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What the hell is going on in the real estate industry? More specifically what is going on with the future of buyer agency? Is the end near and will buyer agency cease to exist? I’m hearing of agents already “losing” buyers who are unwilling to pay a buyers agency fee at closing so is this the beginning of the end?
Here’s what I know for certain, if you don’t change you will go out of business because here’s the truth. Commission compression is real and the future of buyer agency as an income stream is real. There is a large segment of the real estate buying population that does not see the value in paying 2.5-3% buyers agency fee.
My Prediction: The average buyers agency fee will be 1-1.5% in the next 6-18 months.
NOTE: Listen to this podcast to see the ins and outs of how to profit with mortgage legally.
The Future Of Buyer Agency Compensation Is Through Ancillary Services Or Indirect Services
If real estate agents and brokerages do not start making adjustments, they are at risk for a massive wake up call. We’re talking about a 50% reductions on buyer agency commissions which WILL CHANGE the way the entire industry operates.
However, it’s not all doom and gloom because there is a massive opportunity here to because I believe a large part of the future of buyer agency compensation can be through mortgage.
I made a post a on my personal Facebook page back in March stating that every loan office just became a buyers agent and i got a lot of shit for it. In today’s market I think my prediction is starting to see fruition because the opportunity to shift.
“BUT MY COMPANY NAME IS… AND WE HAVE BEEN AROUND FOR 99 YEARS… OUR MARKET SHARE IS AMAZING & I DON”T NEED TO ADJUST!”
Nobody gives a crap. People care about one thing and that’s their bottom line. What is your alternative going to be with a buyer client when they say no to your buyers agency agreement?
Are you just going to let them go because your ego is too big thinking you are “worth 2.-3%”? Guess what, 100% of nothing is still zero.
This is going to be one of th ebuggest challenges we see within the real estate industry over the next 12 months, but what are you going to do about it?
Well, through a mortgage partnership you can legally collect anywhere between .5-.75% (lenders call these basis points) of the loan amount.
So if you were to receive 1-1.5% commission as a buyers agency fee, you could not also receive additional compensation legally through referring the mortgage, which you probably do anyways 90% of the time.
The Future of Buyer Agency Is Thinking Outside The Box
Everything changed with the NAR lawsuit. This has changed the consumer expectations. In addition telling a byer they need to come up with an additional 2-3% plus their downpayment is a tough sell. I’m not discounting buyers agency at all, the public is, I’m just trying to show you an alternative.
The way real estate is bought and sold has changed dramatically in the last 15+ years. It was not long ago when consumers needed a real estate agent to obtain information on the buying and selling process.
In today’s world, buyers can get that information easily by turning on their computer and logging onto Zillow, Trulia, Red Fin, Realtor.com, and other property search related websites.
The value of a buyer’s agent has lost much of it’s value in the eyes of consumers.
Your Buyers Agency Value Proposition Has To Change
People don’t hire your broker they hire you, but you have to show them you’re worth it. What do you do that nobody else does? The client experience and your personal brand have never been more important. part of having a value proposition can be marketing yourself as a hybrid agent or a true one stop shop.
Now your buyer clients can use you to help them find, negotiate, and finance their next property which is much different than someone who cannot offer that. People don’t hire or remember what you do, they remember how you do it.
Pattern Interruption Is The Future Of Buyer Agency
We will see over the next year what’s in store for the future of buyer agency, but there is no doubt a paradigm shift occurring.
We’ve seen this play out in a couple different industries.
Blockbuster vs.Netflix
Taxi’s vs. UBER
The hotel industry vs. Air BNB.
CarMax vs. The Used Car Dealerships
Don’t get scared, take advantage of the opportunity. It’s times like these when millions are made because of the opportunity.
There will remain several factors that that I don’t think will ever change. People still want a human to work with during one of their largest financial transactions.