Yesterday I broke down exactly for what a seller’s agent is paid and today I will discuss what a buyer’s agent performs in that same real estate transaction for their 50% share of that 6% commission. For this segment, I elicited the help of my friend and colleague Noah Rosenblatt, a successful buyer’s agent at The Halstead Property Company who is also a fellow blogger of UrbanDigs.com. Noah and I have developed a friendship over the past couple of years as we both share the desire to make the residential real estate process more transparent and more honest.
Here’s Noah’s take on what a good buyer’s agent should perform:
Buyer’s Agent 3% -(directly from my InBox from Noah)
I must admit that the majority of my sales business is on the BUY side, representing first time buyers or even veteran buyers who are seeking to upgrade. The consistent feedback I get from my buyer clients regarding the level of service that is both expected and wanted, is that they want unbiased, value oriented consulting to determine a best of breed product in a particular price point. Buyers actively tell me that my focus on profit potential at resale is what they admire best when I go and view a property.
Its a product to me and buy side brokers should focus on property quality, property valuation, profit potential, individual scalability, comps analysis, bidding strategy, negotiating, and providing a smooth process from contract signing to closing. In addition, I usually consult my buyers on the anticipated closing costs, renovation ideas & costs, and the loan/rate process. Having an unbiased and product oriented focus while you view 10+ properties is sometimes hard to do, but buyer brokers must adapt to what the buyers’ needs are and take in what they like and don’t like about a specific property as you view with them. In the end, this allows the buyer broker to fine tune their strategy for that specific client and actively look for a product that not only is the best value in the price point, but also one that can extend a time-line to own and offers the best resale potential for down the road.
The days of sugar coating an overpriced property to get a quick deal are done and will only insult the buyer’s intelligence and result in a lost client!
Having worked with buyers from all walks of life, I would agree with much of what Noah suggests and it is obvious to me that he excels with buyers from the financial world who really view their property as part of their overall portfolio. But I have to wonder how many buyers out there feel like they are getting this level of service? And the bigger question is that I wonder how many seller’s feel like the buyer should be paying this 3% side of the commission?
Now it’s true that a buyer’s agent takes part in the negotiation process and the preparation of a Board application in the case of a Co-op sale but both of these responsibilities are aligned with the buyer’s interests so why is the seller paying their commission? I have long been a proponent of a change in commission structure but for now we work with what we have and that is a system where a seller pays a buyer’s agent for all of their time and hard work leading up to the showing of their property as well as the responsibilities that the agent incurs from the point an offer is made to the closing table and beyond. For the record, I don’t think buyers have reached the point where they would be comfortable paying for an agent’s services but if more agents work like Noah, that may change.