This article was last updated May 4, 2024.
Early in my real estate career, I was asked by a potential lead, "I'm an attorney. What can you do for me that I can't do for myself?"
Of course, long-time buyer agents would (or should) have plenty of ways to respond to that question, but as a newbie, I was caught a little flat-footed. However, over the next few months, many buyer agents will find themselves in that same position — attempting to justify the value of their services to skeptical and price-sensitive buyers.
In a Q&A published on Inman, Tampa, Florida, team leader Kendall Bonner, in commenting on the buyer commission lawsuits currently wending their way through the legal system, said that real estate professionals are simply not prepared to defend their value.
"If the light switch was to be turned on tomorrow that you no longer can be paid, or will be paid, by the seller and the listing broker, how would you now change your conversations with the buyer in order to deliver value — and express that value, and charge for that value?"
The commission lawsuits argued that there has been a conspiracy to force sellers to pay for buyer agents, essentially acting against their own best interests. Whether you are offended by this or not doesn't matter. Because of the jury verdict in Sitzer/Burnett and the pileup of subsequent copycat lawsuits, business as usual has changed for the real estate industry, forcing buyer agents to come up with a new compensation model.
Instead of being paid by sellers at closing, buyer agents will either need to justify their services as an out-of-pocket buyer expense — tough to do in a time of record-high home prices and higher-than-usual interest rates, begin offering a la carte services at a lower rate of pay, or negotiate with listing agents to have sellers pay some or all of their commission as a cost-of-doing-business concession.
While many agents and brokers have chosen to take a head-in-the-sand approach to the upheaval that would result from a wholesale change in buyer agent commissions, it's time to start paying attention. Most agents are already fielding tons of questions from buyers and listing agents are having to advise their homeowner clients about how much, if anything, they should offer to pay.
If you haven't already, it's time to start thinking about how you'd express your value in terms other than, "Hey, my services are free to you as a buyer!"
25 objection handlers for the buyer commission conversation
Next time you go into a buyer consultation, start thinking about how you would justify the several thousands of dollars you'd be charging directly.
Here are 25 talking points to use as you sell your service to buyers:
1. Market expertise: Buyer real estate agents possess in-depth knowledge of the local real estate market, including market conditions, trends, and pricing. That's essential for helping you make informed decisions.
2. Access to listings: Buyer agents have access to a significant professional network and a database of former clients, allowing them to uncover hidden gems before they're available to the public, finding properties that align with your needs and preferences.
3. Negotiation skills: Buyer agents are skilled negotiators who can represent your interests and work to secure the best possible purchase price, contingencies, and terms on your behalf.
4. Save time and effort: Searching for a home can be time-consuming and overwhelming, especially in a competitive market. A buyer agent researches properties, schedules showings, and screens listings, saving you valuable time and effort.
5. Needs assessment: A buyer agent will conduct a comprehensive needs assessment to understand specific buyer requirements and preferences. They can help you identify your must-haves, prioritize features, and find properties that align with your vision.
6. Professional network: Buyer agents have connections with lenders, inspectors, appraisers, and other industry professionals, allowing them to recommend reliable service providers and coordinate the various moving parts in the buying process.
7. Market analysis: Buyer agents analyze market conditions, recent and pending sales, and comparable properties to help you determine a fair value for the property you're interested in. This analysis ensures that you don't overpay and that your offer is based on market realities.
8. Due diligence: A buyer agent will conduct thorough due diligence on properties of interest, including a review of property disclosures, an investigation of any potential concerns, and recommending both general and specialized inspections to ensure you are thoroughly informed before making an offer.
9. Streamlined process: Buying real estate involves a series of complex steps, including legal paperwork, contracts, and contingencies. A buyer agent guides you through the entire process and explains the legal language and helps to ensure that all necessary documents are completed accurately and submitted in a timely manner.
10. Objective advice: Your feelings can cloud your judgment when buying a home, keeping you from making rational decisions and getting the best possible deal. Buyer agents provide an objective perspective, offering advice based on their expertise and market knowledge.
11. Local area knowledge: Buyer agents are familiar with the neighborhoods and communities within their market. They can provide information about schools, amenities, transportation, and other local factors that may impact the decisions you're making.
12. Professional advocacy: When you're buying a home, you need someone who's totally on your side. A buyer agent has a fiduciary duty to advocate for your best interests throughout the transaction. They are committed to protecting your rights, ensuring fair treatment, and addressing any concerns that may arise.
13. Market insights: Buyer agents stay up-to-date with market trends, including changes in inventory, pricing patterns, and emerging neighborhoods and purchase opportunities. They can provide insights into market dynamics so that you make more confident strategic decisions.
14. Off-market and pre-market opportunities: Sometimes, properties are available for sale without being officially listed on the market. Buyer agents often have access to these off-market opportunities, increasing your chances of finding the right property for your needs and preferences.
15. Guidance in multiple offer situations: In popular markets, multiple buyers may be interested in the same property, leading to highly competitive bidding wars. A buyer agent can guide you through these situations, help you craft and present the strongest possible offer, and improve your chances of success.
16. Price negotiation: Negotiating the price of a property can be challenging. Buyer agents are skilled negotiators who can help you calculate and present compelling offers, navigate counteroffers, and work towards a favorable purchase price.
17. Market insights on investment potential: Whether you're considering buying real estate as an investment or including an ADU or rental unit in your primary home purchase, buyer agents can provide insights into areas with strong growth potential, evaluating rental market trends and other factors that impact investment decisions.
18. Professional representation: Engaging a buyer agent signals to sellers and their agents that you are serious about buying and prepared for the rigors of the process. It establishes a level of professionalism and credibility, which can strengthen your position during negotiations.
19. Assistance with financing options: Buyer agents can provide guidance and recommendations for financing options and connect you with lenders who offer favorable terms customized to current market conditions. They can help you navigate the mortgage process and ensure you secure the best financing for your needs.
20. Market price analysis: Buyer agents analyze market data, recent sales, and comparable properties to determine the fair market value of a property you may be interested in buying. This analysis helps you make an informed decision about the price you should offer and can help you identify post-move-in improvements that may provide instant equity.
21. Familiarity with contracts and paperwork: Real estate transactions involve extensive paperwork and contracts, with a range of details that are specific to each individual transaction. Buyer agents are experienced in reviewing and understanding these documents, making sure that you understand each detail and all the moving parts.
22. Coordination of inspections and contingencies: Buyer agents can help coordinate property inspections, including specialized inspections for chimneys, pools, or historical properties. They can also assist with contingencies, such as obtaining satisfactory appraisal or financing.
23. Market knowledge beyond online listings: While the public-facing information included in online listings provides a starting point, buyer agents have access to additional information and resources that may not be available to the general public. They can provide a comprehensive view of the market, helping you make well-informed decisions.
24. Ongoing support and guidance: Buyer agents are there for you even after the transaction is complete. They can assist with post-purchase matters, provide referrals for home improvement professionals, and offer ongoing advice and support as you settle into your new home.
25. Peace of mind: Ultimately, engaging a buyer agent provides peace of mind throughout the home-buying process. You can rely on their expertise, guidance, and professional representation, knowing that you have a dedicated advocate working in your best interests.
Hiding from the reality of the commission lawsuits is no way for you to run your real estate business. Determine how you'll express and explain your value to buyers and start working with colleagues to practice your talking points so that you'll be prepared.
Most of all, know your value so that you can express it. Find the differentiators that make you exceptional and bring them to the forefront of the way you market your services. Develop your professional skills, niche expertise, and other exceptional qualities so that you can sell yourself with confidence.