Like the majority of real estate companies in St Louis, our firm, MORE, REALTORS® is a member of the National Association of REALTORS®. One of the things that go along with membership is to agree to abide by the Code of Ethics. Within the code of ethics, is Article 12 which states, in part, “REALTORS® shall be honest and truthful in their real estate communication and shall present a true picture in their advertising, marketing, and other representations.” As with every article in the code of ethics, there are “standards of practice” to serve as examples of how that article should be applied. For this article there is Standard of Practice 12-2 which states “REALTORS® may represent their services as “free” or without cost even if they expect to receive compensation from a source other than their client provided that the potential for the REALTOR® to obtain a benefit from a third party is clearly disclosed at the same time.”
I have always taken exception to that standard of practice for a couple of reasons, including:
- I don’t believe the statement is true.
- I think good buyer’s agents work hard, know the value they bring to their clients and earn what they are paid. To think that an agent has to represent that their services are free in order to get a client to use them I feel is an insult to a professional agent.
The reason behind my first issue above is that while in a traditional home sale, the buyer may not directly pay the agent representing them (the buyer’s agent) they pay them indirectly. Typically, when a home is listed and sold using a REALTOR®, the seller agrees to pay commission to their agent (the seller’s agent) as well as to the Buyer’s agent. Why would a seller agree to do this? Well, they basically have no choice as, if they want their home listed in the REALTORS® MLS system (who doesn’t?), they must offer a commission to the agent that sells the home as it’s a rule. So, like it or not, the seller is going to “agree” to pay the buyer’s agent’s commission. To say the total commission the seller is paying does not affect the price they accept I think would be disingenuous. So, if the commission the seller has to pay affects the price they will accept from a buyer and the commission the seller is paying includes the buyer’s agents commission, I think it’s safe to say the buyers agents services to the buyer are not “free”.
The Department of Justice must feel the same way…
Clearly, I’m not the only one out there that feels this way. Last November the DOJ (Department of Justice) and NAR (National Association of REALTORS®) entered into a settlement agreement to end an investigation. One of the things NAR had to agree to was to no longer permit buyers agents to advertise that their services were free. Recently, this agreement fell apart and the DOJ and NAR are involved in legal battles now so we’ll see where that goes.
Why a good buyer’s agent is more than worth the cost…
So now I’ll get to my second point. A good, professional buyer’s agent is worth every dollar they make on a transaction and, quite frankly, often don’t really get paid enough. Before you roll your eyes and think I’m just another one of those people that have “drank the REALTOR® KOOL-AID®”, stick with me. I assure you I’m not one of those, I hate KOOL-AID®, avoid sugar as much as I can, and I don’t like hypocrites. I like to tell it like it is. Often, I’m very supportive of the real estate industry, the people in it the practices, etc, however, there are times I am not. But, getting back to buyer’s agents, I want to add another caveat…note the adjectives I used; “good and professional”. I’m not in any way saying all agents are created equal nor that all agents are worth what they get paid. However, there are a lot of great ones that are very dedicated to their profession, love serving their clients, do so in an exceptional way and more than earn the commission they make. I feel blessed in that in our firm, MORE, REALTORS® I’m literally surrounded by agents like that.
What are you going to do for me that makes you worth the price I’m going to pay for your representation? This is a good question to ask an agent you are considering to represent you as a buyer’s agent. If it were me, here are some of the things I would like to hear in the response as well as be convinced that this is what past clients have experienced and what I can expect from the agent:
- Their knowledge and experience of the local market. They should know what the housing market is like, the prices, the trends, the inventory, etc.
- Their knowledge of the type of real estate you are looking for. For example, if you love older homes, such as the 80+-year-old ones that exist in Kirkwood, Webster Groves, you are going to want an agent with extensive knowledge of older homes. This will be invaluable to you when evaluating the condition of the home, reviewing your building inspection, etc. If you are looking for a mid-century modern, it would help to have an agent that knows what you are talking about as well as where to find that style of home.
- Their knowledge of the process and guidance they will give you. Today, we are very much in a seller’s market and buyers are having to compete with often a dozen or more offers on a home. You want an agent that is detailed, knows the process, the contract, and has a great grasp on how to best prepare you so that, when the time comes, your offer is seen in the best light possible by the seller. A good agent will not leave anything to chance in this area.
- Their relationship and reputation in the industry. There is a fine line on this one, as you don’t ever want to choose an agent that is more concerned with what the agent on the other side of the deal thinks of them rather than fearlessly representing your best interests. However, you don’t want an agent that has a bad reputation in the industry or is known as someone that is impossible to work with. I would want to find one that I’m convinced will always have MY best interest in mind, that understands their fiduciary obligation to me, and is well respected by their peers.
- Their commitment to my best interest. I would want an agent that is laser-focused on my interests and is going to work to do their best to get me what I want under the best terms and price. But, at the same time, someone that is confident and professional enough to also “stand up to me” if necessary to set me on the right track or to keep me from shooting myself in the foot.
When you take the time to go through some of the things above with an agent and find one that stands out as the best and most professional to represent you, I can almost guarantee that you are more than getting your money’s worth. I see it time and time again with our agents, where through knowledge and advice, negotiation or strategy, they save their clients not only money (and likely often more than the agent is being paid) but also time and frustration.
So, as my headline says, Buyer’s Agents AREN’T Free and as the things I point out above nor should they be.
Now it’s time for a shameless plug…do you want to be connected with a great, professional agent that is a Master of Real Estate? Just give me a call at 314.332.1012 or email me at Dennis@stlre.com and after I understand your wants and needs, I’ll connect you with the perfect agent for you!