Editor’s Note: The Buyer-Agent Playbook is a new iteration of RISMedia’s biweekly Playbook segment, specifically centering on buyer agency and how agents are navigating the changes and trends in a post-NAR-settlement environment. The series will provide brokers and agents with insights and information to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every Thursday for another addition to the series.
What is a contract, really? Just a legal document designed to specify an agreement, and make certain obligations enforceable under the law? Or can it be more than that?
As the National Association of REALTORS®’ (NAR) settlement is set to make buyer contracts mandatory in just over two months, it might be easy to view the change as an obstacle, or at best, an inconvenience.
But that isn’t necessarily true, according to eXp Realty CEO Leo Pareja, who urges agents to really start thinking about the contract (as well as all the conversations and ideas it might elicit) as a very specific asset.
“As a listing agent, I used to hand-write in my ‘love it or leave it’ guarantee, where if you were unsatisfied with the service prior to the expiration of the contract date, you can send me unilateral termination,” Pareja says. “I came up with that language, ran it by my broker, they deemed it compliant, and it became part of my listing presentation, and I hand wrote it in.”
Pareja was able to set himself apart, and win clients with that little addendum—something tangible, on paper that assured people of his value and confidence. The process he used, and the kinds of opportunities, value and differentiation that it created through listing agreements was always part of the buyer agreement as well (or could have been).
But now, Pareja says he expects the “creativity” to accelerate dramatically, as agents adapt to a mandatory—and more urgent—process.
“I think we’re going to see people experiment, and then I think some people are going to say, ‘That was a good idea’ or, ‘That was not a good idea.’ And I think best practice has come from (experimentation),” Pareja says.
How do you make your buyer agreement something that buoys your business instead of dragging it down? Like most things, it will depend on who you are, your goals, your clientele and your strengths or weaknesses as an agent.
But there is a lot more than that, due to the nature of the settlement changes. Any agent who wants to avoid being on the wrong end of a lawsuit needs to ensure that their agreement, and how they talk about it, is compliant with the law and NAR settlement. That means you likely can’t just entrepreneur your way to having a buyer contract that both adheres to requirements and simultaneously fulfills your business needs.
Kendall Bonner, who recently joined eXp as VP of industry relations after growing a successful team in the hyper-competitive Tampa Bay, Florida, market, says agents will need to look up—finding leaders who can help them build a foundation—before they jump into that creativity.
“People are seeking leadership and support at a higher level now,” she says. “Agents will be looking for brokerages that can enforce those (buyer) agreements and can support those (buyer) agreements and create those (buyer) agreements.”
Before the changes, it was common in many areas to sign casual agreements or no agreements at all (though many states actually mandated agreements decades before the settlement). Either way, though, the NAR changes are a new world, according to Bonner, and the starting point needs to be foundational.
“We have been taught since our formative years to trust and follow processes and to value process. And so because of these changes, there will be changes to our process,” she says.
The ABCs of Buyer Agreements
Pareja emphasizes that when it comes to learning the new changes, the feedback and listening flows both ways. Brokers and franchisors should be helping agents understand what they can do with a buyer agency agreement, but should be simultaneously listening to what those agents want to do.
“These entrepreneurs build these phenomenal businesses, and some of them have a very specific way of doing things,” he says. “I see that on the listing side right now. The variability exists right now, and it has for the two decades I’ve been in the industry. So I fully expect that to kind of bubble up and mature.”
Several companies—including eXp—have sought to create short, single-page agreements that agents can use to get their foot in the door with buyers, and decrease the friction of having to sign a contract (with promise of payment) right after meeting someone. Pareja admits those agreements are not going to work for every agent in every situation.
“We’re hearing feedback real-time that folks are saying, ‘Hey, if all we have is vanilla ice cream, we probably need some strawberry, maybe some chocolate as well.’ And so our first attempt to provide an alternative flavor was this one-pager,” he explains.
He notes that with listing agreements, agents often come up with their own variations that can be modified on the fly and use whatever works for them. Taking these big-picture items and then tweaking them to the situation or to the agent’s needs will almost certainly be the best starting point.
“I fully expect percentages, flat fees to even hourly (agreements). I’m very much reserving my opinion as to where I think it’s a good use of people’s time because we don’t have enough data to say if it’s a good use of people’s time,” Pareja says.
That philosophy can apply to many aspects of the agreement apart from compensation, from things like search range or specific commitments regarding the agent’s availability during the search, to personal guarantees like Pareja’s.
Bonner says the idea is that brokers and companies can help agents build a “framework,” but it is up to the agents to turn that tool into something that grows their business.
“Every listing agent that’s ever taken a listing, the first few times they did it, it was probably not that great, but over time they got better…I think the same will also take place for buyers and buyer agency,” she says. “And it’s important to have leadership and companies provide a framework for agents to be able to plug in and then make it their own.”
Something else to emphasize, even if it isn’t written in the contract itself, is the scale and scope of it. Pareja says that just pointing out all the elements and obligations that you as an agent are taking on as part of a legal binding contract can help show clients how hard you work as a buyer agent, and how hard you will work for them.
Specifically, a lot of that work comes after an offer is written and accepted, he emphasizes, something that can help agents push back against the assertion that consumers are able to navigate the home-buying process just by using internet portals. Circling all the obligations or commitments in an agreement where you will be using your expertise to help your client close a deal—negotiations, disclosures, inspections, etc.—can really hammer home how important and valuable your services are.
“I would suggest saying something to the effect of—‘hey, now that you’re actively engaging in the home-buying process, there’s a high probability you’re going to find the house on the internet that we ultimately write a contract on. But just so you know, 80% to 90% of the value I add will be after we fill out the purchase and sale agreement,’” Pareja says. “So it’s really articulating where the value is, what you’re delivering.”
