Responding to the latest questions about working with buyers, I've been making some of this up as I go along but I'm refining it more and more. Don't be afraid to experiment with how you do this business.
With the price of gas getting really outrageous , I'm even more mindful of the cost of doing business. I fill up my car 2 to 3 times a week and it costs me about $60 each time. So, I'm not driving folks around who want a tour guide, don't know what the heck they want or where they want to live, or how much they want to pay. I should act like FSBOs and say ONLY SERIOUS BUYERS NEED APPLY. LOL
Anyway, what I'm doing now is saying " Mr., Ms., or Mrs. Buyer, I'm delighted to be your personal Consultant in the search for a home. Because I value my time and yours, we need to determine how much driving around you want to do or want me to do. If you are in the exploration stage - deciding what neighborhood or part of the area you want to live in, then I can send you listings that meet your basic criteria and you can drive by the homes and neighborhoods. If something interests you, we'll go out to see it together. If you want ME to do the initial investigation of neighborhoods and preview the properties before you see them, my hourly Consulting fees will apply. I take a minimum deposit of an equivalent to 10 hours of my time. If we write a contract that closes, I will rebate 50% of what you have paid in advance at closing."
If the buyer wants to pursue FSBOs, I tell them that I will advise and consult with them at my hourly rate. If the FSBO agrees to pay my Buyer's Agent commssion, I tell the Buyer I will refund the entire consulting fee back to the Buyer at closing. If not, my hourly rate applies and I will take them from contract to close for an addtional fixed fee.
If they don't like any of the options I've offered, I will refer them to my Buyer's Agent and SHE can drive them around to her heart's desire.
Deb
Hi Deb,
Great post. Question, have you modified your buyer agency agreement to reflect what you have said in this post. If so, is this something you could share with the group.
Another question, I assume that all consulting fees are run through your broker. If one is on a split of some sort, or in my case, pays a transcation fee, how is this working. Is the broker sharing in the consulting fees?
Lastly, do you need to get special E & O insurance for the consulting end of the business? Or is this a broker question?
Susan
Susan,
Yes, I do run the fees through my broker and I'm paid in accordance with the normal commission arrangement I have with my company. In my brokerage's business model, I'll be "capping" for 100% commission pay out in the next month and at that time I'll keep everything except my transaction fee.
As for any change or modification to my E & O insurance, this is not anything to which I've given any consideration. Nothing has changed in my real estate practice except for the way in which I am paid for consulting vs. traditional buyer & seller representation. Not sure if I need additional E&O insurance as I also have an umbrella policy of $2 million.
I've just posted my Consulting Agreement (for Seller) to the Document Library. I'll also post the one I've done for Buyers.
Deb