What You Should Know About Buyer’s Agency and Risk Management
We already know the Buyer Agency Agreement is an agent’s best friend, but it does more than ensure you get paid — it also has legal and risk management protections when out with clients.
We’ve all seen it — Buyers and sellers can adopt certain attitudes towards working with agents, depending on which side of the transaction they fall on, but particularly depending on what kind of market we are currently in. As an example during the scalding hot seller’s market, sellers often priced their home much too high, believing there would be some “sucker” out there desperate enough to buy!
There is another attitude among FSBO’s. They say, “I don’t need an agent, I can just have agents show my house and bring me a buyer.” Or, “I can just sell it myself. It’s not that hard.” And let’s not forget this one: “The market is so hot, I don’t have to lift a finger to sell my home.”
For many buyers right now, there is an underlying attitude such as “There are so many buyers, but hardly any sellers, so agents are desperate to work with anyone and I won’t have to commit.” This keeps them from signing the Buyer Agency Agreement, and puts you in an awkward position.
No matter which of these attitudes are keeping your customers from signing on the dotted line, it stems from the fact that they don’t see the value in hiring you as their agent.
Where’s the Value In Committing?
The best answer for this problem is simple: They want you to work for free, so don’t.
They want you to be so desperate to get their business, working so hard to find a home for them, or bend over backwards show their house for them, with little regard for you, your time, and your efforts. Why? They don’t see your value, so they expect you to do it all for free.
Anyone with any sense knows that you can’t run your business that way, or you’ll go broke! But yet, you are more committed to the buyer than they are to you. Why? Why would you spend your time away from your family, or your socializing time to work for people who aren’t even committed to you?
TIP: Check out this article by Business Insider about why we shouldn’t work for free.
Take a Stand For Your Business
The real estate industry is a unique business model, and sometimes we get so focused on helping people that we forget this is a business. You aren’t just a salesperson, you are a businessperson, and you need to THINK like a businessperson. A businessperson manages their self-promotion, their money, their clients, their marketing, their referral business, their customer service, and so much more.
The Restaurant Analogy
When you go into a restaurant, you have a ton of different people making everything run smoothly. You have the hostess, the wait staff, the chefs, the managers, the bussing staff, and if you are lucky to go to really fancy restaurants, you have a sous chef, and maybe a sommelier. Then, there is the bookkeeper, the marketing agent, and the list goes on. The point is that all these different people help make the restaurant a success, and each have their own unique role and skillset.
In real estate, we need to be skilled at everything. We need to be the hostess, then take their order, go to the kitchen and cook their food while planning promotional content and balancing the books. Then you bring the food out, then clean up after the guest, and wash the dishes while trying to think of hosting an event.
You are your whole business, and that business has to come first. That means that you need to decide “what do I want my business to look like?” What are your standards of operation? Operation procedures? How do you run your business?
Stop working for free! Really.
When a buyer wants to look at a house, don’t show the house without there first being a clear understanding of the relationship between you and them. Just like you would go on a listing appointment and have that conversation to show the homeowner the value of listing with you, you need to do the same thing with a buyer.
Sit down with them and walk them through the Six-Step Buying Process and tell them a little about yourself, your company, and how they need to make a decision to hire you, because if they choose not to have you as their representative, you will be representing the seller. Your commitment will NOT be getting them their dream home at the best possible price, but your duty will be to the seller and getting THEM the best possible price for their home. Your fiduciary duty means you will be working AGAINST the buyer.
Buyers don’t hire agents because they don’t realize the detriment they put themselves in by hopping from agent to agent. Why? They don’t recognize the disadvantages because no agent is sitting down with them to explain it.
Legalities and Risk Management
We had a guest speaker on a Power Agent® webinar a little while ago, Robert Zabbia, who talked about risk management for agents. If you are working with buyers without having that buyer agency agreement in place, you have a lot more liability. That can be a great approach to discussing the Buyer Agency agreement with the buyers if they are hesitant to sign:
“You know, Mr. and Mrs. Hunna Hunna, without this agreement, if something happens when we’re looking at properties, then there’s a big liability issue, so this is a legal and insurance issue that we need to be covered for. It’s not personal, but I want to protect your interests. That’s what I’m here for, as a professional. I have a license, and insurance, and there’s a reason for that. This is just to make sure that we’re covered.”
This request doesn’t have to fall on your shoulders either. Blame the laws that govern your license, blame the company policy, or blame the insurance. Put the responsibility of this document somewhere else if you are getting pushback.
“Mr. and Mrs. Hunna Hunna, before I can lift a pen for you, by law, I have to have a conversation with you about agency so that we are all clear on our relationship and who I’m representing. I know you just want the address to the house, and sure, other agents might just give that to you, but listen…I happen to be really good at what I do, and the reason why I’m really good is because I’m a businessperson, and this is how I run my business. If you want to work with someone else that’s a little more carefree, be my guest, but you are putting yourself at a high risk doing it that way. I would love to work with you, and I’d love to show you properties, but first things first, we need to have this conversation to protect your interests. If other agents are showing you around all over the place without this legality in place, are they really looking out for your best interests? Mr. and Mrs. Hunna Hunna, I would be concerned. This is an important decision you are making in buying a home, and just like if you were going to make an investment in the stock market, you could do it yourself, or hire a professional. But, even among professionals, there is still good, better, and best. You can give your money to a pro and still lose it if you don’t do your due diligence. I want you to do your due diligence and have this conversation so I can explain how this all works. That way, you can protect your interests. There is a difference between someone who’s going to fight for your interests and someone who’s just going to give you addresses over the phone. Those types of agents might as well just be clerks.”
TIP: For other information on risk management, check out this article by Real Life Real Estate Training.
Showing your value and why it’s in the client’s best interests to commit to you is a part of coaching the homeowner. When they don’t have an accurate understanding of what’s at risk, how can they see the value in working with you?
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Power Agents®, for more tools and training to impress your buyers and protect your business, check out the amazing content in the Buyers tab in the Classroom. If you haven’t yet, peek into the Time and Money Management tab as well for some tips and tricks to work on the business side of real estate.
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