ABR® Designation Course V3.0 Course Description

November 2016 © Real Estate Buyer’s Agent Council Page 1 of 7

Course Goal

The goal of the 2-day ABR® Designation Course is to establish a foundation of training, skills, and resources to help real estate professionals succeed as a buyer’s representative. Students learn to:

Build a buyer- representation business

Value the services you perform on behalf of buyer-clients

Increase confidence to work toward a signed buyer representation agreement if written buyer representation agreements are customary in your market

Gain methods, tools, and techniques to provide the support and services that buyers want

Learning Objectives

Introduction to Buyer Representation

Analyze the agent-buyer relationship and learn what’s important to the buyer

Articulate a value proposition as a buyer’s representative

Forming a Buyer Relationship

Gain the confidence to present the case for buyer representation

Connect different relationships (client or customer) and forms of representation to duties and services provided

Buyer Consultations

Conduct an interview and consultation session that leads to a signed buyer representation agreement and wins buyers’ loyalty

Help buyers evaluate if they are ready to purchase homes

Help buyers establish their needs, wants, and price range

Shape buyer expectations of the market

Putting Buyer Representation into Action

Search for properties that meet the buyer’s needs and wants

Follow federal, state, and local Fair Housing laws when selecting and showing properties

Work with listing agents to arrange property showings

Prepare a buyer for property showings

ABR® Designation Course V3.0 Course Description

November 2016 © Real Estate Buyer’s Agent Council Page 2 of 7

Show properties

Apply safety procedures when showing property

Offers, Counter Offers, and Negotiations

Assess the strengths and weaknesses of offers and negotiation positions of the buyer and seller

Help the buyer formulate an offer

Use valuation tools—RPR, AVMs, CMAs—to help the buyer evaluate price/value

Present your buyer-client’s offer to the seller

Help the buyer formulate and implement a negotiation strategy

Guide buyers through the offer and counter offer process

Manage a multiple-offer situation

From Contract to Close

Guide buyers through the required actions and processes between contract and closing

ABR® Designation Course Course Outline

November 2016 © Real Estate Buyer’s Agent Council Page 3 of 7

The Accredited Buyer Representative

A. Course Overview

B. Achieving the ABR® Designation Requirements

C. FAQs—What You Need to Know About the ABR® Designation

D. Business Tools for REBAC

E. Course Learning Goals

F. Course Modules and Learning Objectives

I. Introduction to Buyer Representation

A. The Buyer’s Advocate

B. How Buyers Start Searching for Homes

C. Your Role in the Age of the Internet

D. Your Unique Value Proposition

II. Forming the Buyer Relationship

A. First Meetings

B. Exercise: Looking Through Buyer’s Eyes

C. Start Smart

1. Respecting Exclusive Agreements

2. Staying Safe

D. How Is an Agency Relationship Formed?

1. Express Agreements

2. Implied Agreements

3. Agency Disclosure and Confidential Information

E. How Will We Work Together?

1. State Law

2. REALTOR® Code of Ethics

3. Office Policy

F. Exercise: State of Agency Disclosure ABR® Designation Course Course Outline

November 2016 © Real Estate Buyer’s Agent Council Page 4 of 7

G. What Are the Options?

1. Buyer or Seller Only

2. Dual Agency

a) Disclosed Dual Agency

3. Designated Agency

4. Subagency

5. Non-Agency Relationships

6. 3 Important Principles

H. What Are Your Duties and Responsibilities?

1. Duties to Clients

2. What Is Reasonable Care and Diligence?

3. Responsibilities to Customers

I. Are You in Sync with Your Brokerage?

J. Exercise: Turning Duties into Value

III. Buyer Consultations

A. The Buyer Consultation

B. Goals of a Buyer Consultation

C. The Ideal Home—Needs, Wants, Parameters

1. Buyer Needs Assessment Worksheet

D. Price Parameters—Qualify the Buyer

E. Shaping Expectations—How Is the Market?

F. Do You Want to Represent This Buyer?

G. Buyers or Renters?

H. Is a Written Buyer Representation Agreement Necessary?

I. The Buyer Representation Agreement

J. Compensation Pop-Quiz!

K. Four Contracts in Real Estate

L. Compensation ABR® Designation Course Course Outline

November 2016 © Real Estate Buyer’s Agent Council Page 5 of 7

1. Compensation Options

2. When the Offer of Compensation Doesn’t Match

M. Listings Not in the MLS

N. FSBOs

O. When Buyers Won’t Sign

IV. Putting Buyer Representation Into Action

A. Finding the Right Property

1. Managing Expectations

2. “No Stone Unturned”

B. When the Search Includes FSBOs

C. Realtors Property Resource®

1. The Realtors Valuation Model® (RVM®)

2. Property Resource® Property Report

D. Buyer Loyalty

E. Showing Property Protocol

1. Eyes and Ears Everywhere

F. Procuring Cause

G. Skill Practice – Meet Your Next Buyer

H. Fair Housing and the Buyer’s Representative

1. Which Law Prevails?

2. How Will You Respond?

3. Statement of Fair Housing Policy

I. Skill Practice Scenarios

V. Offers, Counter Offers, and Negotiations

A. Preparing the Buyer

B. Educated Buyers Make Sounds Decisions

C. Exercise: What Buyers Need to Know ABR® Designation Course Course Outline

November 2016 © Real Estate Buyer’s Agent Council Page 6 of 7

D. Evaluate the Buyer-Client’s Negotiating Position

E. Formulating an Offer

F. Contingencies

G. Prepare a Market Analysis

H. Skill Practice Scenarios

I. Presenting an Offer – Know the Rules

1. Confidentiality and Disclosure

2. Variable Rate Commissions

3. Back-Up Offers

J. Multiple Offer Situations

1. Presentation of Multiple Offers

2. Discussion Question

3. Using an Escalation Clause

K. Offers on REO Properties

L. Offers on Short Sale Properties

M. Counter Offers

VI. From Contract to Close

A. Contract Contingencies

B. Mortgage Process

1. Loan Estimate Comparison

2. Mortgage Application Follow-up

3. Additional Documentation

C. Inspections

D. Property Insurance

E. Flood Insurance

F. Title Insurance

G. No Changes in Financial Picture

H. Pre-Closing Walk-Through(s) ABR® Designation Course Course Outline

November 2016 © Real Estate Buyer’s Agent Council Page 7 of 7

I. Data Security

J. When Appraisal Derails Closing

K. Prepare the Buyer for Closing

1. How to Prepare

2. Who Attends?

3. What to Expect

L. Exercise: Stay in Touch

M. Next Steps—REBAC Candidacy

1. Complete an Elective Course

2. Document Completed Transactions

3. Maintain REBAC and NAR Membership

VII. Completion Exam

A. 50 multiple-choice questions, closed book

B. 80 percent passing grade

 

Course Goal

The goal of the 2-day ABR® Designation Course is to establish a foundation of training, skills, and resources to help real estate professionals succeed as a buyer’s representative. Students learn to:

 

 

Learning Objectives

 

 

■ Forming a Buyer Relationship

■ Buyer Consultations

■ Putting Buyer Representation into Action

 

■ Offers, Counter Offers, and Negotiations

 

■ From Contract to Close

 

 

The Accredited Buyer Representative

A.             Course Overview

  1. Achieving the ABR® Designation Requirements
  2. FAQs—What You Need to Know About the ABR® Designation
  3. Business Tools for REBAC
  4. Course Learning Goals
  5. Course Modules and Learning Objectives

 

  1. Introduction to Buyer Representation
    1. The Buyer’s Advocate
    2. How Buyers Start Searching for Homes
    3. Your Role in the Age of the Internet
    4. Your Unique Value Proposition

 

  1. Forming the Buyer Relationship
    1. First Meetings
    2. Exercise: Looking Through Buyer’s Eyes
    3. Start Smart
      1. Respecting Exclusive Agreements
      2. Staying Safe

D.             How Is an Agency Relationship Formed?

  1. Express Agreements
  2. Implied Agreements
  3. Agency Disclosure and Confidential Information

E.              How Will We Work Together?

  1. State Law
  2. REALTOR® Code of Ethics
  3. Office Policy

F.              Exercise: State of Agency Disclosure

 

 

  1. What Are the Options?
    1. Buyer or Seller Only
    2. Dual Agency
      1. Disclosed Dual Agency
    3. Designated Agency
    4. Subagency
    5. Non-Agency Relationships
    6. 3 Important Principles

H.             What Are Your Duties and Responsibilities?

  1. Duties to Clients
  2. What Is Reasonable Care and Diligence?
  3. Responsibilities to Customers

I.               Are You in Sync with Your Brokerage?

  1. Exercise: Turning Duties into Value

 

D.             Price Parameters—Qualify the Buyer

  1. Shaping Expectations—How Is the Market?
  2. Do You Want to Represent This Buyer?
  3. Buyers or Renters?
  4. Is a Written Buyer Representation Agreement Necessary?
  5. The Buyer Representation Agreement
  6. Compensation Pop-Quiz!
  7. Four Contracts in Real Estate
  8. Compensation

 

 

  1. Compensation Options
  2. When the Offer of Compensation Doesn’t Match

M.            Listings Not in the MLS

  1. FSBOs
  2. When Buyers Won’t Sign

 

  1. Putting Buyer Representation Into Action
    1. Finding the Right Property
      1. Managing Expectations
      2. “No Stone Unturned”

B.             When the Search Includes FSBOs

  1. Realtors Property Resource®
    1. The Realtors Valuation Model® (RVM®)
    2. Property Resource® Property Report

D.             Buyer Loyalty

  1. Showing Property Protocol
    1. Eyes and Ears Everywhere

F.              Procuring Cause

  1. Skill Practice – Meet Your Next Buyer
  2. Fair Housing and the Buyer’s Representative
    1. Which Law Prevails?
    2. How Will You Respond?
    3. Statement of Fair Housing Policy

I.               Skill Practice Scenarios

 

  1. Offers, Counter Offers, and Negotiations
    1. Preparing the Buyer
    2. Educated Buyers Make Sounds Decisions
    3. Exercise: What Buyers Need to Know

 

 

  1. Evaluate the Buyer-Client’s Negotiating Position
  2. Formulating an Offer
  3. Contingencies
  4. Prepare a Market Analysis
  5. Skill Practice Scenarios
  6. Presenting an Offer – Know the Rules
    1. Confidentiality and Disclosure
    2. Variable Rate Commissions
    3. Back-Up Offers

J.               Multiple Offer Situations

  1. Presentation of Multiple Offers
  2. Discussion Question
  3. Using an Escalation Clause

K.             Offers on REO Properties

  1. Offers on Short Sale Properties
  2. Counter Offers

 

  1. From Contract to Close
    1. Contract Contingencies
    2. Mortgage Process
      1. Loan Estimate Comparison
      2. Mortgage Application Follow-up
      3. Additional Documentation

C.              Inspections

  1. Property Insurance
  2. Flood Insurance
  3. Title Insurance
  4. No Changes in Financial Picture
  5. Pre-Closing Walk-Through(s)

 

 

  1. Data Security
  2. When Appraisal Derails Closing
  3. Prepare the Buyer for Closing
    1. How to Prepare
    2. Who Attends?
    3. What to Expect

L.              Exercise: Stay in Touch

  1. Next Steps—REBAC Candidacy
    1. Complete an Elective Course
    2. Document Completed Transactions
    3. Maintain REBAC and NAR Membership

 

VII.        Completion Exam

A.             50 multiple-choice questions, closed book

  1. 80 percent passing grade

 

Version 3.0

© Copyright 2016, Center for Specialized REALTOR® Education V 3.0

Note: The National Association of REALTORS®, the Center for Specialized REALTOR® Education, and the Real Estate Buyer’s Agent Council (REBAC), its faculty, agents, and employees are not engaged in rendering legal, accounting, financial, tax, or other professional services through these course materials. If legal advice or other expert assistance is required, the student should seek competent professional advice.

Real Estate Buyer’s Agent Council 430 North Michigan Avenue Chicago, Illinois 60611

800-648-6224 (phone)

312-329-8632 (fax)

REBAC@Realtors.org www@rebac.net

Contents

The Accredited Buyer Representative 1

Achieving the ABR® Designation Requirements 3

ABR® Elective Courses 5

Business Tools for REBAC Members 6

Course Learning Goals 12

Course Modules 12

  1. Introduction to Buyer Representation 15

The Buyer’s Advocate 16

How Buyers Start Searching for Homes 18

Your Role in the Age of the Internet 20

Your Unique Value Proposition 21

  1. Forming the Buyer Relationship 25

First Meetings 26

Exercise: Looking Through Buyer’s Eyes 27

Start Smart 28

How Is an Agency Relationship Formed? 32

How Will We Work Together? 36

Exercise: State of Agency Disclosure 37

What Are the Options? 38

What Are Your Duties and Responsibilities? 43

Are You in Sync with Your Brokerage? 54

Exercise: Turning Duties into Value 55

  1. Buyer Consultations 57

The Buyer Consultation 58

Goals of a Buyer Consultation 59

The Ideal Home—Needs, Wants, Parameters 60

Price Parameters—Qualify the Buyer 66

Shaping Expectations—How Is the Market? 67

Do You Want to Represent This Buyer? 70

Buyers or Renters? 71

Is a Written Buyer Representation Agreement Necessary? 72

The Buyer Representation Agreement 73

Compensation Pop-Quiz! 75

Four Contracts in Real Estate 76

Compensation 77

Listings Not in MLS 80

When Buyers Won’t Sign 82

  1. Putting Buyer Representation Into Action 85

Finding the Right Property 86

When the Search Includes FSBOs 87

Realtors Property Resource® 89

Buyer Loyalty 92

Showing Property Protocol 94

Procuring Cause 98

Skill Practice – Meet Your Next Buyer 99

Fair Housing and the Buyer’s Representative 103

Skill Practice Scenarios 106

  1. Offers, Counter Offers, and Negotiations 111

Preparing the Buyer 112

Exercise: What Buyers Need to Know 116

Formulating an Offer 119

Contingencies 120

Prepare a Market Analysis 121

Skill Practice Scenarios 125

Presenting an Offer – Know the Rules 129

Multiple Offer Situations 133

Why Shouldn’t I Use an Escalation in My Offer 136

Offers on REO Properties 137

Offers on Short Sale Properties 138

Counter Offers 139

  1. From Contract to Close 141

Contract Contingencies 142

Mortgage Process 142

Inspections 145

Property Insurance 146

Flood Insurance 147

Title Insurance 147

No Changes in Financial Picture 148

Pre-Closing Walk-Through(s) 149

Data Security 149

When Appraisal Derails Closing 150

Prepare the Buyer for Closing 151

Exercise: Stay in Touch 155

Resources 157

Prospect ID Form 158

Sample Agency Disclosure and Brokerage Fee Agreement for Unlisted Property 159

Buyer Needs Assessment Worksheet 160

Buyer Information and Disclosure Checklist 162

True Cost of Homeownership 163

Make These Scripts Your Own 165

Ask Your Broker 168

Acknowledgments

The success of the Accredited Buyer’s Representative (ABRÆ) designation program is driven in large measure by the standards of educational excellence that our course providers, instructors, and fellow buyer’s representatives uphold. REBAC expresses gratitude and appreciation to the following ABR® Designees for their contributions, ongoing support, and commitment to excellence in buyer representation education.

Schaumburg, Illinois

Bullhead City, Arizona

Oceanside, California

 

The Accredited Buyer Representative

ABR® Designation Course

Welcome to the Accredited Buyer’s Representative (ABR®) Designation Course. This two-day course is the foundation of the ABR® designation program. REALTORS® who earn the ABR® designation demonstrate:

The ABR® designation is conferred by the Real Estate Buyer’s Agent Council (REBAC), a wholly owned subsidiary of the National Association of REALTORS® (NAR). With more than 30,000 members, REBAC is the world’s largest organization of professionals who specialize in representing buyers in residential real estate transactions.

Students who complete this course are on the way to meeting the educational requirements for the ABR® designation.

2

Introduction

Achieving the ABR® Designation Requirements

Becoming an Accredited Buyer’s Representative (ABR®) designee is a multiple-step process requiring elements of active membership, continuing education, and real- world experience. For anyone to be considered an ABR® designee they must first be an active member of the National Association of REALTORS® or similar cooperating association.

    1. Complete the 2-day ABR® designation course
      • Pass the 50 question exam at the end of the course with a minimum 80% score.
        • You will have 2 attempts to pass the exam if needed.
      • Become an official REBAC member.
        • The Real Estate Buyer’s Agent Council (REBAC) is a wholly-owned affiliate of the NATIONAL ASSOCIATION OF REALTORS® (NAR).

REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer.

Upon successful completion of the ABR® course and exam an email will be sent to you with information on how to log onto REBAC.net and verify your first year of complimentary membership.

    1. Complete an ABR® elective
      • One ABR®-approved elective course must be taken sometime before or up to 36 months after the initial ABR® designation course.
    2. Submit the ABR® application with documentation verifying 5 completed transactions in which you acted as a buyer’s representative
      • Any transactions closed before taking the ABR® designation course or closed within 3 years after completing to course are valid.
      • Submit the application documenting these transactions along with verification of the other requirements. This application will be emailed to you after completing the ABR® course and can also be found at REBAC.net/content/abr-application.
    3. Maintain active membership in both NAR and REBAC
      • To remain an ABR designee, you must pay all dues and remain an active member of NAR and REBAC.
        • Course enrollment includes a free one-year membership with REBAC. Second-year membership is prorated. Annual dues are $110 each year thereafter.

3

ABR® Designation Course

FAQs—What You Need to Know About the ABR® Designation

When the course provider (the school/board/franchise) notifies REBAC of your course completion, REBAC will e-mail you a membership confirmation. The e-mail confirmation contains your membership ID number, which you will use to log on to REBAC.net.

You will receive a notification by e-mail from REBAC. Depending on instructions from your local REALTOR® association, your ABR® Designation kit will be sent to your preferred mailing address.

The course provider must notify REBAC of course completion.

1st year: free

2nd year: prorated based on ABR® Designation Course completion date

3rd year: $110 annual dues—with 5% discount if paid online before end of year

You will receive a designation application along with your membership confirmation. Or go to www.REBAC.net and login using your REBAC membership ID number. Select ABR® Application under Member Center.

REBAC membership dues are billed in November for the upcoming year and are due on December 31st. That means that you will receive a dues invoice in November for a prorated amount of dues for the second year less than $110, based on the month that you completed the ABR® Designation Course. For example, if you completed the ABR® Designation Course in June, you will receive an invoice in November for $55—half a year’s dues for the second year. The amount billed covers the months remaining in the calendar year after your free membership expires and syncs your membership dues with REBAC’s annual dues-billing cycle.

Submit the completed application by e-mail to REBAC@realtors.org or by mail to REBAC, 430 North Michigan Avenue, Chicago, Illinois 60611, USA.

Allow REBAC staff 2 business days from receipt to process your application.

Once you receive notification from REBAC that your designation application has been approved, only then will you be able to use the ABR® logo.

No. You must maintain both memberships.

4

Introduction

5

Business Tools for REBAC Members

Tools for Working with Buyers

Here you will find business-building tools to assist you when working with buyers—all designed to help you deliver superior buyer-representation services. Make the most of out of these benefits by becoming a certified ABR® designee.

Denotes benefit that is only available to certified ABR® designees.

Marketing Materials

Save marketing time and money and tailor professionally designed flyers, postcards, and brochures, featuring numerous themes and formats with your personal branding.

Publications

Networking Referrals

Course Learning Goals

The goal of the 2-day ABR® Designation Course is to establish a foundation of training, skills, and resources to help you succeed as a buyer’s representative. Let’s look at what you can expect to learn over the next two days:

Course Modules

The course material is organized into six modules based on the skills and knowledge you need to fulfill your value proposition as a buyer’s representative. The learning objectives of the modules are:

The course concludes with a 50-question multiple-choice exam. Successful completion is 80 percent or better—a total of 40 or more correct answers.

 

  1. Introduction to Buyer Representation

The ABR® Designation Course provides the skills and knowledge you need to build your buyer representation business. The course will help you find the winning combination for your marketplace, your business, and your personal style.

The Buyer’s Advocate

Buying a home is a complex process involving a major financial commitment. For most people, it is the largest single purchase they will make in their lifetime.

Beyond the financial commitment, homeownership is an important milestone in a buyer’s life. It is an expression of lifestyle, as well as the place that will shape their family life for years to come. With so much at stake, buyers want a trusted guide who can help them make good decisions and minimize risks.

The buyer’s representative owes the client fidelity and fiduciary or statutory duty in all transaction matters. That duty includes finding buyers the right property at the best price and terms, guiding them through the home-buying process, protecting their interests, and safeguarding confidential information.

As an experienced real estate professional, you know that getting the process right is crucial, but there is a lot more to putting a transaction together than following the letter of the law. Buyer’s representative’s find success by matching their services to buyers’ motivations, concerns, and needs. If you are in the buyer representation business, you provide services, information, knowledge, and guidance for compensation.

Where do you begin building a buyer representation business? Let’s start by looking at what buyers say they would like you to do for them and the benefits they say you provide.

    1. Introduction To Buyer Representation

The services buyers want most from their agent include help finding the right home, negotiating price and terms, determining what comparable homes sell for, and help with paperwork.1

1Source: Profile of Home Buyers and Sellers, National Association of REALTORS®, www.realtor.org/Research

17

      What Services Do Buyers Value?2

     Do the services you offer match the services valued by the clients you are trying to reach and serve?

How Buyers Start Searching for Homes

NAR research shows that on average, buyers spend about 3 weeks looking at properties online before contacting a real estate agent. When they are ready to get serious about buying a home, they seek out expert guidance to help them find the right home and navigate the process.

2 Ibid., page 17.

      1. Introduction To Buyer Representation

How Buyers Start the Home Search3

Looked up

What do buyers do after searching on the Internet? 65% Walk through homes viewed

Visited open houses, 3%

Contacted a Talked with lender, 7% family, friends

about process, 5%

neighborhood info, 2%

Other, 6%

Looked online for properties, 42%

online

38% See exterior of homes or neighborhoods

33% Find a real estate agent

27% Request more information 17% Contact builder/developer 14% Look for information on

mortgage & home buyer tips

Drove by homes, neighborhoods, 7%

Read about the process online, 13%

Contacted a real estate agent, 14%

58% of buyer contacts

How Buyers Found Their Real Estate Agent4

involve people who know you.

  

Internet website Met agent at open house For sale or open house sign Personal contacty agent Relo or employer referral

Walk in or call while agent on duty Newspaper, home book, Yellow Pages

10%

5%

5%

4%

3%

2%

1%

How many real estate agents do buyers interview?

67% One agent

20% Two agents

8% Three agents

4% Four or more agents

3 Ibid., page 13.

4 Ibid., page 13.

19

             

What Buyers Find Useful5

Your Role in the Age of the Internet

Ever feel like you’re competing with the latest website or app?

While there is an abundance of information available to consumers today, that makes your guidance and interpretation more important than ever. Sorting out what is timely, valid, and valuable challenges even the savviest consumers.

The Internet has not replaced you; in fact, the number of buyers who purchased their homes through real estate agents has grown from 69

5 Ibid., page 13.

6 Ibid., page 13.

  1. Introduction To Buyer Representation

percent in 2001 to 88 percent in 2014.7 At the same time, it’s important to recognize technology and consumer preferences are moving targets.

Your Unique Value Proposition

Knowing that consumers see clear value in using a real estate professional, it’s also important to make the distinction that real estate professionals are not all alike – and that’s a good thing.

Think of it this way: if all real estate professionals were the same, what reason would the consumer have to choose you over everyone else?

Your differences – those things that distinguish you from other real estate professionals – stand to give you a competitive advantage by attracting those consumers who will most value working with you over a competitor.

Your value proposition is your market distinction expressed as the services you offer to buyers.

Three elements form the foundation of your buyer representation value proposition:

Successful buyer’s representatives adapt and embrace change, leveraging the opportunity to add value and further differentiate themselves in the marketplace.

7 Ibid., page 14

21

    1. Introduction To Buyer Representation

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

23

ABR® Designation Course

24

 

    1. Forming the Buyer Relationship

First Meetings

The first meeting with a potential buyer sets the tone for your agent- client relationship. Accordingly, it merits thoughtful planning on your part as the professional: What are your goals? What questions will you ask?

What information will you provide?

Before addressing those questions, think about your last five buyers. How did they find you?

A Relationship is a Two-Way Street

No matter how you are introduced, it’s important to consider the buyer’s goals when first meeting. This is especially true when goals differ, which they often do at this stage of the process. After all, many buyers just want to get out and start house hunting.

Exercise: Looking Through Buyer’s Eyes

Try looking at the home buying process through “buyer’s eyes” and imagining their experience prior to contacting you. What sites have they visited? What do they know about you? What are their perceptions and concerns about the home buying process? Create a list of home buying experiences a buyer may have had prior to contacting you.

Start Smart

The first meeting sets the tone for the agent-client relationship. It gives you an opportunity to engage the buyer, find out about their situation, how far along they are in the process, and describe how you can help them find the right home.

Respecting Exclusive Agreements

Although we will discuss the entire buyer consultation shortly, it is important that you determine whether the buyer is in an exclusive agreement with another brokerage firm prior to moving forward with them. You might want to start with something like this:

Why do I need to talk to a lender? I know what I can afford?

      

      

Safety

Buyers who are anxious to jump into house shopping may be resistant to changing course, so it’s important to prepare for potential objections.

How would you respond to the follow: I don’t need to meet with you first. I already know what I want to see, just meet me there.

Meeting prospects and showing property can place real estate professionals in potentially dangerous circumstances. Office policies should include safety procedures and cover risky situations that real estate professionals encounter every day.

Perhaps the best guide you can follow is your intuition. If a situation doesn’t feel right, or a person makes you feel uncomfortable, listen to your gut feelings. At worst, you may be overly cautious, but you could be avoiding a very dangerous situation. For more information and resources on staying safe on the job, go to NAR’s REALTOR® Safety webpage at www.Realtor.org/topics/realtor-safety.

Staying Safe in Everyday Situations8

Precautions: Meet at the office. Require completion of a Prospect Identification Form. Ask for and photocopy ID or take a photo of the person. Introduce the prospect to a colleague.

Risks: Touring a vacant property with a stranger

Precautions: Walk behind the prospect. Don’t go into confined spaces like cellars and attics. Keep groups together. Let coworkers, friends, or family know where you are going. Use the buddy system. Schedule a call-in time—if you don’t call in, the office knows to contact police. Use a smart phone app to preprogram a phone call as an excuse to leave an uncomfortable situation. Call the office and give a predetermined distress signal. Park your car for a quick getaway.

Risks: Waiting in an empty house and anyone can enter Precautions: Note in open house publicity that ID is required. Jot down license plate numbers as lookers arrive. Introduce yourself to neighbors. Keep groups of people together. Use the buddy system.

Schedule call-in times—if you don’t call in, the office knows to contact police. Stow away your valuables. Open drapes and turn on all lights. Plan an escape route. Let local law enforcement know you are holding an open house. Park your car for a quick getaway.

Risks: Inviting the attention of criminals

Precautions: Avoid provocative, glamorous photos in your marketing. Wear modest business attire and avoid flashy jewelry. Protect personal information on websites. Don’t publish your home phone or address or information about your family.

Precautions: Drive in separate cars. Watch where you park. Make sure your car is not blocked so that you can make a quick getaway

8 Adapted from “Real Estate’s 6 Most Dangerous Everyday Situations,” by Melissa Dittmann Tracey, REALTOR® Magazine, September 2010, www.realtor.org

without backing up. Screaming and running to a neighboring house may be more effective—if you know someone is at home.

Entering a vacant or foreclosed property

Risks: Encountering squatters, former owners, animals, hazardous conditions

Precautions: Inspect the perimeter for signs of break in or occupancy. Don’t confront squatters, occupants, or animals. Visit during daylight hours. Use the buddy system, your partner can wait in the car and keep in touch by mobile phone. Let coworkers, friends, or family know where you are going.

How Is an Agency Relationship Formed?

Express Agreements

An agency relationship may be in the form of an express agreement with both parties consenting to the agreement. Although agency agreements are usually written with the terms of the agreement spelled out, an express agreement can be made orally or by an affirmative action. For example:

Implied Agreements

According to the law in many states, when the licensee acts or speaks like an agent and the consumer relies on those statements and actions, the licensee and the consumer have formed an agency relationship. In these states, agency relationships can result even unintentionally, accidentally, or inadvertently regardless of the conduct of the parties, or their intent, description, or understanding of the relationship. Key facts to remember about implied agreements include:

Implied agency relationships may occur when a seller’s agent works too closely with a buyer-customer and does not make the proper disclosures.

Agency Disclosure and Confidential Information

You should make an agency disclosure consistent with state laws early in your interactions with prospective buyers, Many states require the disclosure to provide a written explanation of all legal forms of brokerage relationships available to consumers, even if the brokerage does not offer all of those options.

States may have different standards for the timing of disclosure but to be most effective, the disclosure must take place before any substantive discussions about real estate needs and financial capabilities, or exchanges of confidential information. In states that presume buyer agency (you are automatically the agent of the person with whom you are working), the explanation will differ from that in states where the buyers must sign a representation agreement. Why is this discussion of agency so important? Agents must caution prospects against sharing confidential information.

Although state specific, an implied agency relationship can occur when the real estate professional acts or speaks like an agent and the buyer relies on the agent’s actions and statements. Regardless of party’s intent, description, or understanding of the relationship, conduct can create an agency relationship—even if the parties have signed an acknowledgment denying the existence of such a relationship.

Are you a Secret Buyer’s Agent?

You might be a secret agent if you:

Performing client-level duties without full disclosure and, preferably, a signed agreement, opens the door for a range of conflicts, misunderstandings, lost income, and potentially serious legal consequences. Aside from the legal ramifications, how can you expect buyers to be loyal if you keep the client relationship under wraps? You miss the opportunity to showcase your services as the buyer’s advocate.

What is your agency relationship at first contact?

How Will We Work Together?

Starting off the interpersonal relationship on the right foot eases the next step—the contractual relationship. The nature of your first meeting, the buyer’s previous search efforts and priorities, and information gathered during the consultation all point to the type of relationship you’ll establish with a buyer. Only when you are working with the buyer as a client can you offer the full range of services that buyers want. The services buyers value most—express an opinion about property value, evaluate properties, help negotiate—can be offered in only an agent- client relationship.

Your representation relationship with a buyer-client and how you will work together is determined by:

Exercise: State of Agency Disclosure

Effective agency disclosure takes place BEFORE substantive discussions. Briefly discuss agency disclosure in your state, including when and how disclosure is made, what form(s) are used, and what constitutes “substantive discussions”.

What Are the Options?

Buyer or Seller Only

Although the terminology may differ, the most straightforward type of relationship is single agency. The agent represents only the buyer or only the seller—or the landlord or tenant—not both. Some brokerages keep things simple by practicing only buyer agency or only seller agency.

Dual Agency

Depending on state laws, the dual agency can occur when:

Dual agency is inherently conflictual. The duties of confidentiality, undivided loyalty, and full disclosure cannot be reconciled between two clients. For example, the duty to a buyer-client of confidentiality compromises the duty to the seller of full disclosure.

Undisclosed dual agency – for example, when a listing agent’s conduct creates the impression of working on behalf of the buyer – is illegal.

Disclosed Dual Agency

Disclosed dual agency is workable, but only if a timely, meaningful, and written disclosure is made, and both the buyer and seller consent. Most commonly, the brokerage company asks the buyer and seller to help the resolve the conflict by allowing a modification of fiduciary duties, or acknowledging the duties required of a dual agent. In either case, the buyer and seller must accept a reduced level of service.

In some states, an agent should not, however, try to obtain a blanket consent to disclosed dual agency before the situation arises. When a potential dual agency situation does occur, informed consent should be sought before the property is shown (unless otherwise provided by law). Verbal consent, if permissible, should be confirmed in writing when the purchase offer is submitted.

Designated Agency

Designated agency (also known as appointed agency) eliminates the dilemma of in-house dual agency situations because both the buyer and seller continue in an agent-client relationship. In states that allow designated agency, the broker appoints one agent to represent the buyer and another agent to represent the seller. The broker’s appointments specifically exclude all other agents in the office. Check your state laws, MLS rules, and company policy to determine if subagency is still offered in your marketplace.

Subagency

Subagency was created as a way to address MLS cooperation issues, but it has virtually disappeared from real estate practice. The subagency concept held that when a listing was entered into an MLS, cooperating selling brokers and their salespeople by accepting the offer in the MLS became the subagents of the seller and agent. Because the seller paid the commission to the listing agent, who worked for the seller, it therefore followed that any agent who brought a buyer to the transaction also worked on behalf of the seller.

Non-Agency Relationships

What about transaction facilitators? Who do they represent? In some states, real estate agents may work concurrently with buyers and sellers in a non-agency capacity. The real estate professional acts in a neutral capacity to facilitate the transaction. Terminology and agent responsibilities vary from state to state.

There are varying viewpoints on the pros and cons of non-agency relationships in the real estate transaction. Some argue that non-agency relationships are the fairest way to mitigate the risk of dual agency and protect buyers and sellers. Others assert that the motivation to limit risk robs buyers and sellers of the opportunity for fair representation.

3 Important Principles

All three of these principles are very state specific. Ask your broker or office manager how these legal principles apply where you do business.

Imputed knowledge

Under the theory of imputed knowledge, your broker, and possibly all other agents in your office, are deemed to have knowledge of the same facts about a particular property as you have. In states where imputed knowledge applies, office policy should provide procedures for communicating property facts to all agents. In designated agency situations, however, confidential information about clients should not be shared.

Under the theory of imputed notice, informing an agent is the same as informing the agent’s client, even if the agent never conveys the information to the client. For example, when the listing agent communicates an offer acceptance to the buyer’s representative, it is the same as providing notice to the buyer. As a rule of thumb, inform your buyer-client of anything you learn about the property or seller. Imputed notice becomes critical when decisions depend on disclosure of material facts.

. Under the theory of vicarious liability, the client may be held responsible for the actions or statements of agents and subagents, even if the client was unaware of those actions or statements.

When applicable, agents should disclose the potential for vicarious liability so that clients understand the risks.

What Are Your Duties and Responsibilities?

The terms client and customer or duties and responsibilities may seem interchangeable, but there are important distinctions. Because the relationship between client and agent is legally binding even in an implied relationship, the agent has a duty to place the client’s interests before those of any other parties.

However, an agent’s duties to the client do not mean, however, that the facts of the transaction or the property may be concealed from or misrepresented to a customer. Agents have a responsibility to customers to treat them honestly.

Real estate agents work for clients and with customers.

Duties to Clients—Real World

Consider that as a buyer’s representative, what you are selling is your services—not homes—even though the outcome of your relationship is a new home for your buyer-client. The way you go about fulfilling your duties is your buyer representation value proposition. Let’s recap client duties and how they relate to the REALTOR® Code of Ethics and to communicating your value to your buyers.

Duties to Clients

Obedience: Follow all of your client’s lawful instructions. Don’t make decisions for the client or exceed your authority.

Code of Ethics Article 1: When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)

Loyalty: Give your clients your undivided loyalty. The client’s interests come first—before customers, service providers, or anyone else including you.

Code of Ethics Article 1 (see above)

Disclosure: Disclose affirmatively, fully, and honestly all information concerning the transaction and property that might affect the client’s decisions.

Code of Ethics Article 2: REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00)

Confidentiality: Do not reveal confidential information learned about clients or told to you by clients within the agency relationship.

Code of Ethics Article 1, Standard of Practice 1-9: The obligation of REALTORS® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-

agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law.

Accounting: Safeguard money and property held on behalf of the client. Maintain records and provide a prompt accounting when requested of money and property received and paid out.

Code of Ethics Article 8: REALTORS® shall keep in a special account in an appropriate financial institution, separated from their own funds, monies coming into their possession in trust for other persons, such as escrows, trust funds, clients’ monies, and other like items.

Reasonable care and diligence: Protect the client from foreseeable risks or harm. Recommend expert advice or assistance when the client’s needs exceed the agent’s expertise.

Code of Ethics Article 1 (see above)

Code of Ethics 13: REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the transaction warrants it.

What Is Reasonable Care and Diligence?

     

Responsibilities to Customers

An agent’s responsibilities to customers—Honesty, Accounting, Reasonable skill and Disclosures—can be remembered as HARD, as in it can be HARD to work with customers because they want to be treated like clients.

Honesty: Do not make statements or take actions that can result in fraud or misrepresentation. Ensure all laws and regulations pertaining to the transaction are obeyed.

Code of Ethics Article 1: When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)

Accounting: Record money or property received and paid out and, upon request, provide an accounting. Safeguard money and property held on behalf of the customer.

Code of Ethics Article 8: REALTORS® shall keep in a special account in an appropriate financial institution, separated from their own funds, monies coming into their possession in trust for other persons, such as escrows, trust funds, clients’ monies, and other like items.

Reasonable skill: Provide standards of practice and competence that are reasonably expected. Do not try to provide specialized professional services for a type of property or service outside your field of competence.

Code of Ethics Article 11: The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

Disclosure of material facts: Disclose material facts about properties. Disclose agency relationships and explain the difference between a customer and client relationship in a timely fashion so that customers can protect their own interests.

Code of Ethics Article 1: (see above)

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Download a printable PDF version of this consumer one-sheet at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Are You in Sync with Your Brokerage?

If the approach in your brokerage office is unwritten because, “everybody knows that,” asking the right questions may inspire development of written policies which will also benefit your colleagues. Ask your broker or office manager:

What types of agency relationships do we offer and not offer?

Do we have a statement of agency policy?

What is the rationale for the company’s agency policy?

What disclosures are required, when, and to whom?

Do we have standard disclosure forms?

Do we require exclusive buyer representation agreements?

What is the maximum number of buyer-clients an agent can work with at one time?

Is dual agency okay? Under what circumstances is it not?

Do we offer designated agency?

How are dual or designated agency implemented?

How should the agent interact with the client or customer in each type of relationship?

What pocedures are in place to assure client confidentiality?

      1. Forming the Buyer Relationship

Exercise: Turning Duties into Value

As discussed, agency disclosure should be made in a manner consistent with state laws and prior to substantive real estate discussions. The buyer consultation is the perfect opportunity to do this while showcasing the value of your services. For each fiduciary duty, create a value statement that answers the buyer’s question: “Why should I work with you” while complying with agency disclosure requirements.

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      1. Buyer Consultations

The Buyer Consultation

When you meet a buyer-prospect for the first time, how can you convert that contact into a successful transaction that adds to your bottom line? Achieving a positive outcome requires two skill sets:

These two skill sets come together in the buyer consultation. The consultation process is your opportunity to show how a buyer representation commitment opens the door for you to fulfill your value proposition, by providing the services buyers want.

3. Buyer Consultations

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The Ideal Home—Needs, Wants, Parameters

With the myriad of property information resources online, buyers can get a head start—or perceive that they can—on needs assessment and property selection. Have you had the experience of buyers arriving at your office with a list of properties they want to see? So, why not just skip the needs assessment process and start lining up homes to view?

A Needs Assessment Worksheet (see sample next page) or Intake Sheet, much like the forms other professionals such as doctors and attorneys use, is a great tool for gathering information and making sure you don’t miss anything.

By working through the process you’ll learn about the buyer’s:

Ask: How does this compare with your current home? Is this a big change in your living situation?

Ask: Why are you looking at this time?

Ask: If we find the right property, are you prepared to make a decision now?

Ask: Will anyone else help you make the decision?

Ask: If a property meets all of your other needs but does not have (a desired feature), should I eliminate the property or would you like to see it?

The consumer one-sheet on page 63 can help focus a buyer’s thinking about needs and wants.

Buyer Needs Assessment Worksheet

Family size: Pets:   

Currently: Own Rent Must sell to purchase?

Desired possession date    

Mortgage: Prequalified Pre-approved

Lender:   

Ideal Price: Ideal Monthly Payment:   

Ideal Location:   

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Download a printable PDF version of this consumer one-sheet at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

The ABR® Designation Course

Price Parameters—Qualify the Buyer

Establishing price parameters during the buyer consultation is an essential step that guides property selection and helps the buyer’s expectations

The best course of action is to let a lender qualify buyers by means of a mortgage pre-approval. Pre-approval not only helps establish price parameters, it strengthens the buyer’s negotiating position and facilitates closing the transaction. Potential credit problems that could derail the closing come to light. In fact, some real estate professionals ask buyers to meet with lenders and obtain a mortgage pre-approval prior to the consultation session. Other real estate professionals use the consultation process to discuss financing and provide a list of lenders that the buyer can contact.

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3. Buyer Consultations

Shaping Expectations—How Is the Market?

Attention-grabbing headlines can sometime create an unrealistic picture of the market and a gap between market realities and buyer perceptions. That gap can be costly to you and the buyer in terms of time and opportunities lost. Sometimes buyers expect to grab properties at deeply discounted, pennies-on-the-dollar prices. Real estate professionals know the local market, and can align buyers’ expectations with reality. Buyers who spend weeks or months looking at properties and delay making an offer can lose out; good homes priced right generally don’t linger on the market. How do these national statistics compare to your local market?9

9 Source: Profile of Home Buyers and Sellers, National Association of REALTORS®, www.realtor.org/Research.

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The ABR® Designation Course

The A-A-I Buyer Consultation Session

Use the “A-A-I” Model to ask for information, answer questions, and inform on the process.

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3. Buyer Consultations

My Pledge of Performance

Contact Information

Office phone:    Fax: Website:   

Mobile: e-mail:  

Agent Signature: Date:   

Courtesy of Lynn Madison

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Do You Want to Represent This Buyer?

Do you encounter buyers who you may not want to represent? Be wary of buyers who can drain you of time and resources. You may want to think twice about the following types of buyers.

There are times when you decide to call it quits with a buyer. How can you say “you’re fired” without completely burning bridges? You could say:

Buyers or Renters?

In today’s market you may meet prospects who want to buy but really need to become or remain renters. They may:

Unfortunately, some agents may miss this opportunity because they don’t see the tenant relationship as potential future business. Consider tenant-clients as investments in future transactions. If you work with tenants and protect their interests as you would a buyer-client, they will refer business to you and remember you when they are ready to buy.

Is a Written Buyer Representation Agreement Necessary?

Both buyers and real estate professionals have reasons to postpone or sidestep discussion of signing a representation agreement. Consumers want to keep their options open and are wary of creating a contractual obligation, especially if they are in the “just-looking” phase. Before initiating a contractual relationship with a buyer, real estate professionals want to be sure the fit is right and the buyer is ready and able to complete the transaction. In fact, it is common practice for real estate professionals to take prospective buyers out to look at a few properties as a way to get acquainted and decide if they will work together.

If an agency relationship can be formed by words or actions, is a written agreement necessary? Some states require a written buyer representation agreement. In almost all states, a broker cannot enforce a claim for a commission against a buyer-client without a written representation agreement. You need to know your state’s law on this important point.

When is the best time to ask buyer to sign a representation agreement? Brokers’ office policies range from the initial consultation to contract signing. Agents who work with buyers as clients without a written agreement representation agreement are still obligated to comply with state laws and the REALTOR® Code of Ethics. Ultimately, the quality of service that a real estate professional provides creates and sustains buyer loyalty and productive relationships.

The ABR® Designation Course, however, focuses on three important aspects of buyer representation agreements:

Brokers and their agents, working within the REALTOR® Code of Ethics and state law, must make business policy decisions about how the principles presented in this course are incorporated and implemented into day-to-day practice.

The Buyer Representation Agreement

The elements that should be part of the buyer representation agreement are:

Will you be the sole representative of the buyer-client? Although this will vary according to state law and company policy, exclusivity protects the right of the buyer’s representative to be compensated when the buyer finds a property. Generally, an exclusive agreement is better than a non-exclusive or open agreement.

The description of the property states the client’s requirements in general terms—such as a residential, commercial or rental property, or land—without being overly specific. Price, if it is addressed in the agreement, should be defined as a range that is broad enough to encompass all the properties within the buyer-client’s parameters. Area should cover the market area of the buyer representative rather than a specific town or subdivision.

How long will the buyer be your client? The primary factor that determines duration is the buyer’s time frame. Other factors may include your marketplace, desired property type, buyer’s needs, and your broker’s business policies. The agreement should not expire while the purchase is being finalized and closed.

The description of services should detail the range of duties and tasks you are agreeing to perform as well as what is expected of the buyer-client. As a buyer’s representative, specifying what you will not do, otherwise known as limiting scope, is just an important as spelling out what you will do. For example, will you include FSBOs in the property search?

The buyer representation agreement should set forth the circumstances under which you will get paid, how much, and by whom. There are different modes of compensation available to buyer’s representatives, and your office policy will likely delineate the options.

State regulations may affect this, but generally such a provision, if

applicable, allows both you and other agents in your company to show the same property to other buyers.

This affects those in disclosed dual agency states and in companies that allow disclosed dual agency. If the possibility exists, it should be included in the buyer representation agreement. As noted earlier, however, the buyer should not be asked to provide upfront blanket permission for dual agency.

Discrimination is unacceptable under any circumstance. All federal, state, and local statutes and regulations must be observed.

Remember that under federal Fair Housing Laws it is unlawful to provide information about the race, color, religion, sex, handicap, national origin, or familial status of individuals in a neighborhood or building.

If the buyer purchases a home you showed them within a certain period after the agreement expires, you are due a commission.

Obligates the buyer to pay a commission to the brokerage company if another party purchases the property with the intent of assigning the contract to the buyer prior to closing or selling the property to the buyer after closing.

Cancellation

Under what circumstances and how can the buyer or the agent cancel the agreement?

Four Contracts in Real Estate

Before beginning the discussion of compensation, it is helpful to review the four types of contracts typically used in real estate transactions.

Understanding who the parties are to each agreement, and that only the parties can modify their agreements, helps to clarify the discussion of compensation.

The listing contract is between the seller and the listing broker. It creates the relationship between the parties, establishes the duties of each, and establishes the terms under which the broker will earn commission. It also authorizes the listing broker to cooperate with and compensate cooperating brokers. At the time of listing, the agent must disclose to the seller how much compensation will be offered to cooperation brokers.

The buyer representation agreement is between the buyer and the selling broker. It establishes the duties of each and establishes the terms under which the broker will earn commission.

The offer of compensation is between the listing broker and cooperating brokers, and is generally established through a multiple listing service. The listing broker determines the terms and conditions of the offer to compensate and the contract is formed when accepted by the cooperating broker. Acceptance occurs only through performance as the procuring cause of the sale.

The purchase agreement (sales contract) is between the buyer and the seller. It establishes their promises and obligations to each other. The brokers and agents are not parties to the sales contract.

Compensation

A good principle to keep in mind is that regardless of the compensation arrangements, the buyer ultimately pays the buyer-representative’s fee through the purchase price. If the buyer’s representative is compensated through a commission split, it is true that the seller pays the listing broker out of the sale proceeds, and the listing broker shares the commission with the buyer’s representative. But it’s the buyer who puts the money on the table by funding the transaction.

A buyer representation agreement could contain language like:

If, during the term of this contract or the protection period, Buyer enters into a contract to acquire real estate and such contract results in a closed transaction, Buyer agrees to pay Broker a fee of % of the purchase price. The Broker will make every effort to collect the fee from the seller or the listing broker.

If Broker is not being offered compensation as a cooperating Broker sufficient to satisfy Buyer’s obligations, Agent will so inform Buyer prior to showing the property.

Note that in all discussions of compensation the reference to buyer representative does not imply that the agent can be paid directly. Due to the various state definitions of broker—broker in charge, managing broker, etc.—we are using the term buyer’s representative to mean the firm for whom the agent works. All compensation must flow through the brokerage company.

Compensation Options

The most common approach is a commission split with the listing broker based on a percentage of the sale price. However, your clients are ultimately responsible for your fees. They should be informed that if the seller or seller’s broker does not pay your fee, they are obligated to do so.

Rather than charging a percentage of the sales price as commission, the buyer representative agrees to work for the buyer on a flat fee basis. In most cases, the buyer representative will not take any compensation from the listing broker or the seller and the buyer will accommodate the payment of compensation.

The buyer may compensate the representative through an hourly fee, similar to the way attorneys are compensated. The pay-per- hour arrangement may guarantee compensation for a minimum number of hours.

A buyer representative could charge the buyer a retainer fee. State law would dictate how the retainer fee is handled relative to where it needs to be held.

When the Offer of Compensation Doesn’t Match

“Seller and/or any third party to the settlement and transfer of this property agrees to pay buyer X% of the sale price to settle their contractual agreement with their buyer brokerage at closing.”

A sample of the language might be:

“ABC Realty rejects any offer of compensation made by the listing firm. Seller and/or any third party to the settlement and transfer of this property agrees to pay the buyer X% of the sale price to settle their contractual agreement with their buyer brokerage at closing.”10

10 Excerpt from the SRS – Seller Representative Specialist Designation Course – Adorna Carroll, Bruce Aydt and Steve Casper, partners of the SRS Council, LLP and SRSCouncil.com.

What if the offer of compensation is more?

What if the offer of compensation is more than what is in the buyer representation agreement? What if the seller or listing office is offering a bonus on the property?

Listings Not in MLS

MLS’s require that all listings be submitted in a set amount of time. For example, some MLS’s requirement is 72 hours. If the listing is NOT going to be submitted in that time frame, the seller must have signed an “Exempt Form” that explains the benefits of the MLS and the seller opts out of the submission.

Can You Rebate Part of a Commission?

Some brokers promote commission rebates as a competitive edge. Other times, the buyer is short of cash and asks the agent to rebate part of the commission to help with closing costs. Is this legal and ethical? Brokers cannot pay a commission to an unlicensed person, but, if state regulations allow, they can rebate a portion of the commission to the buyer.

FSBOs

Alternatively, the buyer could include the following language into the purchase contract.

“Seller to pay Buyer ‘an additional’ X% of sale price for the buyer’s agent/Firm at closing paid through the proceeds of the sale.”11

When Buyers Won’t Sign

Buyers may be reluctant to sign a representation agreement because they think it will limit their options and impose undue obligations. Although most buyers stick with the first agent they talk to, no one wants to feel pressured to make a commitment before they know if the arrangement will work out and if you can work together. How can you allay concerns but still make progress in establishing a buyer-client relationship?

“Do I need to sign an agreement before you have found me the right property?”

If a buyer is uncomfortable with a long-term agreement, offer a shorter term; for example, an agent-for-a-day agreement. The agreement can be extended if the buyer wants to continue.

If the buyer doesn’t want to be tied down to just one agent, it’s okay to offer a nonexclusive agreement (if your brokerage policies allow it). However, the buyer should be aware of the drawbacks of such an arrangement.

Offer to take the buyers out once to view a couple of properties in order to get acquainted and see how you can help them. Be clear that an agreement will be required if you decide to work together.

The terms of the buyer representation agreement could specify a particular area or neighborhood; the buyer is not bound by the agreement if they find a home outside of the specified area. The buyer should be aware, however, that such an agreement limits the services you can provide.

The agreement could include a cancellation clause if the buyer is dissatisfied with your services.

Offer a performance guarantee that spells out what you will do and how you understand your duties. (A sample appears on page 69.)

  1. Buyer Consultations

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

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The ABR® Designation Course

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  1. Putting Buyer Representation Into Action

The ABR® Designation Course

Provided you want to represent the buyer after the initial interview process and depending on your state requirements for agency disclosure and the use of buyer representation agreements, the reality is that buyers will seldom sign an agreement or commit to giving you loyalty – or even work with you – if they do not understand what it is you will be doing for them. Consequently, you will need to explain what you will do for them BEFORE you ask them to sign an agreement.

Finding the Right Property

Looking at homes can feel a bit like speed dating. Buyers are not only looking at multiple properties in a short time frame, but also searching for the perfect match. And, like dating, sometimes it is love at first sight and sometimes finding the right home takes a lot of looking around and accepting tradeoffs.

Managing Expectations

Part of your job as a buyer’s representative is to take as much stress as possible out of the house-hunting process. One of the best ways to manage stress is to manage buyer-clients’ expectations of available homes and price trends, market realities, and your services.

Inform your buyer-clients that you will use your market knowledge and connections to find homes that fit their needs, wants, and price parameters. Encourage the buyer to focus on the things that are most important and be willing to accept some tradeoffs on lower priorities.

Present a realistic picture of the current market. Caution buyer- clients that trying to time the market for rock-bottom prices or mortgage rates risks losing out on the ideal home. Good homes priced right don’t stay on the market long.

Make sure that the services clients expect align with what you committed to provide. Avoid making promises you cannot—or do not intend to—keep. Refer to your pledge of performance (see page 69).

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“No Stone Unturned”

Real estate agents who represent buyer-clients can do a “no stone unturned” property search and even promote the buyer’s search through a variety of media and channels, including word of mouth. The buyer’s representative has access to the entire market including FSBOS, REOs, and even off-market properties. And when it comes to your broker’s

new-on-the-market listings, the buyer-clients should get the first look. There are really no limits on the property search except those determined by the buyer-client.

When the Search Includes FSBOs

Despite the difficulties of selling on their own, 9 percent of home sellers choose the FSBO route.11 Most do so to avoid paying the listing broker’s commission. Although FSBO sellers report difficulties attracting buyers, as well as getting the price right, approximately half do nothing to actively market their homes. Can you see how these factors might create an opportunity for you as a buyer’s representative?

If your buyer-client is interested in a FSBO, the first hurdle is making a productive contact with the seller.

11 Profile of Home Buyers and Sellers, National Association of REALTORS®, www.Realtor.org/Research.

The ABR® Designation Course

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Realtors Property Resource®

REALTORS® can tap into a unique decision-making tool to help buyers make informed choices and narrow the property search. Realtors Property Resource® (RPR®) is a member benefit, which means it is already included in the dues you pay to the National Association of REALTORS®.12 What can RPR® do for you?

Does this sound familiar? You are driving around to view properties when the buyer spots an interesting property and says something like “What about that house? Could I see that one?” Imagine this scenario—while you are in your car with the buyer, you use your smartphone or tablet to search the home’s address and download the RPR® Property Report, Mini Property Report, or Neighborhood Report, with a wealth of information (all public) like sales13 and financing history, square footage, number of rooms, lot size, and other facts. On-the-spot access to RPR® Property Report data means you can present facts about the property immediately and determine if the home might meet the buyer’s needs and wants. If the answer is yes, you can contact the agent or seller immediately to learn the asking price and arrange a viewing. Where sales data is publicly reported, RPR® aggregates data on recent and current sales to calculate an estimated value for the property; this AVM estimate can indicate if the home is over or underpriced in comparison to similar properties in the neighborhood.

You can view RPR® reports online as well as in downloadable PDF format. The full-color report, with your contact information and personal or company branding, takes only a couple of minutes to generate and arrives in the buyer-client’s e-mail or on the client’s smart phone or tablet. Some sample excerpts appear page 91.

The Realtors Valuation Model® (RVM®)

If your MLS shares its data with RPR®, reports include values calculated by the RVM® from real-time, real-world data. If you’ve ever compared price estimates from some of the online valuation sites like Zillow®, you know that the estimates can be quite wide—over or under real-world property values.

12 RPR® applications and reports are available to members of the National Association of REALTORS® practicing in the United States.

13 Except in nondisclosure states.

All REALTORS® have access to RPR® as a member benefit, but only those who participate in MLSs that share data have the benefit of the RVM®. If your MLS does not share data, value estimates are calculated by an automated valuation model using publicly available information on past sales. Find out if your MLS shares data, register, and take the RPR® application for a test drive at www.narrpr.com. You’ll also find information on continuing-education credit training classes online and in classrooms, as well as free tutorials.

Sharing Information Responsibly

The ability to gather and share data by electronic means carries both a legal and ethical obligation to share information responsibly. Therefore, it is very important that you know who you are sharing information with and why. When providing RPR® reports to clients and customers, REALTORS® should emphasize the importance of treating the information respectfully and making sure it doesn’t fall into the hands of someone with bad intentions.

4. Putting Buyer Representation Into Action

Realtors Property Resource® Property Report

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Buyer Loyalty

The representation agreement creates the contractual relationship between the buyer and the agent. However, as noted at the beginning of this chapter, the interpersonal relationship makes the agent and buyer into a team. Buyer loyalty is a two-way street, and it starts with the words and actions of the buyer’s representative. Your pledge of performance is a powerful tool for building loyalty, because it is a narrative of what you will do and how you will treat the buyer.

Transparency of information, and your willingness to answer any of the buyer’s questions and address concerns, will go a long way toward establishing a mutually loyal relationship. Transparency includes being frank about situations in which you would not get paid.

With so many sources of house-hunting information available, it seems inevitable that buyers will look around and research on their own. You can impress on buyer-clients the importance of calling you first whenever they want to see a property and explain why. What other steps can you take to prepare buyer-clients for these situations?

At open houses, advise buyers to inform agents that they are working with you and to provide your name and company affiliation. You could provide the buyer with a small supply of your business cards for this purpose. Caution buyers against signing any registration card or guest book, or revealing information that could weaken negotiation leverage. If buyers see a for-sale sign, ask them to note the listing agent’s contact information and to call you to set up a showing. They should not be coerced into putting an offer on the property, regardless of what the agent sitting in the open house says.

Like an open house, your buyer-client should inform the builder’s sales representative that they are working with you. Caution against signing any registration card or guest book or visiting model homes if signs say “agent must accompany the buyer on the first visit.” Purchasing a new home involves decisions about customization options. Inform your buyer-client that you can advise on evaluating the cost-benefit of various options and navigating the phases and process of buying new construction.

4. Putting Buyer Representation Into Action

What if your buyer-client sees an ad that looks interesting and can’t resist calling or e-mailing for more information? Coach buyer-clients to say upfront that you are helping them find a home. If the price is in range and the buyers want to see the property, say that you will make arrangements for them to see the property. Caution buyers that websites are not always up-to- date; unless the site reflects real-time data from the MLS, homes advertised on websites may already be sold.

Caution buyers not to just pick up the phone, call the number on the sign, and go on their own to see a FSBO property. It’s not a safe thing to do. It can be a big waste of the buyer’s time and give sellers the impression that no agent is involved.

Explain that you can scope out properties in advance, do CMAs, and help the buyer develop a strategy to avoid getting caught up in a bidding rush. You can also help the buyer prepare for the auction terms like reserve bids and proof of funds. Just be sure you register as the buyer’s representative before the auction.

Buyer-clients should politely inform other agents that they are working with you, thank them for their interest, and possibly suggest they contact you if they have a property they think may fit the buyer’s needs.

Buyer-clients should politely refuse and tell the seller they need to contact you. You will then make an appointment to show them the property.

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Eyes and Ears Everywhere

Snapping photos can help buyers remember the details of a property, but buyers should not post those photos on social media; the photos could be used to case the home or target the family. Caution buyer-clients not to post, text, or tweet comments that can easily find their way back to the seller and harm the buyer’s negotiation leverage. When buyers are viewing a property, it’s not a good idea to show strong reactions or make comments—good or bad; electronic monitoring devices, like hidden web cams, can be anywhere.

NAR’s Pathways to Professionalism states:

Additionally, many states do not allow the taping or picture taking of the interior of properties without permission.

Many states have regulations on whether the homeowners can video or audio record potential buyers while viewing their home. Regardless of rules and laws, caution buyers that their comments and everything they do in the property may be viewed or heard by the sellers.

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Procuring Cause

The principle of procuring cause is an unbroken chain of events that results in a successful transaction. When disputes arise, real estate agents tend to equate procuring cause with “all the work I did for this buyer.” The pivotal question is, however, whose actions “caused” the buyer to decide to buy the property? Can you see how neither the act of showing a property nor even a signed representation agreement with the buyer is sufficient proof of procuring cause? For REALTORS®, procuring-cause commission disputes are decided by the Professional Standards arbitration panel at the local association. Seven key decision points that panels examine—and preventive steps the agent can initiate—are as follows:

  1. When and how was the original introduction of the buyer made?

Preventive actions: Ask prospects if they are working with or have looked at properties with other agents.

  1. Did the original introduction start an uninterrupted chain of events leading to the sale? Preventive actions: Maintain careful records of property showings, communications, and interactions with buyer-prospects and clients.
  1. Did the agent who made the original introduction maintain contact with the buyer? Did the agent abandon the buyer?

Preventive actions: Stay in contact with buyers and keep them up-to-date on your actions between meetings and showings.

  1. Did the cooperating agent initiate a separate series of events, not dependent on the original agent’s efforts, which led to a successful transaction?

Preventive actions: An exclusive buyer representation agreement might prevent this situation.

  1. Was the introduction of the other agent an intrusion into the transaction or cause estrangement or abandonment?

Preventive actions: You can’t control the conduct of other agents and sadly some use unethical ploys to lure other agent’s buyer clients. Prepare your buyers.

  1. Was the second agent aware of the prior introduction of the buyer to the property? Preventive actions: Make sure your buyer-clients know what to say and do if approached by another agent.
  1. Did the agent do anything to cause the buyer to look elsewhere for assistance? Did the agent’s actions estrange the buyer?

Preventive actions: Find out what is troubling a buyer and make an effort to resolve the problem.

Skill Practice – Meet Your Next Buyer

Darrell and Melissa, relocating

Darrell and Melissa are relocating, at their own expense, to your area from out of state. Darrell, a database designer, lost his job when his former employer went out of business. After several months he landed a new job with a start-up company in your area. Job prospects for Melissa are good because her skills and experience as a dental hygienist are always in demand. Their son Stewart starts second grade in the fall. Darrell and Melissa are under pressure to find a new home and move so Darrell can start his new job and Stewart can enroll in school. They also have a buyer under contract on their current home. While searching on the Internet, Darrell saw your blog about the local real estate market and was impressed by your straight talk and service approach. He sent you an e-mail regarding his job relocation and home search. The e- mail is specific about what they need and want: 3–4 bedrooms, 2 baths, yard with room for a swing set and garden, good public elementary school, family-oriented neighborhood, short commute, and public transportation options. He will discuss price range, down payment, and financing when you meet face-to-face.

Robert and Patricia, retirees

Robert and Patricia are past clients. You helped them buy their current home back when their kids were teenagers. Now, the children are through college and establishing careers and families, and Robert has retired. Robert and Patricia have decided it’s time to give up the responsibilities and expense of maintaining a large home and move to a smaller house, townhome, or condo. Over lunch at a favorite café, Robert and Patricia describe their future plans and ideal new property. They are looking forward to traveling to visit children and grandchildren as well as to “seeing the world.” They would prefer a 2-bedroom, 2-bath condo or town home so they don’t have to worry about house maintenance and yard work. The mortgage on their current home was paid off several years ago and they want to stay debt-free in their retirement years. The cash proceeds from the sale of their current home will determine the price range for the new home. They are in no hurry to sell—they can wait for the right price. A neighborhood or development that is sensitive to the needs of older residents would be nice, but they don’t want to live in a retirement community where, Patricia says, “there are too many old people around!”

Jim and Amy, referred by a past client

Jim and Amy were referred to you by Jim’s cousin, a past client. Jim and Amy want to relocate in order to be within certain school districts, so they are very specific in terms of location. They are also quite specific about their needs and wants for the new home. Jim and Amy want a single family home with 4–5 bedrooms and 3 baths. Jim’s father recently passed away and his mother may be moving in, so one bedroom and bath must be on the ground floor. They also want a big family room and yard. It would be nice to find a neighborhood with open space and bike trails—bike riding is a favorite family-time activity. Jim is the general manager of a home improvement store and has good contacts with contractors and builders, so a home that needs some repair or remodeling might be okay if the price is right. Amy, a paralegal at a local law firm, will transition from part-time to full-time when their son Douglas starts school. The pressure is on to find the right home and move before the next school year starts. Although they have cash to make a down payment, they can’t afford to carry two mortgages. They need to sell their current home to purchase the new one.

Christina, first-time buyer

Christina called your office after visiting an open house hosted by one of your colleagues. Christina is single and well established in a successful career as a graphic designer. She currently rents an apartment—the lease expires in about four months—and she is excited about the prospects of owning her own home. Christina is interested in a townhome or single-family detached home with garden space. She would like a home that is energy-efficient. She prefers to commute by public transportation. You have a pretty good idea of her price range based on her reaction to the open-house property. Christina has a very close relationship with her parents, Ken and Grace, who plan to provide half of the down payment. Since she is a first-time buyer, Christina’s parents always accompany her to showings.

What objections might the buyers have to signing an exclusive buyer representation agreement?

What would you say to overcome those objections?

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Fair Housing and the Buyer’s Representative

What if buyers ask questions you cannot legally answer, like the racial composition of a neighborhood? Although buyers may ask, real estate professionals should never estimate or give an opinion on the racial, religious, or ethnic composition of a neighborhood. Instead, focus on providing objective data from third-party sources. Thanks to an abundance of websites, statistical information is now available online to address a wide range of buyer-client queries. These include neighborhood income levels, education levels, school ratings, crime statistics, median incomes, age, voting patterns, air pollution, and many other aspects.

Your presentation packet could include a statement on fair housing rights as well as a list of sources for community and neighborhood information. The consumer one-sheet on the preceding page summarizes what buyers should expect.

What additional protected classes does your state or local municipality have?

   

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Which Law Prevails?

What if, for example, the local law does not prohibit discrimination based on handicap, but the federal law does? The federal fair housing law always prevails. Federal statutes should be considered as the minimum laws. However, you must also comply with local and state laws at all times. As a rule of thumb, comply with the law that provides the greatest protection against discrimination.

How Will You Respond?

Never estimate or give an opinion on the racial, religious, or ethnic composition of the neighborhood. Focus on providing objective data from third-party sources and make sure you provide this information to all clients. Refer home buyers to sources of information such as the websites, or the local municipal offices so they can research the questions themselves. Focus on economic status and occupation, which are not protected by Fair Housing law. If you mention people you know or have worked with in the area, do not describe them in a way that includes a protected class. For example, you could say, “this is a middle-income neighborhood.

Many of the folks who live here work at the businesses downtown because it is an easy commute.”

Provide the buyer only with reliable and authoritative information, such as student-teacher ratios, expenditures per pupil, percentage of students who go on to college, the number of National Merit scholars, and the like. Refer the buyer to sources of information, such as the school or the school district’s main office. Maintain the same type of information for each school and never favor one school over another. Never attempt to influence a housing choice with either complimentary or negative general comments about the school or give an estimate or opinion of the racial, religious or ethnic composition of the student body. You could say, “Our office does not maintain statistics regarding the racial makeup of the

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student body of schools in our market area. To get the best answers to your questions, you should contact either the school or the school district’s main office. Also, you might want to check with some of your potential new neighbors about how they feel about the schools their children attend.”

Give your honest opinion, whether it’s positive or negative, to this question and give a non-discriminatory reason that focuses on the attributes of the property. Never mention or volunteer information related to the racial, religious or ethnic makeup of the area. You could say, “Yes, I would. The area is well-maintained and that particular house is very nicely located.” Or, “No, I wouldn’t because the house is too small for our family.” Or, “No, I wouldn’t because it’s too far from my spouse’s office.”

Statement of Fair Housing Policy

As noted earlier, the buyer representation agreement should include language indicating the company’s commitment to equal housing opportunity and a statement that the agent may not lawfully disclose information regarding race or other protected classes. For example:

It is the policy of (firm name) to abide by all local, state, and federal fair housing laws and not discriminate against any individual or group of individuals. The agent may not lawfully disclose the racial, ethnic or religious composition of any neighborhood, community, or building, nor whether persons with disabilities are housed in any home or facility, except that the agent may identify housing facilities meeting needs of a disabled buyer.

Skill Practice Scenarios

Darrell and Melissa

Darrell and Melissa want to make an offer one of your colleague’s listings. The property is listed at $259,000. A few weeks before you met Darrell and Melissa, your colleague told you that there was an accepted offer for $235,000 that did not close due to buyer financing problems.

She also confided that the sellers are very motivated and growing increasingly anxious about selling their home. In addition to being very motivated, the sellers were now willing to accept a reduced price, because a property inspection turned up problems with the roof, which will probably need to be replaced within a year; plus, the kitchen appliances are old, yet still functional. Based on their Internet research on Trulia and Zillow®, Darrell and Melissa want to make a $245,000 offer on the property.

Robert and Patricia

You lined up six properties for Robert and Patricia to view, one of which is a condo on which you made a listing presentation. Although you didn’t get the listing, during the course of the conversation you learned the seller’s motivation, bottom line price, and other information pertinent to the sale of their property. When Robert looks at the listing he says, “We’ve already seen one of these condos at an open house and really liked it. We knew better than to say anything that would harm our negotiating position if we decide to make an offer. That’s okay, right?” You asked if Robert and Patricia told the open house agent that they were working with you or if they signed anything. Patricia says she doesn’t think so, but really can’t remember.

They have looked at so many open houses it’s kind of a blur.

Jim and Amy

Jim and Amy are scouring the neighborhoods in their first-choice school district. One Sunday afternoon, they drive by a FSBO property that looks very attractive. The owner is outside mowing the lawn and invites Jim and Amy in to see the house. It’s love at first sight for Amy and she is already picturing how she will decorate the house for the holidays. Jim suspects the house has some delayed maintenance issues. Also, all of the bedrooms and bathrooms are on the second floor. Will it be possible to add on a ground floor addition? When Jim asks why the house is for sale, the seller says that the home was listed with an agent but it didn’t sell before the listing expired. Jim asks the seller if you can contact them tomorrow and the seller says that would be okay.

Christina

Christina and her parents are touring loft apartments. Her face lights up when she walks into a newly renovated loft apartment and she wants to share her excitement with friends. She starts snapping photos with her phone and tweeting about the loft. The builder’s sales agent, picking up on Christina’s excitement, enthuses about how quickly the neighborhood is gentrifying. The sales agent says this is a chance to buy into tomorrow’s trendy neighborhood before prices really go up. Christina’s father, checking out the HVAC, asks how much it will cost to heat and cool the loft. He also asks about the property taxes. Christina’s mother asks, “Do you think this is a safe neighborhood for a single woman? Would you live here?”

 

    1. Offers, Counter Offers, and Negotiations

Preparing the Buyer

After finding the right property, the next most important services that buyers say they want you to assist with are negotiating price and terms.

As you help buyers formulate an offer, think of the process as a “training the buyer-clients” seminar to help them understand the give-and-take of the offer and negotiating process. Educating first-time buyers is particularly important because they may be intimidated by the paperwork, as well as the unknown venture they are undertaking. You may need to educate your buyer-clients on important facts about making an offer.

Once signed, both parties are legally obligated to contract terms.

Educated Buyers Make Sound Decisions

In “Getting to Yes: Negotiating Agreement Without Giving In”, authors Ury and Fisher outline a “straightforward method of negotiation that can be used under almost any circumstance.” One of the four principles of this method is: Insist on using objective criteria.

Market data is the “objective criteria” of the real estate negotiation. However, such data alone does not paint the whole picture of the market and is subject to interpretation. Consider the following distinctions between data, information, knowledge, and insights:

      1. has been verified to be accurate and timely
      2. is specific and organized for a purpose
      3. is presented within a context that gives it meaning and relevance
      4. can lead to an increase in understanding and decrease in uncertainty

It is recommended that you utilize the analytics in your MLS and RPR to communicate the actual market conditions in your area for the type of home the buyer is currently looking for.

Exercise: What Buyers Need to Know

What do buyers need to know to shape their expectations about the market and be prepared to make sound negotiating decisions?

      1. Offers, Counter Offers, and Negotiations

Evaluate the Buyer-Client’s Negotiating Position

Assessing your buyer’s negotiating position involves collecting and evaluating information about market conditions, the property, the buyer’s financial strength, and the seller’s situation. Discussing pros and cons helps you and your client articulate a negotiating position and rationale. Use the checklists on the preceding pages to help assess negotiation position factors.

Evaluate the Buyer-Client’s Negotiating Position

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The ABR® Designation Course

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Formulating an Offer

Market and property facts from the Market Analysis provide the basis for making an offer.

Inclusion of all personal property (and possibly fixtures to avoid confusion) that the buyer wants to have remain with the property. The sales contract supersedes whatever is being offered in the MLS, and the seller has the right to take his personal property with him if it is not included in the contract. Often the loan officers ask to have the personal property removed from the contract and put on a separate addendum. Legal counsel should be consulted prior to creating an additional document that is not disclosed to the lender.

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Is It a Buyers’ or Sellers’ Market?

Contingencies

Common contingencies that are often written into standard contracts include a satisfactory home inspection report, approval of financing, and sale of a current home. Contingencies may be added based on the property or circumstances of the seller or buyer.

Commonplace buyer contingencies include:

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Seller concessions could include:

Prepare a Market Analysis

Preparing a winning offer starts with a detailed Market Analysis, similar to the one prepared for sellers. Be sure to check your Market Analysis results against online value estimators like Zillow®. Your buyer-clients probably check values on these websites and you need to be prepared to respond to concerns about differences in estimated values.

If you have access to the Realtors Property Resource® and the Realtors Valuation Model® (RVM®), the Property Report provides an estimated value based on real-time MLS data and assembles a comprehensive profile of the neighborhood and property. The Property Analysis for Investors tools on the Details tab lets you choose a strategy—buy and hold, resell, or rent—and adjust the variables for investment goals, financing, and property conditions. Export the results to an Excel® worksheet.

Are you acting as a disclosed dual agent in a transaction? Although state- specific, if while acting as a dual agent you prepared a CMA for the seller, you should also do so for the buyer. Not doing a CMA for the buyer puts him or her at a disadvantage.

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Skill Practice Scenarios

Darrell and Melissa

Darrell and Melissa are feeling time pressure to find the right house and move. There are two homes that look good to them and either one would be acceptable if the price and terms are right. One home is listed at $245,000 and the other at $239,000. Darrell and Melissa’s target price is no more than $235,000. Darrell asks you if it’s okay to make offers on both properties at the same time.

Jim and Amy

Two days ago, you contacted the FSBO sellers of the property that Jim and Amy really want. So far no one has returned your phone calls. Jim and Amy are ready to make a full-price offer. This morning the property popped up on the MLS as a “new listing.” The original listing agent contacted them, relisted the property, and now has a buyer who is interested in the home. The list price, however, is now $10,000 higher than the sale price the FSBO sellers quoted when Jim and Amy looked at the house.

Robert and Patricia

Robert and Patricia really liked one of the condos you showed them, and the elderly sellers were present when Robert and Patricia viewed the condo and they all really hit it off. Now Robert and Patricia want to make an offer. The sellers have already received one offer, to which they haven’t responded because they just really like Robert and Patricia and would like them to have their condo. The sellers instruct their listing agent to tell you the amount of the other offer so that Robert and Patricia can match it and get the condo.

Christina

Before calling you to start the offer process, Christina pulled up a Zillow® report and found a value estimate that is lower than what the sellers are asking or what you said comparable properties are going for. Christina posts to all her Facebook friends how excited she is about negotiating for the loft. She asks for suggestions on negotiating and her friends respond with lots of ideas on strategy.

Presenting an Offer – Know the Rules

The REALTOR® Code of Ethics states that all offers and counter offers must be presented to the clients up to closing or until the sellers states, in writing, that they no longer want to entertain offers.

Personally Presenting Your Buyer’s Offer

In some marketplaces, it may be the custom for the buyer agent to accompany the listing agent when the offer is presented to the seller.

If you will be present when the offer is presented you will want to

Your duties to a buyer-client require a timely submission of the buyer’s offers and responses to counter offers.

Confidentiality and Disclosure

As stated previously, sellers are not legally obligated to keep offer details or the buyer’s identity confidential. Per Standard of Practice 1-13, REALTORS® must advise potential clients of “the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties.”

If your buyer-client requires confidentiality, the buyer should ask the seller to sign a confidentiality agreement before you present the offer. If the seller refuses to sign, your buyer-client must consider whether or not to go ahead with presentation of the offer.

On the other hand, listing agents are required to disclose if a property is under contract, even if that contract is subject to a contingency. They are also required to report the acceptance to MLS according to MLS rules.

Listing brokers are not required to automatically disclose the existence of offers on a property. The buyer or buyer’s representative must ask for this information and the seller must consent to divulging it.

Variable Rate

Variable rate commissions are often misunderstood, but it’s important to understand what they are and why listing brokers are required to disclose them. “Variable rate” simply means the seller pays one amount if the listing broker’s firm procures the buyer and a different amount if a cooperating broker procures the buyer.

A variable rate commission can impact the seller’s bottom line, since the net proceeds on identical offers will vary depending on who procures the buyer. Therefore, variable rate commissions must be disclosed to cooperating brokers. Buyer’s representatives must disclose such information to their buyer-client before making an offer. When a variable rate commission has been appropriately disclosed in the MLS, it is the buyer’s representative’s responsibility to inquire further as to the variance or differential.

Back-Up Offers

A back-up offer is a written offer containing a contingency making it subject to the release of a prior contract. Upon acceptance, the offer becomes a contract in “back-up position.” An accepted back-up contract does not give the seller the right to cancel the first contract, but it makes it critical for the first buyer to meet all obligations and contingencies as a seller with a buyer in back-up position may be quick to cancel.

Multiple Offer Situations

Multiple offers weaken a buyer’s leverage. Sellers are neither obligated to consider offers in the order that they were received, nor accept the highest bid if a lower bid presents more attractive terms. And it doesn’t have to be a seller’s market for a seller to receive multiple offers on a property.

Multiple offers complicate the situation, because buyers must consider not only their own interests and capabilities along with the property’s condition, but also the unknown factor of other buyers’ interests and capabilities. When a multiple-offer situation arises, consider the following factors as you help your buyer client formulate an attractive offer:

Remember: The listing broker is not required to tell you if there are other offers on the table. It’s the seller’s decision.

If a multiple offer situation arises, counsel buyers not to panic or withdraw from negotiations; they may be the highest bidders and will never know it if they pull out. Although the situation may be nerve wracking and the final outcome disappointing, it is worth the time and effort to go through at least one round of negotiations before withdrawing. Counsel buyers to have a price in mind, remain objective, and stay in the negotiations until that price is reached.

Using an Escalation Clause

  1. Contract reads: “$400,000 or $5,000 higher than the highest ascertainable, bona fide offer”.
  1. Contract could read “5,000 higher than the highest ascertainable, bona fide offer” without a price
  1. There does not need to be a ‘not to exceed’ price in the offer
  1. When the seller comes back with a price – let’s say $425,000 – the buyer has the ability to say “no” and he is not bound.
  1. Putting a “not to exceed” gives the seller the buyer’s maximum price. There would be no reason why the seller could not counter at that price – even if the other offer was not even close!
  1. Listing agents should not eliminate the other offer before they go back to the buyer with the escalation clause to verify he will go to the price the seller is asking.
  1. There may be NO way that the buyer will ever get something that totally satisfies him relative to what the other offer was. Buyers should only use an escalation clause if he can live with this.

Tips on Using an Escalation Clause in Your Offer

An escalation clause can be a useful strategy to raise your offer price, while not overpaying compared to the next closest bidder. Here are some tips for effectively adding an escalation to your offer.

  1. Determine your highest acceptable price – Whenever you are competing with another bid, you have to decide what the maximum price you are willing to pay. Don’t get caught up in the competition and stick to

your price so that you don’t end up overpaying.

  1. Accept that you may not get the evidence you desire – you have to look at using an escalation clause as a way to get the property and be able to accept the fact that you may not get the kind of hard evidence you need regarding the other offer. Remember Tip #1 – do not go higher than you feel the property is

worth.

  1. Price escalation cannot make up for weaker terms – if the other terms of your offer are weak (low down payment, multiple contingencies, long closing time), the small premium in price that your escalation gives isn’t the most compelling offer. Money usually is the deciding factor on house offers, but when bids are

close to one another, sellers often opt for the offer that looks like a sure thing.

  1. Ask to see the competing offer – In a normal real estate bidding process, competing offers are not shared with you. However, when you use an escalation clause, there is an obvious opportunity for sellers to game

the system and claim that there is a competing offer that doesn’t actually exist. The escalation contract could require the seller to show a copy of the competing offer before they can invoke the escalation clause. “If seller receives an offer which is higher than the offer contained in this contract, seller will provide purchaser with a copy of that higher third party offer. Seller reserves the right to delete the name of that third party offeror to protect privacy. Seller represents and warrants that the third party offer is bona fide.”

Why Shouldn’t I Use an Escalation in My Offer

On the surface, it would seem that an escalator is a great way to compete on price without paying too much more than your competitors. However, it is not a guarantee to winning a bidding process.

Banks don’t accept escalators – If you are bidding on a bank-owned house, you can forget escalation in your offers. Banks won’t review offers that contain an escalation clause, so don’t bother with it. You will be asked for your “highest and best offer,” which means you need to pick a competitive price that you are comfortable with and stick to it. If you get the property, great. If you lose to the competition, remember that there will always be another house coming on the market.

Sellers don’t always like escalations – Some sellers believe that if buyers were to submit their highest and best they may get more money for their property. They don’t like to “play games” and some have been known to take a lower offer rather than run the risk of losing that offer in an attempt to get something higher from you.

It still must appraise – Overpaying for a property and having it not appraise – thereby not being able to close – is not in the best interest of either the buyer or the seller. A good listing agent will have advised their client if they feel that they are reaching the appraisal limit and this is another reason the sellers may not want to entertain your escalation clause.

Adding an escalation clause to your offer can be an effective strategy to compete on price, but think carefully about the situation before doing so. Putting your “highest and best” offer forward may be the better approach.

  1. Offers, Counter Offers, and Negotiations

Offers on REO Properties

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The ABR® Designation Course

Offers on Short Sale Properties

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  1. Offers, Counter Offers, and Negotiations

Counter Offers

Be ready to implement your negotiating strategy when the seller makes a counter offer. Refer back to the scenarios you constructed when developing an offer and negotiation strategy. Does the counter offer match of one of the scenarios? Is it close to aligning with your buyer- client’s priorities? Before responding to a counter offer, it’s wise to reassess objectives. For example:

Identify points of agreement and differences between your buyer-client and the seller. Focus the negotiations on areas of disagreement and concentrate on resolving those issues. Although most concessions occur at the closing phases of negotiations, patience and staying focused on objectives achieves the best outcome. Prolonged, incremental negotiating is not without risk. Caution your buyer-clients that the longer negotiation, the greater the risk that a seller may accept a competing offer—just to conclude the deal.

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  1. From Contract to Close

The buyer and seller have agreed on terms, signed a purchase contract, and the earnest money is sitting in an escrow account. It’s time to sit back and wait for closing, right? What more is there to do?

The buyer agent’s job has not ended when the contract is signed. Your continued attention to buyer-clients presents another opportunity to prove your value proposition. The reason you are in this business is to represent buyers for compensation. Real estate professionals know all too well that no closing means no compensation. Even with the finish line in sight, buyers can encounter pitfalls that delay or derail the closing.

Let’s take a look at what the buyer’s representatives can do to help their clients complete those final steps to the closing finish line.

Contract Contingencies

Review contingencies with the buyer. Establish a timeline for completing the buyer’s contingencies and monitoring the seller’s completion.

Admonish buyer-clients that the consequences of not complying with the terms of the contract could be a loss of the property and earnest money. You might want to create a Due Diligence Checklist to assist the buyers in ensuring they meet all the deadline dates in their contract.

Mortgage Process

Unless the transaction is an all-cash deal, the buyers need to obtain mortgage financing. Buyer’s representatives should stay abreast of requirements under the Consumer Financial Protection Bureau’s TRID (TILA-RESPA Integrated Disclosure) rule, since most mortgages are subject to TRID.

Mortgage application

In truth, the buyer should take first steps for a successful mortgage approval—well before the loan application—by improving or repairing credit rating issues and debt load. For example, after a period of credit difficulties, it may be best to wait 12 months to apply for a mortgage because barriers usually diminish after a year.

Purchase contracts often stipulate a time frame for making mortgage application. TRID calls for a mortgage application date, a date for the buyer to give their lender of choice their Intent to Proceed, and another date for the Mortgage Approval.

Under TRID, borrowers are allowed to apply for a mortgage from multiple lenders and receive a Loan Estimate from each showing all fees so they can do an “apples to apples” comparison and then choose a lender by giving them “Intent to Proceed.”

Buyer should compare critical items on the Loan Estimate, including:

As noted above, after completing the initial mortgage application process, the lender will likely make several requests for additional documentation and information. A prompt response from the buyer keeps the process moving along.

You can help your buyers by providing an advance list of documents that lenders in your area typically request so they can begin compiling the information in order to prepare for a mortgage application.

Lender requirements differ, but most require:

Additional Documentation for Some Situations

If the source of the down payment is a gift or money borrowed from relatives, the lender may request documentation.

Inspections

Home inspections should be scheduled ASAP. The purchase contract will likely stipulate a date by which inspections must be completed. If the inspection turns up major problems, it takes time for the seller to make repairs or renegotiate terms. The buyer should be present at the home inspection, which usually last 2–3 hours.

Buyers should be cautioned to read the language in the sales contract relative to what is covered during the home inspection as well as who is authorized to do the home inspections.

Buyer agrees that minor repairs and routine maintenance do not constitute defects and are not a part of this contingency. The fact that a functioning major component may be at the end of its useful life shall not render such component defective for purposes of this paragraph.

A system or item shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety.

Property Insurance

Buyers should begin the process of applying for property insurance at the same time that they apply for a mortgage. Homeowner’s insurance is required in order for the deal to close.

Insurance Claims History

Stress to buyer-clients that they should apply for insurance coverage without delay after signing a purchase contract. The lender will not permit the closing to proceed if the buyer is unable to obtain or afford adequate property insurance or if a higher premium is needed and the buyer no longer qualifies.

It may come as a surprise to buyers to learn that the loss claims made by previous owners are used to calculate premium rates and even to deny coverage in some instances. The insurers look at the history of the property; for example, is it in an area susceptible to destructive weather events? As a contingency, the buyers can request the sellers to provide an Insurance Claims History report on the property detailing the most recent five-year history of property claims. The sale can be contingent on a home inspection ensuring that problems identified in the report have been repaired.

Insurers also look at a potential policy holder’s credit score when deciding whether or not to offer coverage and determining premium rates. Insurers feel that someone who has a low credit score, indicative of poor credit management, will be less likely to do needed upkeep.

Flood Insurance

During the inspection or due diligence period, the buyer should determine if the property is located in a mapped flood plain and investigate the cost and availability of flood insurance, which will likely be required if the buyer is obtaining financing.

For information and updates, go to the official site of the National Flood Insurance Program at www.floodsmart.gov or NAR’s NFIP Toolkit at www.realtor.org/topics/national-flood-insurance-program-nfip/nfip- toolkit.

Title Insurance

Title insurance is a type of coverage that is often misunderstood. Who is covered for what loss? Imagine this scenario: a few weeks after moving into a new home, a man knocks on the door. He informs you that the sale was fraudulent and that he is the rightful owner. Title insurance protects the policy holder—the lender or borrower—from losses resulting from defects in the title. Lender title policies protect the lender and owner title policies protect the homeowner.

The lender’s policy insures the validity and enforceability of the mortgage document. This guarantee makes it possible to sell the mortgage in the secondary market. The value of the policy equals the amount of the mortgage. The lender will probably use a designated company to write the lender’s title policy.

Title insurance protects the buyer’s ownership right to the home, from both fraudulent claims and mistakes (such as an inaccurate description of the property) made in earlier sales. It’s a one-time cost based on the price of the property. Title insurance is particularly important for buyers who purchase homes in foreign countries, e.g. Mexico, where property records can be murky or nonexistent. Title insurance is a good idea even for new construction. Even though the home is new, the land isn’t. There may be claims on the land or liens placed during the construction.

The buyers may wish to include provision of an owner’s title policy in the purchase contract, to be paid by the seller, although this can vary depending on your state and local customs. Home buyers can—and should—shop around for the best rates. Title insurance is a very competitive business and a search on the Internet for owner’s title insurance brings up numerous hits.

No Changes in Financial Picture

Warn buyers not to make any changes in their financial picture between contract and closing. Lenders recheck credit and employment shortly before closing and a loan commitment could be rescinded if there is a change. This includes:

What are some common missteps that lead to changes in the buyer’s financial picture and jeopardize closing?

Pre-Closing Walk-Through(s)

Most purchase contracts entitle the buyer to a walk-through inspection of the property before closing. It is important that buyer do this personally. The buyer’s representative can accompany but should not do the walk-through for the buyer-client.

The purpose of a pre-closing walk-through is to:

In case there are major problems, the buyer can ask to delay the closing or request that the seller deposit money into an escrow account to cover the necessary repairs. In such case, be sure the buyer is the one making decisions, and recommend they seek appropriate counsel.

Data Security

Real estate professionals often collect a lot of personal information about clients and customers in the course of finding them the right home. In this age of digital recordkeeping, your office policies should include standards and procedures for collecting, sharing, destroying, and protecting customer and client information. A data security plan includes protecting the security, confidentiality, and integrity of data, as well as disposing of it properly when no longer needed. The Federal Trade Commission recommends five key principles for a sound data security program:

  1. Take stock: know what personal information is in office files and computers and who has access.
  2. Scale down: keep only what is needed for business.
  3. Pitch it: properly dispose of information that is no longer needed.
  4. Lock it: protect the information that is kept.
  5. Plan ahead: create a plan to respond to security breaches.

For a free Data Security and Privacy Toolkit with information about state laws and pending federal regulations as well as guidance and checklists for drafting a security program tailored to the operations of the company visit www.REALTOR.org/law-and-ethics/nars-data-security-and-privacy- toolkit.

When Appraisal Derails Closing

When properties appraise below the agreed sale price it’s a big headache for buyers, sellers, and real estate agents. The transaction comes to a halt until the issues can be resolved. How?

The first step is helping the buyer understand the contract, including any appraisal and financing contingencies, so they can evaluate their options before deciding what to do next.

Before going to bat for the buyer to save the deal, make sure it’s what they want. One option may be to walk away. If an appraisal contingency allows, the buyer may elect to cancel the contract and receive a refund of their earnest money.

If the buyer wants to go forward, here are some options to consider:

Prepare the Buyer for Closing

Preparing the buyer for what will take place at the closing reduces stress and facilitates a no-problem settlement process. Counsel buyer-clients how to prepare, who will attend, and what to expect when closing.

The closing process varies depending on factors such as state law, local custom, and whether financing is involved (and even the type of financing).

How to Prepare

In the days before closing and/or signing loan documents, buyers should gather all the paperwork accumulated throughout the buying process and additional documents which may be needed, such as:

Who Attends?

Closing procedures vary from state to state (and even county to county). The following parties may attend closing/signing:

What to Expect

Ownership of the property will be transferred to the buyer on closing day. Any changes to the transaction must be made prior to closing. The closing agent makes sure that all documents are signed and sent for recording and that closing fees and escrow payments are paid and properly distributed. If not completed previously (depending on state law) the buyer should be prepared to:

  

Exercise: Stay in Touch

Considering the lifestyles and stages of these buyers, how would you stay in touch and top-of- mind? What information would be valuable to them?

Darrell and Melissa Jim and Amy

  

  

  

  

  

  

  

  

When you have met all ABR® designation requirements and REBAC confers the designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in with the REBAC membership ID number you will receive after REBAC processes course completion information.

Resources

Prospect ID Form 158

Sample Agency Disclosure and Brokerage Fee Agreement for Unlisted Property 159

Buyer Needs Assessment Worksheet 160

Buyer Information and Disclosure Checklist 162

True Cost of Homeownership 163

Make These Scripts Your Own 165

Prospect ID Form

Photocopy Driver’s License(s) or other Photo ID(s) and attach to this form.

Sample Agency Disclosure and Brokerage Fee Agreement for Unlisted Property

Buyer Needs Assessment Worksheet

Family size: Pets:   

Currently: Own Rent Must sell to purchase?

Desired possession date    

Mortgage: Prequalified Pre-approved

Lender:   

Ideal Price: Ideal Monthly Payment:   

Ideal Location:   

Buyer Information and Disclosure Checklist

Compliments of Madison Seminars

True Cost of Homeownership

One-Time Expenses

Appliances

Will the appliances in the home need upgrading—now or in the near future. Don’t forget to check out the water heater and HVAC.

Furniture

If you move from a one-bedroom apartment to a three-bedroom house, you will probably need more furniture to fill it. Evaluate furniture needs and costs for your new home.

Remodeling.

Before purchasing a home that needs remodeling, ask a contractor give you an estimate. Homeowners often underestimate the costs.

Ongoing Expenses

Principal, interest, taxes, and insurance (PITI)

If you have a fixed rate mortgage, the payment will remain the same for the life of the loan. Taxes and insurance may increase.

Homeowner Association Fees

Fees or assessments for a condo, townhouse or single-family home with an association can increase yearly. Compare fees of similar properties line-by-line. Check what the fee includes; for example, utilities gas, electricity, garbage pickup, and water. Watch out for special assessments for capital repairs and improvements to common areas.

Exterior maintenance

Replacing the roof, painting the siding or trim, sealing the driveway, sealing the deck and repairs, replacing windows, gutter cleaning or repair, septic and well maintenance are just some of the additional exterior maintenance costs in owning a home. Some maintenance jobs you can do yourself, but other jobs require professionals. Don’t forget the tools that go along with these maintenance jobs: lawn mowers and trimmers, power washers, compressors, heavy- duty ladders, and power tools.

Interior maintenance

If you’ve been renting, your landlord probably picked up the tab for repairs and general maintenance. Once you own your home you’ll be footing the bill. You will need to maintain appliances, plumbing and electrical systems, carpets, floor and wall coverings, and so on.

Utilities

If you are renting you’re probably used to budgeting for utilities. But the cost of heating a one- bedroom apartment can pale in comparison with the bills for an entire house. A real estate professional can help you find out about the current occupant’s costs but family size and usage impacts those numbers.

Yard care and snow removal

Plan on buying a lawnmower and other landscaping tools or budget for a professional lawn service. Include a snow shovel or snow blower if you live in a cold climate.

Pest control

Depending on location, be sure to schedule a termite inspection before you purchase a home. Purchasing a termite infestation bond may be in order. Even if there is no infestation at the time of the inspection, that’s no guarantee these or other pests won’t show up.

Transportation Costs

Don’t forget to calculate transportation costs whether by public transportation or your own vehicle. Budget for gas, oil, insurance, tires, and regular maintenance. Will you need to purchase another car to take care of all of the family’s transportation needs?

Make These Scripts Your Own

The following questions asked by buyers probably sound familiar to you. Ready answers to buyers’ frequent questions enhance your presentations by demonstrating your experience and professionalism. Knowing you’ll never be at a loss for words, builds your confidence.

    1. In my company, most buyer representation agreements last for 2–3 weeks with the option to renew. Of course, if you are dissatisfied with the arrangement, you always have the choice to cancel the agreement. Keep in mind, however, that in this marketplace, buyers typically take 10–12 weeks to find a home.

A. You certainly can, but if you ever needed an agent on your side it is when you are buying from a “professional seller” such as a builder. My job is to point out the pros and cons of what the builder is offering, such as: is the premium they charge for the corner lot likely to pay off when you sell? I can help you buy smart and potentially save you thousands in the long run.

A. What you find on the Internet are advertised properties—not necessarily all the properties available. I have access to the MLS with real-time information on the latest listings including new on the market and price changes. I also have relationships with agents in other offices who may have listings that are not even advertised. Even in a buyer’s market there are homes selling daily that you might never see if you wait for them to show up on the Internet; they’re selling before they even get there.

A. You certainly can trust me and I feel that I can trust you as well. That said, I can only work with (3, 4, 5) buyers at a time if I am going to give them the service I am committed to giving and they are entitled to. I only work with buyers with whom I have a contract, which protects their interests. Let me explain how.

A. Because I am your agent, I must put your interests ahead of everyone else’s. I would never violate my duties to you or jeopardize my commission for the small portion earned off the “negotiating room” on your $200,000 purchase.

A. You do not “pay” me out of your pocket; my fee is a part of the exchange of monies at closing. Although the commission is taken from the seller’s sale proceeds, when you think about, you are paying the commission in the amount you offer and the mortgage you are taking out on the property. You put the money on the table at closing.

A. My job is to protect your interests and help you acquire all the information you need to make an educated decision. Once we’ve determined the value of a piece of property, I will help you negotiate the best price and terms. After that, I’ll keep an eye on the transaction details through the closing and until you move in.

A. Most of those agents are listing agents. Being nice is their job but they are looking out for the best interests of the seller, not yours. You want someone working for you and helping you get the best price on the right house.

A. You are more than welcome to work with more than one agent at a time. Each of us has access to the same inventory of property on the MLS. But with all of us calling you to look at the same houses you could waste a lot of time. Bottom line, you’ll get much better service from one agent who is committed and loyal than from many of us. I owe it to the buyers I am working with now not to take time away from them for buyers who are working with many agents at the same time.

A. My knowledge of the market and ability to research available properties will give you ample choices of properties that are potential good deals including distressed properties. I can give you the advice you need to make an offer and negotiate a favorable combination of price and terms.

A. This is the fee that the company has determined is fair for the services we provide. And remember, no fee is earned until we have a completed transaction. My compensation is paid at the closing.

A. With our company you do not. But, if you are serious about looking for a home and need to purchase, what would stop you from buying?

A.. If at any time you are unhappy with my services, you can speak with my broker. She will resolve the issues by assigning a different agent or cancelling your agreement.

A. I will do a comparative market analysis before you make an offer on a property so that you will know facts like: fair market value, number and prices of similar homes for sale, time on the market, and any information about the seller and the property condition that is available. All of that information will help us formulate an offer.

A. That depends on the buyer. If you are new to the area or have never owned a home, I might agree with that. You, however, have lived here all your life and have a good feel for the market. A dual agent will always give you all information about the property but cannot give you confidential information about the seller or recommend an offer price. If we do find one of my listings you want to buy, I will do a CMA so you can decide what price to offer.

A. Helping you buy a home is more than just finding one. My expertise includes negotiating, following up from contract to closing and working with the attorneys, title companies and other agents in the marketplace. You want to work with someone who understands what it means to “play well with others” but always puts your interests first. That’s my specialty.

Ask Your Broker

Make a note of important questions, issues, and clarifications to discuss with your broker or office manager.