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Buyer Representation in Real Estate Third Edition.

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Presentation on theme: "Buyer Representation in Real Estate Third Edition."— Presentation transcript:

1 Buyer Representation in Real Estate Third Edition

2 Chapter One - Objectives Evolution of buyer agency How buyers benefit Duties of a fiduciary agent Creating the relationship Define agency options

3 Let’s Begin Key Terms Why so much attention to buyer agency? Major reasons for buyer agency

4 Buyers Who Must Be Represented Agent purchasing for own account Buyers who want to remain anonymous

5 Buyers Who Should Be Represented Current seller clients Former clients First-time buyers Out-of-town or relo buyers Close friends

6 Regulations Common law of agency created confusion Laws passed to clarify role of buyer agent Abrogation of common law States dictate disclosure and contract requirements

7 Risk Management Licensees must know common law of agency and state statutes that address buyer representation

8 Fiduciary Agency Obedience Loyalty Disclosure Confidentiality Accounting Reasonable Care and Diligence

9 Risk Management Agent should avoid exaggeration, misrepresentation, concealment of pertinent facts Agent should recommend use of outside professionals

10 Imputed Knowledge Common law concept What the agent knows AND should have known

11 Vicarious Liability Principal may be responsible for, and may be bound by, the actions of his or her agent

12 Creating Agency Relationships Oral agency – verbal agreement Implied agency – words and actions of the parties Written or Contractual – documented in an agreement between the parties

13 Contracts in Writing Required by some states Required by NAR code of ethics Article 9 Reduces risk for agent

14 Termination of Agency Completion of task Agreement expires Mutual agreement to terminate Death of one of the parties

15 Termination of Agency Broker files bankruptcy Death or insanity of principal or agent Actions of agent warrant cancellation by principal

16 Statutory Agency State law replaces common law as basis for agent – principal relationship Duties may vary from state to state

17 Chapter Two – Objectives Understand reluctance to enter into an agreement Respond to buyers questions Determine service option Describe consultation meeting

18 Starting Out Key Terms Reasons some purchasers are reluctant to enter into representation agreements

19 Service Options in Office Policy Types of agreements Agency options Types of fees

20 Service Options in Office Policy Multiple buyer clients Agreements Services for self- represented buyers

21 Buyer Consultation Meeting Should follow an agenda Check for existing buyer-agency agreements Prepare interview questions

22 Sample Meeting Agenda Confirm basic data Introduce concept Elicit wants and needs Identify features they desire

23 Sample Meeting Agenda Identify urgency and barriers Review financing issues Identify actions that you and buyer are going to take

24 Responding to Buyer Questions Agent must be confident Avoid confronting buyer Focus on buyer’s concerns Buyers must be comfortable with commitment

25 Chapter Three – Objectives Identify components Explain compensation options Describe types of fees Discuss areas to be negotiated Understand importance of a signed agreement

26 Type of Agreements Exclusive-Right-to-Represent Exclusive Agency Open Agreement

27 Discussing the Agreement Buyer disclosure Purpose of the agreement Broker’s duties Buyer’s commitments Compensation

28 Discussing the Agreement Start and end dates Disclosed dual or designated representation (if applicable) Equal opportunity clause Multiple-buyer clients

29 Compensation Options Contingent fee Non-contingent fee Buyers are reluctant to accept obligation to compensate agent Listing broker often shares fee with buyer agent

30 Methods of Paying Fee Fee due from buyer at closing Receipt of funds from a third party Acceptable fee range Retainer fee Hourly rate

31 Determining Compensation % of sales price Flat fee Hourly rate Cooperative fee credited to buyer

32 Self Represented Sellers Inform client that property is not listed No fee available from another agent Buyer must decide whether to pay agent directly or to include in offered price Agent must inform seller

33 Retainer Fees Amount must be the same for all clients Refundable Creditable Stated in representation agreement

34 Presenting Buyer Agreement Buyers are often concerned about selecting the wrong agent Issue of exclusivity is best resolved by creating a strong relationship during consultation meeting

35 Presenting Buyer Agreement Exclusivity Fees Fair housing issues Multiple-buyer clients Limitations to representation

36 Negotiating the Buyer Agreement Length of term Exclusivity Compensation issues Shared representation issues Termination options

37 Chapter Four - Objectives Showing properties Duties after property is selected Preparing the buyers’ offer Responding to counteroffers

38 Chapter Four - Objectives Ancillary services Critical issues Resolving conflicts Effective communications

39 Getting Started Key terms Components of a well established agency relationship

40 Mutual Task List – Agent MLS, newspaper, and Internet search Preview properties and schedule showings Place ‘searching for’ ad in local newspaper

41 Mutual Task List – Purchasers Apply with lender Confirm ability to extend lease, if necessary Gather documents for loan application

42 Property Research Locating properties Showing properties Narrowing the search Controlling emotions

43 Property Research Determining property condition Providing pricing assistance Performing resale analysis Uncovering use restrictions

44 Creating and Negotiating the Agreement Disclose what you know about seller Establish priorities Advocate for buyer (unless in dual agency)

45 Creating and Negotiating the Agreement Creating reasonable offers Adding contingencies Presenting the offer Handling counteroffers

46 From Contract to Closing Property inspection and re-negotiation, if required Environmental inspections Appraisal contingencies Survey

47 From Contract to Closing Termite, infestation, or moisture inspections Title inspection Eliminating contingencies Final walk through

48 Client-Care Program Help them handle paperwork Spell out client obligations and timeline Establish communication system Pre-closing review Turn closing into a celebration

49 Closing the Property Resolve walk-through issues Review HUD-1 Identify post-closing tasks Thank clients, other agents, and the seller

50 Beyond Closing Call 10 days after closing – ‘How are things going?’ – ‘Any problems?’

51 Beyond Closing Visit client 30 – 60 days after closing – ‘See what you’ve done to the property’ – ‘Here is a gift for you’ – ‘Do you know anyone else who might benefit from my services?’

52 Chapter Five - Objectives Generate buyer leads Develop effective marketing message Conduct effective buyer seminars Survey clients

53 Let’s Get Started Key terms Success requires discipline – Prospecting – Quality service – Obtaining feedback – Adjusting service delivery

54 Generating Opportunities Receiving referrals Converting incoming buyer calls Conducting buying seminars

55 Web Site Outline What our clients say about us What our clients bought How we do the job

56 Buyer Seminars One of the most effective tools Schedule on a 12 month basis By written invitation Written thank you notes and mail the day after

57 Effective Marketing Plan Define your vision Create the plan – What do you want to say? – What benefits do you offer? – What is your message?

58 Differing Purposes for Marketing Awareness or Corporate Targeting specific buyers Performance testimonials, statistics etc. Prospecting

59 Marketing Mistakes to Avoid Copycat marketing Confrontational marketing Promising more than you can deliver Failing to convey value Underestimating the cost and effort

60 Generating Referrals Past buyer clients Must have a plan Discuss at initial consultation 75% of business should come from past client referrals

61 Client Feedback Every transaction should be surveyed Conveys message that agent cares about service Different buyers require different service plans Written or oral External company is best

62 Chapter Six - Objectives Using technology to locate potential clients Using technology to analyze market for them Providing client-level communication

63 Farming for Clients Primary activity for all buyer agents Use Windows-based database software Pre-designed templates Consider purchasing data lists

64 Farming for Clients Gather e-mail addresses Permission-based marketing is best Consistency is critical Professional should create

65 Farming for Clients Submit address to search engines Abide by the Can Spam Law

66 Analyzing the Market Maintain data base of contacts to match with properties Use market analysis software that downloads from MLS systems Use MLS systems for reverse prospecting

67 Analyzing the Market Maintain profiles of clients’ needs and desires Cross-match new listings to internal database

68 Meeting Clients’ Needs Selecting community Data bases from government sources Geodata sources display maps Agent should have ability to access Internet everywhere

69 Contact Management Voicemail Fax machine Fax modem E-mail Contact management software

70 Maintaining Profitability Regular training and reinvestment Personal tech trainer Train in small increments followed by continuous practice Be patient

71 Establish a Budget Technology changes often Equipment is outdated in 36 months Establish a technology budget

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