Setting the Record Straight

The real estate industry has been in the news in recent months due to a class action lawsuit and the outcome is still not clear. Still, business must go on, so brokerages are educating, training and assisting their brokers with how to handle questions surrounding the issues. The basic misunderstanding involves buyer’s agents and how they get paid. The truth of the matter is that payment to buyer’s agents has always been negotiable. The notion that sellers always pay is just not true. Even the Colorado-approved Buyer’s Agency Agreement addresses options for how the broker will be paid for their services. Setting this aside, ERA Shields Real Estate believes agents who can articulate their value to potential clients – both buyers and sellers – is the most effective way to conduct business and ultimately will help guide the client when choices need to be made about paying for real estate services.

Listing Agents

As a consumer, if you are hiring a listing agent, there will be a discussion about what the broker will do for you to get your home marketed and sold and the broker will discuss the fees associated with that service. And then there should be a discussion about whether or not the seller wishes to offer compensation to a buyer’s agent who brings the buyer to the transaction and what that fee amounts to – a percentage or flat fee is acceptable – and 0 is also an option. The listing agent will help the seller understand the pros and cons of the offering and the seller will make the final decision. Keep in mind that the buyer’s agent will also be having a conversation with their buyers about the possibility of paying for their own representation.

Buyer’s Agent

Perhaps what needs clearing up is exactly what a buyer’s agent does so consumers can make an informed decisions about compensation.

First and foremost, a buyer’s agent will conduct an interview with a buyer to nail down important factors such as needs, wants, budget, location and provide resources for other necessary functions such as mortgage needs. This activity, conducted up front, will make finding the right home more efficient and produce potential properties that check many of the boxes for a buyer.

Buyer’s agents are licensed to show properties utilizing provided showing instructions and lock boxes (often electronic), but planning is required. Showing windows may be specific or restricted and there may be other information about the property that is communicated to the agent to share with the buyer (i.e.: Motivated Seller; Quick Close Available; Seller Needs 60 Days to Close).

Once a property has been identified to make an offer on, the agent will do a thorough analysis to assist the buyer in making an appropriate offer. This not only involves looking at recent sales and competition but also speaking with the listing agent to glean additional important information that might be helpful in making an offer. The buyer may also want to consider such things as HOA dues, annual property taxes or age of certain mechanics in the home and a buyer’s agent can easily source these things.

The next step is writing an accurate and complete offer that puts the buyer in the best light to the listing agent and ultimately the seller. This is especially important if there are competing offers on the property.

It is extremely important to have a skilled negotiator on your side during this step in the process. And negotiation can also come into play during the inspection and appraisal phases as well.

While this explanation is pared down to the simplest tasks, there are many hoops to jump through from contract to closing and a competent buyer’s agent will be able to navigate every step, which is a benefit to both the buyer and the seller, if indeed, closing is the end game.

Realtors at ERA Shields 

At ERA Shields, we advocate for having knowledgeable representation for both the buyer and the seller to ensure a smooth transaction while also lessening the chances for issues after closing.

As Realtors, we love what we do and don’t mind that we do not get paid until something closes. That’s our job. We know that today, we will wake up and ready ourselves for job interviews with potential clients that may result in a payday. And tomorrow we will get up and do it all over again.