Home Buying in 55124>Question Details

Brenda Hanson, Real Estate Pro in Inver Grove Heights,...

I am a Realtor in Apple Valley (3 years). Is there any insight as to why buyers are not interested in having agent representation?

Asked by Brenda Hanson, Inver Grove Heights, MN Mon Jan 3, 2011

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Hi Brenda,

Perhaps a loan officer/lender perspective can help! I have been writing loans for nearly 11 years and I can say that I will not work with a buyer who does not have representation. Not in this day and age...not in this lending environment. When I am approached by a non-represented buyer, I am pretty bold in my reasons why he/she NEEDS representation:

Buyer representation is at NO COST to you...why would you not take advantage of this?
Sellers may not take you as seriously as a buyer who is represented by a licensed agent.
When negotiating best terms, who is going to assist you? Yes you can go to a RE attorney, but that is going to cost dearly.
Address discrepencies, title issues, outstanding utility bills/special assessments can commonly come up during the transaction that the lender will REQUIRE these issues be addressed. Will you know how to handle these obstacles? Will you know how to negotiate?
Will you know how to negotiate price and seller paid closing costs to ensure that you are getting the best terms possible for you?

I hope some of this helps!
Web Reference: http://www.sherrisherpy.com
2 votes Thank Flag Link Mon Jan 3, 2011
Brenda, your getting "burned" may be by either the Commerce department or your Broker. If you ever get audited by the Commerce Deparment, they may feel a little suspect that while you are probably an excellent agent, even the "super" agents aren't consistently signing buyers up and then selling them a home on the same day. I would hope that you are are getting the agency disclosure statement signed and you can always have the buyers sign a "non exclusive" buyer broker agreement or even a "short term" agreement while you are trying to create the trust and comfort. While your way of dealing with the buyer broker agreements may be more common than not, it still is in violation of the state laws. I am sure that any Broker would not want to be seeing such admissions on the public forum by their agents. It's one of the major disadvantages of the blog. Quite possibly the Commerce Department also watches these blogs.
1 vote Thank Flag Link Mon Jan 3, 2011
When explained properly, few serious home buyers choose not to accept representation. A buyer representation agreement is a written commitment that binds the agent to advocate exclusively on behalf of the buyer client. It is required by Minnesota statute prior to performing any acts as a buyer's agent.

Some buyers see the agreement as nothing more than a way for the agent to lock them in to working only with them. What is most important is that the agent is locked in to performing the fiduciary responsibilities that do not exist without the agreement.
1 vote Thank Flag Link Mon Jan 3, 2011
There is a segment of the population that represents themselves in a court of law, buy and sell used cars private party, do their own home improvements (most?!?!?!) and etc.

Some people just decide to go it alone - there are probably dozens of reasons and in the case of buyer agency a lot of those reasons can be addressed and cleared but some just will always want to do their own thing.
Web Reference: http://www.aaronsold.com
1 vote Thank Flag Link Mon Jan 3, 2011
We need to show the value of buyer agency.

There was a time that I would not set an appointment without it. However, since the housing crisis, I find more and more that people are just uneasy and some mistrusting of RE agents. I understand why.

So......now, I will develop a relationship with the buyer before asking them to sign anything, but I do let them know early on that in order for me to represent them properly, we need to get it signed. I have never had anyone say no.

In the State of Wisconsin, if we do not have a contract with the buyer, we automatically represent the seller and I am not comfortable with that while working with a buyer.

I think once we earn their trust, then they are more than happy to go forward.
Web Reference: http://www.lindacefalu.com
1 vote Thank Flag Link Mon Jan 3, 2011
Brenda, If you read some of the answers of previous questions about buyer agency vs. dual agency, you can see that our own profession is confused about "agency," therefore the prospective buyer who obtains much of their knowledge about real estate from realtors, is even more confused. We need to do a better job, as professionals, to make sure that we receive the education that is essential to correctly represent our clients.
1 vote Thank Flag Link Mon Jan 3, 2011
Greed and distrust are the reasons. Buyers think that they can save commissions by dealing directly with the listing agent, when in all realty, they will be paying the same, without representation and the listing agent is probably receiving both sides of the commission. Some also have a very low opinion of realtors. Perhaps they have been burned by a bad agent. It happens. It is our job, as professionals, to educate our buyers so that they know that it doesn't cost them money to have realtor representation; it costs them not to have realtor representation. Also, we have to demonstrate, with our knowledge and expertise, that we can be trusted.
0 votes Thank Flag Link Wed Dec 4, 2013
Hey Brenda,

There can be a number of reasons I suppose. I think a certain population of buyers figure they can search for a home easily enough on their own and don't need a Realtor, in the beginning part of the process anyway. Perhaps they think what we do is easy? I suppose some of that's true but there are likely enough hungry agents who push to hard to get that buyer rep signed, nobody wants a pushy salesperson especially with a large purchase like a home.

Another possibly reason is your approach? We all need to polish our approach with potential clients, and continue to improve on it. I've had issues with that in the past because I didn't see value in my service compared to any number of other agents out there, which is a joke and a lie to think about yourself. Be confident in your approach and be ready to explain the value of YOUR service, it comes through in conversation, trust me :) Best of luck. Feel free to reach out anytime. God bless :)
0 votes Thank Flag Link Wed Dec 4, 2013
I think the biggest reason is lack of knowledge as to what an agent will do for them. There is a perception out there that we as agents charge to represent buyers. Simply educating potential clients on how I am compensated and what my role is when they hire me has defiantly helped! I make it all about their best interest and how I am going to guide them through the process, knowing the buyer has someone constantly on their side gives them a sense of comfort. Best of luck!
0 votes Thank Flag Link Mon Nov 5, 2012
Wow, great answers here. I especially appreciate Mack and his wisdom! My experience tells me that this reluctance really boils down to money. They don't know what they don't know and don't want to get "sucked" in to something they don't understand for fear of getting ripped off. I had clients that bought a house from me. A few years later, they wanted to buy another house. I happened to be out of town when they found "THE house". They moved forward without me, negotiating a price that was list price LESS what sellers would have paid for my commission. Deal fell apart. They did have me work with them when I returned. We found another house and I negotiated a price MUCH less than that for them. I use this story all the time to illustrate why it's important to have a professional representative on BOTH sides of the transaction. I look forward to a day when everyone will pay their own agent. That will only happen when Buyer Agent fees can be built in to closing costs.

And, yes, Agency should be signed at "First substantive contact" (determined by each agent, unfortunately) and I ALWAYS have a signed contract before I start showing people. Even though it can be easily canceled, I want the buyers to know that we are making a commitment to each other, not just one sided. The point of the contract is to start moving toward buyers understanding of their responsibility to see to it that we (their agents) get paid. Make sense?

Good luck, Brenda!
0 votes Thank Flag Link Thu Jan 13, 2011
I don't know about "insight," but I've got some ideas.

Remember "Night Court?" Harry Anderson was a magician turned actor - he played the judge, but in interviews he often spoke about the magic business and said something to the effect of: the easiest people to fool were those most afraid of being fooled.

Extrapolate that to real estate, and the people who are most afraid of being fooled are conned by those on the Internet who promise that all they ever need to know, about anything in general, but specifically about real estate, can be reduced to the information that "we" just happen to provide. And you can all talk it out in the blogs we provide, too.

Convinced that all of their time "researching" is worth half, or more, of a buyer's agent commission, they go forth, armed with faulty knowledge and the same lack of experience that they had before, only mistakenly confident about it.

"A little knowledge is a dangerous thing" is a time-tested truism, and we're seeing it play out again in residential real estate, as people who should know better are relying on "the cloud" to look out for their better interests.
0 votes Thank Flag Link Mon Jan 3, 2011
Thank you Mike! I will be including the Buyer's Rep Agreement in my initial showing forms.
I appreciate the information. It is nice to know that I can come here for information and suggestions.
Sherri, I also appreciate your input! I will be checking out your website this afternoon as well.
0 votes Thank Flag Link Mon Jan 3, 2011
MN Statute 82.66 Subd. 2. Buyer's broker agreements. (a) Requirements. Licensees shall obtain a signed
buyer's broker agreement from a buyer before performing any acts as a buyer's representative
and before a purchase agreement is signed.
0 votes Thank Flag Link Mon Jan 3, 2011

As "Mike" said, when presented properly, few buyers choose not ot accept representation in a real estate transaction. I have never had a problem with a buyer once they understand what representation means and what the cost is to them.
0 votes Thank Flag Link Mon Jan 3, 2011

Not sure of MN laws, but in Wisconsin signing agency disclosure up front is required and is sufficient. The problem I run into is when I set up a showing and the listing agent asks if I am a buyer or seller's agent. The reason is, if I do not have a buyer agency, then I am representing the seller. And if after that we then sign a buyer agency, I am then required to get permission from the seller to do so.

It just seems much easier to do it all in the beginning.
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Mon Jan 3, 2011
Agency is always signed up front! Even with renters. It is just the Exclusive Right to Represent that I delay. Could someone send the link or info for the requirement? I remember a class discussion on whether or not to have people sign one, but do not remember it being a requirement. Is this a MAAR requirement or a law? Either way, I would like to be in compliance. I appreciate it!
0 votes Thank Flag Link Mon Jan 3, 2011
As a Mortgage professional who work with a lot of first time home buyers I think there are 2 main reasons.
The first being that they think it is going to cost them money. They don't realize who pays for the services. They assume that they are going to have to pay for the Realtor to represent them.
Second it comes down to trust, many of the buyers I talk to don't trust Realtors (much less Mortgage Brokers) because they think we are all just in it for a quick buck. They all have storied of some"friend, family member. someone they heard about through a friend of a friend" who was screwed over by their Realtor or mortgage person. Who "put them or made them" get a loan or buy a house they shouldn't have.
While I do receive many referrals from my Realtors I also generate a lot of my own purchase leads from referrals and other ways so I get to talk to them before they are already represented, that's how I have found out these concerns.
The one thing that does bother me is when Realtors say "it won't cost you anything to have buyers representation its all paid by the seller" and then we have a $425 broker fee at close that adds to the settlement charges. I always like it when that is disclosed right up front and the borrower knows.
I always try to turn around the situation with FSBO's and those who don't want representation as if I was trying to do their job without the knowledge and experience that they have. They almost always agree with me that they are much better and will do a better job and everyone would be happier.
If you would like to talk more feel free to email or call me.
Sean Wait
0 votes Thank Flag Link Mon Jan 3, 2011
I am not a Buyer's Rep only and at this time work more with Renters and Landlords. Yes, there are sales that also go through Realtor's. I do not sign Rep Agreements until we are ready to make an offer. I feel that if I am doing my job, my clients will work with me exclusively. (with the exception being my listings of course). I know that someday I may get burned on this, but feel that it establishes trust.
I am mainly referring to comments from potential Renters and Buyers. It seems that many of them feel that they do not need an agent. Generally after I explain the win-win situation and that they do not have to pay for the many benefits of having representation, I have new clients.
My question is more of a search for wording. I truly feel that I (and other agents as well) bring many benefits and much information to buyers and renters - sellers and landlords too. It just does not feel like people think they need us.
0 votes Thank Flag Link Mon Jan 3, 2011
Does this mean they buyers are buying from FSBO's or do they just all go to the listing agent to use them as a dual agent?

Are you an agent for a "Buyers Only" agency and wondering why buyers are shy to sign an agency agreement?
0 votes Thank Flag Link Mon Jan 3, 2011
How would you know this ? Are there properties selling via Realtors posted in MLS with buyers agent representing the buyer. IF YES. then buyers have Realtors who represent them for sales as listing / buyers agent

I believe it is education of Realtor show value of our services.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Mon Jan 3, 2011
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