" If these Realtors really believe that buyers are "liars," then why are they even in this class to begin with? Unfortunately, with the exception of a very small few, this is a pervasive belief among traditional agents and brokers–a belief not shared by those who have chosen to serve buyers only.

This was a three-day class, and each day was eight hours in length. It was just enough time to experience the "niceties" of certain traditional Realtors, who demonstrated their narrow-minded worldviews, values, and norms. Some had behaved abrasively, as well as, condescending. They revealed their own prejudice beliefs, as many before have done in the past, that unless one is part of the herd, they do not deserve any professional courtesy.

It was an eye-opener to see the friendly expressions of certain Realtors suddenly change into seething animosity, when told of the decision to represent buyers only. You would have thought a mortal sin had been committed. The consumer value of having the option to avoid dual agency completely did not compute within the minds of these people.

Some traditional agents have gone as far as to say that dual agency is not even an issue, as long as consumers liked them. However, it is an issue when the dual agent cannot negotiate for either side; or when a dual agent company has to remain neutral in the midst of a transactional conflict. What are dual agents being paid for, if they cannot provide the valuable service of negotiation, and if they cannot provide advocacy for neither side?

Now we turn our attention to the culture of exclusive buyer agency. This culture is small, but growing–struggling for recognition and acceptance by Realtor associations that normally favor traditional real estate brokerages. The associations they struggle with do little to educate the public about the option of exclusive buyer agency. Furthermore, they add to the confusion by blurring the real meaning of this agency option. For example–the Washington Association of Realtors has a standard pre-printed form called an "Exclusive Buyer Agency Agreement," yet there is a clause within this form that gives the option to consent to dual agency. If an agreement is truly for exclusive buyer agency, then dual agency should not even be a part of it, because dual agency is a non-issue where this agency option is concerned.

Honestly, a buyer agency agreement becomes exclusive only when the option of dual agency has been removed–otherwise, it is just a buyer agency agreement.

Delving further into the world of exclusive buyer agency, we see a rift within the fragment. This culture is centered on an association that has let former members down in the past. This association is NAEBA. Instead of unity and camaraderie, there were arms-length adversarial attitudes within the group, and no support–as promised in their membership literature. When an exclusive buyer agent breaks away from the disappointing experience, they are then discredited for not belonging to the organization anymore. For example–in a recent Blog–an exclusive buyer‘s broker touted the news of an article he claimed was recommending that buyers only work with exclusive buyer agents who are members of NAEBA. However, upon review, it was realized that the article only mentioned that buyers can find an exclusive buyer‘s agent through NAEBA. The article made no specific endorsement advocating the sole use of NAEBA members.
It needs to be said that not all professional exclusive buyer agents are NAEBA members, mostly for the reasons already mentioned above.

The final fragment we will explore in the real estate industry is the culture of the discount brokers. Like the exclusive buyer agents, they are new to the industry, and they have also drawn the ire of the industry for going against the traditional ways of doing business. However, they have taken an adversarial position against all Realtors, including buyer agents, and inadvertently exclusive buyer agents. They have unfairly shrouded the entire industry under a cloak of suspicion–leading many consumers to believe that they are the only credible option available. Because certain discount brokers have ties to the media–which is notorious for delivering biased information–they are able to spread their inaccuracies nationwide. They profess that consumers are victimized by the industry, yet they fail to take into consideration that not all real estate professionals are alike. They are content to make sweeping generalizations about matters they are not fully informed on. Certain discount brokers contradict themselves by claiming that they do not practice dual representation (dual agency), yet if a buyer purchases a property through them, and the property is listed with their company, this is dual representation on the part of the company.

Bottom line:

The real estate industry is about serving the best interests of our clients, period. It is not about our egos. It is not about our "net gross sales last year," nor is it about out-selling "Sally Sells-A-Lot" next door. It is not about spreading deceitful propaganda and half-truths to induce consumer action, and it is not about suppressing valuable agency optionsnor alienating the practitioners that choose to make these agency options available. It is only about the welfare of consumers, respecting their right to be represented, and respecting their freedom to choose how they want to be represented. They have a right to full disclosure as to what their agency options are, because without full disclosure, they cannot make fully informed decisions on matters that can materially affect them.

Food for thought:

Will the real estate industry ever gather and reconcile its fragments for the sake of consumer welfare? Will real estate professionals ever learn to respect each other, and the diverse cultures that have evolved within the industry? Will old-school Realtors ever learn to understand that these diverse cultures are no less deserving of professional courtesy and mutual respect? Will certain discount brokers ever stop spreading inaccurate propaganda and half-truths to induce consumer behavior? Time will surely tell.

Positive change in the real estate industry will require integrity, diplomacy, transparency, tolerance, mutual respect, and understanding. Until we have these ingredients, we cannot fully serve the best interests of consumers, nor can we become a united industry.

The Agency Debate Rages On

I recently came across a blog entitled Exclusive Buyer Agency Discussed in Realtor Magazine Online written by fellow EBA, Stephen Scholls, from Buyers Broker Of Northern Michigan, LLC. His blog was a synopsis of an article done by Realtor Magazine Online, which intended to gather the views of perceived innovators in the real estate industry, regarding their opinions of where they believe the real estate industry is heading.

When three brokers were asked where they saw exclusive buyer agency heading in the coming years, it was not surprising when all three responded negatively, since they were all from traditional real estate firms. What I did find surprising, and Stephen pointed this out in his synopsis, is that Realtor Magazine Online did not even consult with brokers who actually work in the field of exclusive buyer agency. This caused me to question the motives of the magazine, as well as, question the association behind it. As a Realtor member in good standing, it concerns me, because it means that my trade association does not support my company’s business model. By not consulting with brokers working in the field, they demonstrate a bias in favor of traditional agency, which can introduce the risk of dual agency to consumers.

The general negative attitude towards exclusive buyer agency is apparent in the comments made on Stephen’s blog by those who do not fully understand the need to completely avoid the risk of dual agency. Some believe that most consumers do not know, and could care less, about exclusive buyer agency; but, would consumers not care if an issue arose in their purchase, and their “designated agent,” aka. dual agent, had to remain neutral to both parties? No one wins with dual agency, neither buyers nor sellers.

Some brokers believe that exclusive buyer agency will not last. Their reasoning is that listings have traditionally attracted buyer leads. While there is some truth to this, it is a truth that is in transition, as more consumers become aware of the risks posed by dual agency, aka. “designated agency.” Real estate consumers are not simple-minded, nor are they stupid.

To imply that consumers do not have the ability to understand or care about agency issues is downright insulting to them.

There is a general confusion about agency issues that seem to be generated by those who are intent on muddying the waters, and it is worsened by law makers. Introducing terms like “designated agency” and “single agency” are designed to compete against exclusive buyer agency, but the truth, is that “designated agency” is only dual agency called by another name, and “single agency” means that a buyer will not see properties listed by their agent’s company.

The bottom line, is that exclusive buyer agency helps buyers completely avoid dual agency, while having access to all properties, whether they are listed or unlisted. Buyers do not win with “single agency” because it limits their choice of available properties.

Smart real estate consumers want maximum choice of properties, with absolutely no risk of a conflict of interest. This is the ideal buying position to be in. This is only common sense.

Here is the comment I posted on Stephen’s blog:

“According to Elizabeth Weintraub’s definition of single agency: on Ask.com

‘Single agency means a real estate broker represents the buyer and cannot show the buyer properties listed by the broker’s agency.’

With exclusive buyer agency, the buyer has access to all properties. This includes all listed and unlisted properties. The issue of who pays the buyer’s agent is not really an issue, because if the seller agrees to cover the buyer’s broker fee to make the sale, it is no different than when the buyer asks the seller to cover closing costs.

The problem with merely being a transaction coordinator/facilitator is that consumers do not get the level of service they should receive when fully represented. After all, this is not like going to Walmart and shopping for clothes, or basic goods and services. This is what real estate consumers need to understand. No two real estate transactions are identical, and often times, problems can escalate if not swiftly and properly dealt with (as I am sure everyone here is aware). Knowing how to do this comes from having years of experience, which the average real estate consumer does not have, unless they are also in the real estate business.

Designated agency is just another name for dual agency, in my honest opinion. As more exclusive buyer agents enter the field, and earn the trust and loyalty of their clients, the truth about dual agency, aka. “designated agency,” and the downside of “single agency” will become more familiar to the average consumer. Exclusive buyer agency is a virtual infant, when compared to the age of the real estate industry in general. It is only a matter of time, patience, and perseverence on the part of real estate professionals who recognize the importance of establishing a fair and balanced closing table between buyers and sellers, and not introducing the risk of dual agency. Changing its’ name is not the solution, but avoiding it is. I firmly believe in exclusive buyer agency, and what it means for buyers, as well as sellers, because no one wins when there is a conflict of interest.

I do not regret choosing to specialize in this field of work. I enjoy educating buyers about dual agency, as well as, helping them to avoid it. It is a calling to do this kind of work, because it is challenging, as much as it is very rewarding.”

Here is the feedback I gave to Realtor Magazine Online:

“When asking about the future of exclusive buyer agency, it would have been more appropriate to ask Realtors who have chosen to specialize in this field, and not asking traditional brokers, who will naturally display a negative bias towards it. Did you really expect them to speak positively on this topic?

You do the public a great disservice by presenting biased and negative views from traditional brokers, without presenting the views of brokers who actually practice exclusive buyer agency.

For those who are confused and misinformed, exclusive buyer agency is about the complete avoidance of dual agency, which is a conflict of interest in real estate. No one wins when there is a conflict of interest, especially, when issues arise requiring the dual agent to remain neutral. The truth of the matter, is that exclusive buyer agency is here to stay, and it will flourish in the years ahead.”