Most have heard the adage that “time is money,” but how often are agents asked how much their time is worth? That may be a question that buyer agents are forced to ponder and answer in real time, given the scrutiny that the value of buyer agency has been under in recent months.
Incoming practice changes in accordance with the proposed settlement by the National Association of REALTORS® (NAR) have sparked renewed focus and discussion about the value proposition of practitioners working with buyers in the shifting landscape. More specifically, pundits believe agents need to be prepared to take stock and effectively communicate to clients just how much they are bringing to the table.
“Even if you don’t exclusively work with buyers, we do more than just open a door, and the good agents are able to explain just what more they do and how their skill set will quantify monetarily wise to a buyer, and that is going to be the critical point in my opinion,” says Ken Kaplan, founder of Campbell & Kaplan Real Estate.
“Now, agents really have to take a stand and realize that this is an opportunity and that they will have the chance to get ahead of this and not fear it, but embrace this opportunity.”
Breaking perceptions with data
A byproduct of ongoing litigation—and media coverage of it—has contributed to the public perception that buyer representatives are underworked and overpaid. It has also sparked discussions around how agents can clear the air and educate consumers about the time and work that goes into representing them.
Touting nearly three decades of experience as an official buyer agent contract trainer, Kaplan says the fallout of commission-focused litigation has made it critical for agents to take a harder look at what they are bringing to the table for buyers.
“Now is the time that people are going to have to quantify what they do and show that value to a client because it’s going to be the law that you have to have a buyer representation agreement to work with a client before you show them any property,” Kaplan says.
This, according to NextHome CEO James Dwiggins, is a critical component to justifying the cost of your services and addressing a longstanding confusion and underestimation of the time and effort agents put into serving their clients.
“We did a study with the WAV Group earlier this year, and 25% of all buyers think an agent spends less than 10 hours helping them buy a house,” Dwiggins says.
The study, which was shared with RISMedia, surveyed more than 300 homebuyers who bought their homes within the past year about their experience. It highlighted ongoing confusion about the home-buying process, but also showed a significant disconnect between the perceived amount of time that agents put into a transaction versus the actual numbers.
Dwiggins believes that technology can help bridge that gap, which he hopes to address with a new platform that he and several partners launched in May called Rayse. Using what he describes as “beacon technology,” Dwiggins explains that the program will allow agents to track the work they do, providing a clear, detailed record of an agent’s activities and demonstrating their value to clients.
“I think that it’s going to cause agents to be better,” Dwiggins says. “Consumers will appreciate and understand the work that’s involved in this new future, and candidly, I think people will understand what they’re paying their agent for.”
Show your worth with the work
Discussions about compensation can seem daunting to some agents already. Tack on the fact that agents are going to be having these conversations with buyers, many of whom are already stretched for cash, and it makes the task all the more difficult.
“I think most agents haven’t developed that muscle and practice because a lot of states have agency disclosures that are required, but that’s more of a one-sided disclosure versus this rule change that is really about buyer representation, which is actually an employment contract,” says eXp Realty CEO Leo Pareja.
Questions surrounding how much an agent will charge for their service don’t have just one answer, according to Pareja. Instead, he points out that it comes down to the sophistication of the client and their needs on that specific transaction.
From institutional buyers to first-timers, the conversation over compensation will vary, but it’s critical to inform consumers that it’s always negotiable, and to educate them.
Pareja says he is training eXp agents to treat their buyers as they treat their sellers while also providing valuable metrics and data to keep consumers informed. Successful agents—on both sides of the transaction—are the ones who know their stats.
“If you ask most agents who are successful on the listing side, (they will know) days on market and their list to price ratio, and they’ll tell you the percentage of marketshare they have in a neighborhood,” he says.
Beyond the hard numbers and figures, Pareja highlights the importance of seeking feedback from past clients. He encourages agents to review past buy-side transactions—specifically over the past 24 months—and interview past buyers to understand what aspects of their services were most helpful and appreciated.
Kaplan also believes agents should be ready to articulate the skills and services they offer that will bring value to the consumer.
He highlights a variety of aspects that buyers would find valuable, including skills and services that help buyers save money and get their offers accepted in multi-offer scenarios.
“There are four different things that as an agent, I would think most agents are looking at, but don’t realize that this is a value to explain to a client on how they evaluate a market,” he says.
That includes looking at the current state of inventory and the time on market for listing in their respective areas.
He also says agents should look at the number of reductions in prices within their markets along with the average differentials between the asking price and what listings sold for.
More than a feeling
For Howard Hanna agent team leader Jason Sokody, transparency and honesty about the transaction process and compensation should be at the forefront of agents’ buyer consultation.
“It all starts with just laying it out right from the beginning,” he says. “We’re going to need a big push for being very open and being very honest about these types of conversations. None of this should be clandestine, and the fact that it was a little bit more nebulous in the past is the reason that I believe that we’re at the point that we are right now.”
Buyers have been hammered in recent years as surging prices, limited inventory and more hindered their buying power. Considering demand remains a strong force in the market and buyers are still strapped for cash, Sokody says competition for buyers’ business in the new market will be fierce.
Experienced agents may find navigating the shifting landscape in the industry to be a nonissue, but Sokody suggests that newer agents lean on—or consider joining—a team to help guide them through the changes coming down the pike.
“If you’ve never sold a home before and now you’re about to try to get commission for something you’ve never done before, that’s going to be a very difficult proposition unless you have somebody that has done it with you who can share your experience,” he says.
“You approach it just like anything else you would in your life that you want to be successful at—with honesty and confidence. Because I will tell you right now, if I can’t even ask for my own commission, (do) I even deserve it?” Sokody says. “You look somebody straight in the eye, sit down, you talk to them and you tell them what you do.”
Sokody encourages agents to provide buyers an outline of their services, availability, area of expertise and past performance information that can show prospective buyers their success rate and reviews from past clients.
He also suggests offering “sliding scales” to help consumers better understand how long an agent will work for them or how many homes you can show them for a particular percentage.
“There’s a variety of ways you can work that, so produce a couple different ways for people to actually choose how to work with you, because people like options,” he says.
“They just want to know what’s going on,” Sokody says. “I don’t have any problem telling a buyer why we’re worth what we’re worth, and that’s what it starts with, these candid conversations. ‘Wow, you do all that stuff. Oh, I didn’t know that.'”
Counseling buyers on the transaction process and keeping them informed is essential to building relationships with clients, but Gretchen Pearson, president and owner of Berkshire Hathaway HomeServices Drysdale Properties says that showing up and earnestly working to support their home-buying goals is equally as important to showcasing value to buyers.
She agrees that truth and communication with consumers is essential to the buyer agent’s value proposition in the new landscape of business practices. She says that she and her team of agents have honest conversations with buyers—new and returning—about compensation and the changes in fee payments.
“Those are the small and very minor conversations that we’re having with move-up buyers—what we talk about is does it matter who’s paying as long as you can get the appropriate price for the home you’re selling and you can buy for the appropriate price that you want to pay,” she says. “It doesn’t matter inside the transaction on cost. It matters to the bottom line, and so this is mostly for new homebuyers, and it’s very confusing—there is a trust element.
