Recently in "Consulting with Buyers"

Is it a fair assumption that when working with buyers within the ACRE model a home buyer can expect the home to be reduced by the actual buy side commission that would normally be paid at closing since the buyer paid for his/her services all along? For example: If a home is listed for $410,000 and is negotiated by all sides to $400,000, can an amendment to the agreement of sale be drawn up to reduce the home to $388,000. (assuming a 6% commission) and be signed by all parties. Thus not only reducing the home price by the 3% after the final negotiated price but also affording a decrease in the amount of transfer tax needed to be paid by both sides?

I don't know how many of you are already subscribers to Jim Kimmons' blog...but if you're not already reading it, you should be. Not only does he provide exceptional content, as one of our ACRE grads, he also incorporates the "consulting mindset" into the perspective from which he writes his articles!

I often get more "out of area" emails more so than local, and have diligently been trying to come up with a "consulting" response for these people.

Since I'm between web sites, and other life altering events, can anyone help with a response back to someone like this? It is also difficult to deal
with Merv's SmartPlan when I can't meet them face to face.

Here is the email I received, thoughts anyone?

Buyer Update

  1 Comment

Story for fellow ACREs to appreciate.

Around a year ago, I started an on-line dialog with a buyer from another state who was looking to relocate in my area. We had numerous phone conversations and discovered he even lived in my old neighborhood in Portland, Oregon. One day I get a phone call from him saying he was in the area and wanted to view some properties. I thought," Somewhere between Oregon and Texas it didn't occur to you to phone ahead and make an appointment." Allowed, I only informed him that I was on my way to a funeral and wouldn't be available to show him anything, but I could refer him to another agent. He asked if I could show him properties later that day. I said I honestly didn't anticipate being in any shape to work afterward as the deceased was a very close friend of the family. Would he be ok with looking tomorrow? The buyer told me that would be fine.

Later that afternoon, I was reading my email and found one from him saying that he was driving around and found some properties he wanted to look at, so he started working with another Realtor, adding "I'm sure you understand." So last week I get another email from him saying it didn't work out with the other agent, but they were going to buy something in the next couple of months and he wanted to work with me. I told him, I was an Accredited Consultant in Real Estate and I would help him for x bucks an hour credited back at close.

After he's already shown his true colors, I wasn't thrilled at the prospect of working with him, but I have to admit, getting paid whether he buys or not sure makes me feel better. Thanks ACRE!

Following up on previous posts, I want to reemphasize that getting a Buyer's Agency Agreement in addition to whatever Consulting Services Agreement you come up with, is IMPERATIVE.

I won't go into all the gory details but suffice it to say, against my better judgment and in a moment of temporary insanity, I didn't follow this practice with the buyer I referenced in a previous post. We came toward the end of our initial period covered by the retainer fee when she announced she has been independently going after FSBO sellers and from now on, all she wants me to do is work MLS Sellers on her behalf while she hits the FSBOs and with NO consulting fee to me.

After I pulled all my hair out and put it back in, I had a dialogue with her about it, told her I would not compete with HER to find a property for HER anymore than I would work for her when she might also use other agents. The end result was I fired her. Another lesson learned....

Deb Orth
RichmondHomes4You.com
Richmond, VA

How I Work With Buyers

  2 Comments

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

Using Consulting With Buyers

A few weeks ago, a buyer who had been looking at homes for sale by owner, was referred to me by one of my regular clients. She felt ill prepared to deal with the sellers but felt she could get a better deal if she could offer a contract where a buyer's agent commission was not a factor.

Because she was ill at ease but still wanting to find a home which included looking at FSBOs, she asked for my help. After some discussion, I agreed to work with her and got an agreement that she would allow me to show her homes that were in MLS as well as FSBO. For a retainer fee of $500, I would work with her and I told her that if she put a contract on a home either in MLS or with a FSBO who agreed to pay a commission, I would rebate the $500 to her at clsoing.

We haven't settled on anything yet, but with the investment in time and gas I've made, I'm still ahead of the game and certainly ahead of where I'd be without a consulting agreement. I probably could have charged her more, but since this was the first time I'd really put this approach into action, I under charged her.

The point of this story is that you shouldn't be afraid to get started. Just do it. No one but you knows that you're new at consulting. The client certainly doesn't so don't hesitate to use this fabulous set of tools we have to make a real difference in our own businesses but also in the lives of our buyers and sellers.


Deb

From Susan Plage:

I gulped hard today. I turned down buyers. I had buyers who interviewed several buyer brokers; selected me and asked for an agency agreement. They are dabbling in two market areas here and I made suggestions on how to make that a team effort with another referred broker. They are scouting FSBO's and I mentioned how that would be handled in an agency relationship. We scheduled a meeting to sign the paperwork and in preparation I dropped off the agreements for their review.

Bottomline: they want me to accept a one in three chance that I'll get paid. If they buy in the other market, they want to control that. If they buy a FSBO, they want to control that since "they did all the work." If they buy in my market or "if I find them the perfect house" then they think I should be paid. That's a one in three chance and a lot of time in my car...not to mention the expertise. To me the only way it was a good business decision on my part, as I told them, was to pay a retainer up front for my services (in this three ring circus). They didn't agree and I didn't agree to sign an agency agreement with them. There was exasperation on their side of the phone and a bit of shock. But I did it!

This page is an archive of recent entries in the Consulting with Buyers category.

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