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Business Management Review | Tuesday, November 26, 2024
Sellers will probably question listing agents about whether to compensate buyer agents. They ought to be ready for this inquiry and capable of outlining the benefits and drawbacks of providing buyer agent remuneration.
Fremont, CA: As litigation about agent compensation increases, executives must evaluate contracts, training, and how buyer agency benefits their company. Here is what brokers must do to navigate complex compensation dynamics:
Benchmark and Measure Current Buyer Business
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Brokers should benchmark their present buyer brokerage business to comprehend the possible effects of any modifications that may be made. One of the most important factors in determining how much work to invest in modernizing buyer agent practices is determining how much business is tied to buy-side cooperation remuneration.
Reports showing the proportion of gross commission income from cooperative buyer commission should be accessible in most brokers' back-office systems. Brokers are aware that they need to act if this percentage is high.
Review and Update Buyer Representation Agreements
Buyer representation agreements are in place at many brokerages, as are agreements from their real estate commission or municipal or state board.
Examine these contracts to see if they specify the amount paid to the brokerage for buyer's agent services rendered to a client.
Regarding the exact wording, you should speak with a lawyer knowledgeable about your state's legislation. Additionally, real estate agents may not be eligible for the statutory independent contractor status if they receive hourly compensation.
Review and Improve, or Create Buyer Presentations
Brokerages that lack a strong buyer presentation will have to develop one and train their buyer agents on how to use it with prospective buyers in order to obtain a buyer representation agreement.
Review and Update Buyer Agent Sales Training
Brokers should check their sales training to make sure it doesn't contain any wording stating that buyer agent services are free, much like they would with public marketing. The value proposition of buyer agent services, agency duties, client vs. customer relationships, and how to conduct a buyer consultation may also need to be covered in updated sales training for brokers.
Agents must be able to fully explain the fundamental ideas of agency law and the distinctions between customers and clients so that potential clients can understand their services and the relationship.
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