With gas prices being so high, the cost of food on the rise, and the number of houses on the market increasing steadily as a result of the sub-prime mortgage crash, many realtors have had to change the way they do business. Market conditions have forced realtors to find ways to service their clients in a more cost-efficient and cost-effective manner.
BUYER BROKERAGE AGREEMENTS
In some states, realtors who work with buyers are required by law to enter into buyer brokerage agreements with them. In other states, buyer brokerage agreements are not mandated by law. In a nutshell, a buyer brokerage agreement sets forth the relationship between the buyer and the realtor, including their duties and obligations to one another under the agreement.
There are two types of buyer brokerage agreement, exclusive and non-exclusive. An exclusive buyer brokerage agreement requires the buyer to work exclusively with one agent who will be paid a commission if the buyer closes on a house during the term of the agreement, and, under certain circumstances, for a short time after the agreement expires. A non-exclusive buyer brokerage agreement allows the buyer to work with more than one agent to locate a house and only requires payment of a commission to the agent who finds the house which the buyer ultimately purchases.
In the past, it was not uncommon for agents to work with buyers without having them sign a buyer brokerage agreement. Agents were willing to take a chance on buyers with the hope the buyer would be loyal to them.
However, with the recent changes in the economy, many realtors have decided to work only with buyers who agree to sign an exclusive buyer brokerage agreement. The exclusive buyer brokerage agreement is a promise of loyalty between the buyer and the realtor. The buyer is promising to work exclusively with that realtor to find a home with the understanding that the realtor will be entitled to a commission when the buyer closes. And the realtor is promising to represent the interests of the buyer to the best of his ability and to avidly negotiate on the buyer's behalf.
The exclusive buyer brokerage agreement is a tool realtors use to protect their investment. When a realtor takes on a buyer as a client, he is investing time and resources in that buyer with a eye toward earning a commission if he is successful in finding a home for that buyer. If a buyer refuses to sign a buyer brokerage agreement, it signals to an agent that the buyer may not be serious.
PREVIEWING PROPERTIES
A consumer advocate in Atlanta recently said that any prudent buyer will preview at least 100 houses before making an offer. Well, with gas prices being so high, there are not many agents who will drive a buyer around the city to preview that many homes. Agents are quickly getting out of the tour guide business!
One of the best things the Internet offers realtors and their clients are an opportunity to preview properties online. Realtors can include dozens of photos as well as a virtual tour in the listings they post on their local multiple listing service. There are other sites realtors use to advertise properties as well, such as Craig's List, Zillow, and Realtor.com.
One thing a good realtor will do is qualify a buyer. That means the realtor will ask the buyer detailed questions about their wants and needs as they relate to finding a home. Statistics show that if the realtor has properly qualified the buyer, the buyer will make an offer on one of the first five homes he sees.
So, in preparation to show a buyer homes, a realtor will pull listings that meet the buyer's criteria and e-mail them to the buyer to review. This is the first stage of previewing. The buyer should carefully review the listings, separating them into three categories.
✗ Properties I Must See – These are the properties that the buyer really finds appealing and believes are probably just what he's looking for.
✗ Properties I Might Like to See – These are properties that the buyer thinks might work for him, but might not have all the features and amenities he really wants.
✗ No Way, Don't Waste My Time – These are properties that buyer knows he'd never make an offer on. They might have all the right features, but maybe he doesn't like the neighborhood or maybe they're too far from the highway. The buyer just knows in his gut that he doesn't like them.
Once the buyer has narrowed down the listings he'd like to see, the realtor will concentrate on showing him his top picks first. This is the second stage in the previewing process. The realtor will have the buyer rank these properties in his order of preference. As mentioned earlier, if the realtor has properly qualified the buyer, a truly motivated buyer should be ready to make an offer on one of these properties.
PRE-APPROVAL
In qualifying a buyer, most realtors will require him to get pre-approved, rather than pre-qualified. Realtors need to know what a buyer can afford to buy and the best way to find that out is with a pre-approval.
Pre-approval is important to agents because it prevents them from wasting time showing a buyer homes he can't afford. Additionally, if a buyer refuses to get pre-approved, it demonstrates to the agent that the buyer may not be serious. For that reason, many realtors will not put a buyer in their car that has not been pre-approved with a lender the agent trusts.
Once pre-approved by a lender the agent trusts, the buyer is under no obligation to use that lender for the loan. However, if a problem arises with the lender chosen by the buyer, the loan for which the buyer was pre-approved can be used as a backup.