This is written for Real Estate agents who are new or need a refresher about why they are important to the industry. Recent changes to the real estate agency mandated by a court in Missouri have pushed many agents into reevaluating their skills. If you are a buyer, this article may be of some interest to you. As a listing agent, you should know what is discussed here so you can talk about it with your seller.

So, why do home buyers need the services of real estate buyers agents? Where do I start, there are so many things that are not written about which agents do in the course of following their code of conduct. Basically, anything and everything that a buyer wants, many agents do for them, from walking their dogs to feeding the birds. Sellers now will sign an agreement to make you their exclusive buyer agent. Some states have had this process, many have not.

The buyer’s real estate agent is not a real estate attorney. They do however have at their disposal an archive of forms that their professional associations have paid competent attorneys to create. This makes working with sellers easier and in most cases saving the seller money by hiring an attorney to draft documents. A good real estate agent understands all of the legal work that has gone into the many documents they have at their disposal and how to employ them.

The purpose of this section is not to preach to the choir, you are a licensed agent so our intention is to help you recognize the talents you have and the services you can offer. Real estate professionals know all of the items we will list here but without a printed sheet to put in front of a prospective buyer client, you may not remember all of them. First-time home buyer and those who have not purchased a home in many years should be reminded of the value you as a buyers agent bring to them.

With all of the new changes to the process of selling and buying homes, you should create a new approach to the home-buying process. Reevaluate your sales materials and approach prospective buyer clients. Buyers agents actually need different experience to work with clients than listing agents need with their clients. Buyers agents require more experience with relationships and an understanding of properties and the market area. Selling agents place emphasis on marketing.

Let’s start with a list of what a buyers agents should do for their home buyer clients:

Tasks Performed by Real Estate Agents for Home Buyers

Comprehensive List of Tasks Performed by Real Estate Agents for Home Buyers

Table of Contents

Pre-Purchase Tasks:

Initial Consultation: Meeting with clients to understand their needs, preferences, and budget.
Mortgage Pre-Approval Assistance: Assisting buyers in obtaining mortgage pre-approval to determine their purchasing power.
Neighborhood Research: Providing detailed information about neighborhoods, schools, amenities, and market trends.
Property Searches: Conducting thorough searches for properties that meet the buyer’s criteria.
Scheduling Viewings: Arranging and coordinating property viewings that fit the buyer’s schedule.
Touring Homes: Accompanying buyers on tours of selected properties and offering professional insights.

During Purchase Tasks:

Comparative Market Analysis: Analyzing market data to determine a fair offer price for a property.
Writing Offers: Preparing and submitting purchase offers on behalf of the buyer.
Negotiation: Negotiating terms and prices with the seller’s agent to secure the best deal for the buyer.
Contract Review: Reviewing and explaining the terms and conditions of the purchase agreement to the buyer.
Home Inspections: Scheduling and attending home inspections, and advising buyers on inspection results.
Repair Negotiations: Negotiating repairs or credits based on inspection findings.
Appraisal Coordination: Coordinating the home appraisal process to ensure the property is valued accurately.
Managing Contingencies: Monitoring and managing contract contingencies to ensure all conditions are met.

Post-Purchase Tasks:

Closing Coordination: Coordinating the closing process, including final walk-throughs and paperwork.
Utility Setup Assistance: Helping buyers arrange for utilities, such as electricity, water, and gas, to be set up in their name.
Moving Coordination: Providing recommendations for moving companies and coordinating the move-in process.
Follow-Up: Checking in with buyers post-closing to ensure they are settling in well and addressing any concerns.

Additional Services:

Referrals to Professionals: Referring buyers to trusted professionals, such as mortgage brokers, inspectors, contractors, and attorneys.
Market Updates: Providing ongoing market updates and information relevant to the buyer’s new neighborhood.
Investment Advice: Offering advice on real estate investments and opportunities for future purchases.

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Time Allocation charging by the hour

The buyers agents supervise the entire process. The work required from the first call expressing interest through to closing can require many, many hours. Time is money. The time you have put into learning your skill including continuing education plus license and other fees. You are a professional, you have one thing to sell and that is time. Your time. This starts with being prepared to work with new clients. From that first phone call or email requesting information through to closing, the hours will click away. Even after closing you will continue to do things that help your client get settled.

The following is a rundown on charging by the hour rather than charging a percentage:

Real Estate Agent Hourly Rate Guide

When determining an hourly rate for real estate services, several factors should be considered, including the agent’s experience, local market conditions, and the complexity of the tasks involved. Here is a suggested approach:

Factors to Consider:

Experience: More experienced agents can justify higher rates due to their expertise and track record.
Market Conditions: Rates can vary depending on the cost of living and average income levels in the local market.
Service Complexity: Tasks like negotiating deals or handling complex transactions may warrant higher rates.

Suggested Hourly Rates:

Entry-Level Agents: $50 – $100 per hour
Mid-Level Agents: $100 – $200 per hour
Experienced Agents: $200 – $300+ per hour

These rates are based on industry standards and can vary widely. Agents should adjust their rates according to their specific market and individual qualifications.

Example Calculation:

To achieve a goal of earning $100,000 per year, an agent needs to calculate their hourly rate based on their target work hours per week and year.

Annual Income Goal: $100,000
Working Weeks per Year: 50 weeks (assuming 2 weeks of vacation)
Working Hours per Week: 40 hours
Total Working Hours per Year: 50 weeks x 40 hours = 2,000 hours
Required Hourly Rate: $100,000 / 2,000 hours = $50 per hour

Additional Considerations:

Flat Fees: Some agents may prefer to offer flat fees for certain services instead of hourly rates.
Consultation Fees: Initial consultations may be billed at a different rate or offered for free to attract clients.
Retainer Agreements: Clients may pay a retainer for a set number of hours, providing flexibility and security for both parties.

Ultimately, the right rate will depend on a combination of these factors, and agents should ensure their fees reflect the value they provide to clients.

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Most buyers agents prior to the recent changes probably gave little thought to charging by the hour. The primary reason is that they offer so much help (see the first list) that consumes hours of time e.g. waiting for the cable guy to set up the internet. A good agent is an agent that understands the value of money and time. A former agent is one who could not grasp the concept that being a real estate agent means you are in business for yourself. You must decide which method is best to earn the buyer’s agent commission. Ultimately, the buyer must agree to your proposal. Do not undervalue your services.

Always remember, you are an experienced agent with the buyer’s interests first, part of your fiduciary duty to them. Make sure they know this. Explain the idea of fiduciary duty, most will not know what you are talking about so start with the difference between a real estate agent and a Realtor. As members of the National Association of Realtors, you are following a code of conduct.

The Financial Decision-Making Process

Buyers agents today must wear many hats. One of the most important topics as this was written is high inflation which has caused mortgage interest rates to increase. It’s critical that a buyer agent understand financial products and what programs are available for their buyers. Understand the qualifiers for FHA, and USDA loans for example. Sit down with your buyers and go over their financial plans and situation. Explain debt-to-income ratios and credit scores.

Buyers are not usually well educated. True there are a few that are but most are not when it comes to the financial part of buying a house. The population of the U.S. According to the FINRA Investor Education Foundation, this study regularly assesses the financial literacy of U.S. adults. The 2018 NFCS found that only about one-third (1/3) of respondents could answer four out of five financial literacy questions correctly. It’s best to assume that your buyer clients are coming to you with little or no knowledge of budgeting, credit, or how to make a mortgage payment.

You can help buyer understand the financial side

This is where you can shine. Considering your skills in finance, you can discuss with them how they can afford (if they can) a monthly mortgage payment and why (if they can afford it) it’s better to buy than rent. Show them the numbers. Use online calculators for the ratios and prospective rates. Go over their credit report. Discuss property taxes and homeowners insurance costs. Go into estimated closing costs and what they will need at closing. This includes of course the down payment and if they have agreed to pay your fee as a real estate agent, what that amount would be.

Before your buyer clients make an offer, ensure that they have done their homework about their credit rating and other credit factors. If they owe debt can they pay it off? Judgments and bad credit may or may not disqualify them. Remember you are working on the clock. You do not want to waste your time or the time of your clients if they are not in a position to buy a house. Understand alternative methods of financing such as the wrap-around mortgage, DSCR for multi-family, local contributions to down payments, etc. Recommend your buyer to a good mortgage broker working for a financial institution who can sort out their financial situation and bring them to closing with a loan.

Go over the local real estate market and talk in general about what is available in their price range. Explain that while they may not be able to afford a four-bedroom house, they have options such as buying now and upgrading later or adding a room. Explain fixer-uppers vs buying a new build. Their next home may not be what they were thinking before they met you.

Working with other brokers and real estate agents

You are a good buyer’s agent but you need to work with a seller’s agent to present an offer. Seller agents should work as hard with their clients as buyer agents do. This means explaining the value of the property owner using a buyer’s agent to help sell their property. It’s essential that property owners understand the history of the real estate industry and how well it has worked when multiple agents bring prospective buyers to the closing table. The typical real estate deal would not have happened without these past cooperative efforts between buyers and selling brokers.

The new changes include some sensitive legal areas that listing brokers must be aware of when discussing the concept of paying a buyers agents. This will not be discussed here however you can discuss this with your broker on how best to approach the buyer-broker agreements at the time of listing.

85% of buyers used a real estate agent to purchase their home

Approximately 88% of homebuyers used a real estate agent or broker to purchase their home in 2023. This statistic has remained relatively stable over the years, indicating a strong preference for professional assistance in home-buying transactions. This trend is consistent across various generations, with the majority of buyers, regardless of age, opting for the expertise and services provided by real estate professionals. It’s apparent that using a selling agent has been in the best interests of the seller. Sellers have a better chance of selling their home sooner at or near the asking price by using a buyers agents.

So why to buyers need the services of a real estate agent?

The buyer’s real estate agent is not a real estate attorney. They do however have at their disposal an archive of forms that their professional associations have paid competent attorneys to create. This makes working with sellers easier and in most cases saves the seller money by hiring an attorney to draft documents. A good real estate agent understands all of the legal work that has gone into the many documents they have at their disposal and how to employ them.

The purpose of this section is not to preach to the choir, you are a licensed agent so our intention is to help you recognize the talents you have and the services you can offer. Real estate professionals know all of the items we will list here but without a printed sheet to put in front of a prospective client, you will not remember all of them. First-time home buyers and those who have not purchased a home in many years should be reminded of the value you as a buyers agent bring to them.

Buyer Agent Testimonials

Positive Comments about Buyer Agents

1. Exceptional Support: “[Agent Name] provided support beyond just the transaction. When we were stressed about moving timelines, they connected us with reliable moving services and even checked post-move to ensure we were settled.”

2. Professional and Reliable: “Their professionalism was consistent. They were always on time for appointments and provided reliable advice. Their reliability was crucial during the closing stages, ensuring a smooth final transaction.”

3. First-Time Buyer Assistance: “As first-time buyers, we valued [Agent Name’s] patience. They educated us about each step, from mortgage pre-approval to closing. Their guidance in understanding the mortgage process was particularly helpful.”

4. Problem-Solving Expertise: “[Agent Name] demonstrated excellent problem-solving skills when an issue arose with our home inspection. They quickly negotiated with the sellers to have the necessary repairs made before purchase.”

5. Highly Recommended: “We wouldn’t hesitate to recommend [Agent Name]. Their dedication to our satisfaction was evident in how they went out of their way to accommodate our viewing schedules and provided honest advice on property values.”

6. Market Insight: “My agent’s exceptional market insight played a pivotal role in securing our dream home under budget. Their deep knowledge of the area was invaluable.”

7. Outstanding Communication: “The agent’s outstanding communication and dedication ensured a smooth transaction. They went above and beyond to keep us informed and comfortable throughout the process.”

8. Client-Centric Service: “Our agent was dedicated to understanding and meeting our specific needs, making us feel truly valued and supported throughout our home-buying journey.”

9. Referral Trust: “Everette Forrest became like a friend. You really can’t compare him to anybody else. He was a referral from our friend, and now we’ll be referring him to others.”

10. Genuine and Unsolicited Reviews: “Rose Gachette had her buyer do a quick video at the closing table, which came across as genuine and unsolicited, making it trustworthy and impactful.”

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This site has a wealth of information for real estate agents. Check out this article on Commissions for Buyer’s Agents after the judgment. You may want to read this article from another website: https://retirecoast.com/how-to-choose-the-best-real-estate-buyers-agent/

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Why do home buyers need the services of buyers agents