In January, Jessica Lautz, Deputy Chief Economist and Vice President of Research at NAR broke down pertinent market stats and trends to help keep brokers up-to-date.

During the January Broker Power Hour hosted by the National Association of REALTORS®, Jessica Lautz, deputy chief economist and vice president of research, provided a wealth of economic updates and industry trends to better equip brokers with the information they need to run their businesses.

A Look Back at 2023

Lautz started off by acknowledging that 2023 was a hard year for the industry, but that projections for the spring 2024 market looked favorable.

In 2023, home sales were the lowest they’d been since 1995, which didn’t jive with the country’s population growth since that time. The culprit, Lautz said, is inventory.

“In 1995 there were about 1.6 million units in the marketplace, whereas in December 2023, there were under 900,000 units in the market.”

Lack of inventory means high demand and therefore higher prices. In some areas of the country, Lautz cited a 45% increase year-over-year in pricing. The low interest rates of the early pandemic brought buyers into the market who might not have entered it otherwise, buying new primary residences as well as vacation homes and future retirement homes. “It really put a crunch on inventory,” and contributed to price increases.

A Favorable Outlook for Spring

It’s no secret to anyone in the industry that 2023 was a rough year, Lautz said, however, interest rates are trending down, which should mark an upturn in market activity by spring.

On the 30-year fixed-rate mortgage, interest rates were nearly 8% in October but are now averaging around 6.6%.

“This difference in interest rate saves people about $260 per month on payments for those buyers who are putting 20% down on a home.”

Lautz noted that the current average is down from the historic average, which is 7.74% and that practitioners should counsel their customers that we will not see rates of 2% or 3% again in our lifetime.

Issues with Affordability

Affordability is still one of the main issues would-be homeowners face today. “The cost of a home isn’t just price and mortgage. It’s about income,” Lautz says.

According to NAR’s affordability index, the typical home buyer in today’s market is spending approximately 27% of their income on their monthly mortgage payment, when the historic norm has been 20%.

Lautz said first-time home buyers are entering the market both older and wealthier, but employees integral to their communities—teachers, social workers and firefighters, for example—are still being priced out.

A Breakdown by Generation

Generations buy homes differently. It’s important to look at how each operates in the market to get a holistic view of the trends. 

Baby Boomers

This cohort still holds the largest share of the housing market, and half of them are buying in cash. Many Boomers have stayed in their homes for several years and are reaping the benefits of equity. They’re also thinking about the future, which for many means retirement in more affordable areas.

Though older buyers historically chose to downsize for retirement or after the children left the home, that’s not the case anymore. Lautz says older repeat buyers have the equity and cash to maintain their lifestyle and want to do so. They like newer builds and amenities and are buying their new “forever home,” which statistically means they plan to stay in the home for 20 years or more.

Buyers in all age groups are seeing the value and the convenience of green and smart home features, even the oldest ones, Lautz says. Older buyers have the money to spend on these features and likely recognize that said features could make life easier, which makes aging in place a reality.

Gen-X

Though this generation has mostly remained consistent in the market, one trend is that they’re the most likely to purchase multigenerational properties. Lautz says that there’s quite a bit of financial burden on this particular generation.

Millennials

The median age of today’s first-time buyers is 35, which represents the near middle of the millennial generation. Historical norms for first-time buyers’ ages are 28-29 years old.

This is significant for a few reasons, Lautz says. The first is that a 35-year-old buying a home likely has different housing needs than that of a 28-year-old. Additionally, a 35-year-old first-time buyer has missed out on quite a few years of equity than that of a 28-year-old buyer. Today’s first-time buyer is in a very different place in terms of their needs than they would have been historically.

Implications of Generational Trends

With the increase in age of a first-time home buyer, years of equity, and therefore wealth, is lost, Lautz says. The increase also means one less housing trade than was previously the norm. Additionally, buyers who are partnered or have children have different housing needs than their predecessors, who were typically buying smaller homes and condos.

The baby boomer generation has the most housing wealth in addition to representing the biggest share of the market, so they’re putting a lot of pressure on the market, especially when it comes to inventory and cash sales.

Sticky Trends

A “sticky trend” simply means that a specific behavior within the market looks like it’s going to “stick” despite fluctuations in the economy or otherwise. Lautz identified a few, which she’s been watching for quite some time.

Migration

More than ever before, Boomers and the Silent Generation are willing to move far distances to be near friends and family. In many cases, they’re willing to move across multiple states to be close to a grandchild.

The Sunbelt and mountain states are still the most popular, because after all, many favor sun and temperate weather, a view and/or favorable tax regulations.

People are also willing to move farther than before. From 1989-2022 people moved 10-15 miles. During the pandemic, this figure jumped to 50 miles, with a quarter of those people having moved over 470 miles. It has fallen back down to 20 miles, however, but people are still willing to move further than the historic norm.

Buying Sight-Unseen

The pandemic spurred an uptick in buyers purchasing homes without seeing them in person. Some of this was due to isolation orders and general safety concerns and some of it was due to the sheer distance people were moving.

Though isolation orders have subsided, and most people are out and about in a pre-pandemic fashion, buyers are still moving further than they would have in the past, which means they might not be readily available in the market in which they’re shopping. Lautz notes that 9% of buyers last year purchased their home completely sight-unseen.

The importance of this trend relates to how a home is presented, she says. “We (need to) think about everything practitioners do to showcase a home: virtual tours and staging, floor plans and even making sure your Facetime is ready to go.”

Some Good News

Tumult characterized the market and the association in 2023, but Lautz says there are still positives that practitioners should take to heart.

First, homeownership is still an important way to build wealth and live the American dream. NAR data shows that “the average net worth of homeowners is around $400,000 whereas renters are at $10,000. That’s really important. We’re bad savers as Americans and homeownership is a great way to build wealth,” Lautz says.

Additionally, nine out of 10 buyers and sellers want representation when buying or listing their homes. Buyers need help negotiating and finding the right home, whether they’re first timers or repeats in the market. Today’s market is vastly different from that of a decade ago, and buyers need someone to help them navigate it. Similarly, sellers rely on agents to help them develop a price point, market the home and negotiate on their behalf. On a similar note, For-Sale-By-Owner, or FSBOs, are at a historic low at 7%.

Broker Power Hour is a bimonthly, virtual event offering brokers the information and tools they need to navigate the market and their businesses. It’s offered as an NAR benefit. For more information and to register for the next Power Hour, check out broker.realtor.

National Association of REALTORS®
Reprinted with permission

Communication is always a top priority. Brokers often want their agents to communicate more effectively and professionally. The best way to make that happen? Lead by example.

Language is powerful, says Jo Anne Preston, a workforce and organizational development expert and author of Lead the Way in Five Minutes a Day: Sparking High Performance in Yourself and Your Team. The words you use to interact with your agents can make all the difference. That’s why she urges being thoughtful and intentional about the words you use and the delivery of what you’re saying.

Although some language might seem harmless, its usage could make members of your team feel disrespected, disengaged, uncomfortable or excluded. Here are eight words and phrases Preston recommends nixing from your work vocabulary.

Subordinates

Stay away from “subordinates” and other language that could make your team feel diminished, suggests Preston. Instead, describe staff members by their profession and include a compliment, like “our top agent who works in Kansas City.” Or try alternatives, such as “my team,” “my colleagues,” “frontline employees,” or “folks who do great work here.”

Manager

By saying “leader” instead of “manager,” you’ll highlight a positive aspect of overseeing others—working to inspire them—rather than focusing on the power differential. “By describing someone as a leader, it’s like giving them a compliment,” says Preston. “You’re saying you’re not just a manager by your title, but a leader by who you are.”

Acronyms

Don’t assume your audience will know every acronym, says Preston. If they’re unfamiliar with a term, they might feel foolish asking for an explanation and could then tune out, she adds. “Every time you use an acronym, the listener’s brain has to sidetrack to figure out what it’s about while you’re still talking,” she adds, “which means they won’t be paying attention to what you say afterward.”

Preston equates using an aconym to a high school math class where, if a participant spends too much time trying to understand the first step, they’ll miss the second step and won’t be able to produce the answer to the problem.

I’m a perfectionist

If you describe yourself as a perfectionist, you might inadvertently send a message to your team that they, too, must operate as perfectionists, which holds them to unattainable standards, says Preston. “They should be able to openly discuss their mistakes without fear of ridicule or overly high expectations.” Instead, use language like “striving for excellence” and “working hard and doing your best,” she suggests.

I/Me

If it weren’t for agents, brokers wouldn’t have a business, and it’s important as leaders to acknowledge that. The team helps make the brokerage successful. “It’s human nature to sometimes forget to thank people,” says Preston, who overheard her manager taking credit for her work years ago and resolved to never repeat the practice. By using “we” and “us” and sharing the credit, you’ll increase unity and help your employees feel like an integral part of your team.

The Girls

Subtlety is important and sometimes overlooked in communication. Referring to women as “girls” is one such instance that’s often overlooked. Calling a grown woman a girl might feel belittling, Preston says. It could send a message as a leader that you do not see the person as professional or someone to be taken serious. Plus, it’s important not to assume or assign a specific gender to someone, as this might cause harm to someone on your team who identifies as nonbinary or otherwise.

You Guys

Even though excluding females is likely not the speaker’s intention, this phrase technically leaves them out. And again, the term is gendering. Instead, say “everyone,” “folks,” “all the people on my team,” or “y’all.”

Jargon

Using specialized language can cause listeners to tune out, says Preston. You want to make sure that your message is accessible to those listening so that they can take in your message. “Watch for any glazed-over looks or signs of distraction,” she counsels. When in doubt, ask yourself if a general audience would be able to understand what you’re saying

Talking Tips

Aim to speak in ways that will build up your team, Preston suggests. Try to make them feel respected, included, engaged, motivated, valued, heard, safe, and comfortable. Here’s how.

• Use a person’s name. It’s a more personal connection and lets them know you cared enough to learn their name. Also, make sure you pronounce names correctly.
• Say “thank you” often. Always acknowledge exemplary work or when someone is trying their best. It might seem minor to you, but this kind of recognition goes a long way.
• Listen first. “Sometimes, the higher up we get, the poorer our listening skills get,” says Preston. To remind yourself to give your team space to talk, use the acronym WAIT—“Why Am I Talking?”
• Pause. Instead of feeling you need to provide answers immediately, consider saying, “Let me think about that and get back to you because your question is important,” suggests Preston. Your team will feel you hear and value them.
• Be open. If a team member gives you negative or trying feedback, try to manage your defensiveness and thank them for speaking up, recommends Preston. Practice the talking tips from above: Pause, thank them for their feedback and ask them how you can communicate better with them in them in the future.
• No one’s perfect. Remember that you’re a human being and you might make mistakes when communicating with your team. That’s okay, and if you don’t use the right language, start with an apology that is intentional and sincere. Then, commit to communicating better the next time.

National Association of REALTORS®
Reprinted with permission

Share these five tips with your team to boost their optimism and give them skills for being more productive.

We asked top producing real estate professionals across the country about the daily habits they’ve developed to help them succeed. Now, we’re sharing their insights to help brokers better train and motivate agents who might need a helping hand.

Here are five tips to share with your team.

1. Top professionals have unbridled, passionate optimism.

Optimism is more than seeing the glass half full. Optimism includes confidence, assuredness, enthusiasm and hopefulness. Unbridled, passionate optimism is being able to express that confidence, assuredness, enthusiasm and hopefulness in all your actions and words—which are part of your daily habits.

Even in the face of huge challenges and disappointments, expressing yourself with optimism makes a difference in both business processes and outcomes. W. Clement Stone, author of The Success System That Never Fails, said, “There is very little difference in people, but that little difference makes a big difference. That little difference is attitude.”

One way to protect your optimism in the face of what may seem like an insurmountable challenge or foregone “blown deal” is to internalize the phrase, “It’s too soon to tell.” Just as situations and deals can sour, they can also regroup, revitalize and bloom. By internalizing and expressing “It’s too soon to tell,” you’re leaving yourself and your clients with open-ended options. And no one ever knows where open-ended options will lead.

2. Top professionals have superior market knowledge.

Superior knowledge of your market goes well beyond pricing, comps and market trends. Superior market knowledge includes developing relationships with companies (via your strong networking skills) that are in the process of or planning to move executives in or out of your specific market. Superior market knowledge involves knowing which financial options are available to your clients on all tiers of the wealth spectrum. It is your ability to find inventory even when there is no inventory listed on your local MLS.

3. Top professionals are relentlessly upgrading their skills.

Top professionals know the skills they used in the past that rendered them successful will not work as well, if at all, in this current market. 

Top professionals are consistently upgrading their presentations to sellers and buyers alike. Just as tech companies are constantly upgrading their apps and software, top professionals are constantly upgrading their technical skills so they can capitalize on improved and enhanced apps and products. Top professionals are also upgrading their social media skills and are relentlessly improving their remote presentation skills. Top professionals know that remote work and servicing their clients remotely are here to stay, and they act accordingly.

4. Top professionals say yes more than they say no.

Top professionals are willing to say yes even if they don’t know how to do what it is the client is asking them to do. Top professionals educate themselves through research or find a source that can meet whatever want or need their clients have. 

And, it goes without saying, that the more you learn about whatever it is, the more confident, self-assured, enthusiastic, and passionately optimistic you will be about serving your clients.

5. Top professionals lead rather than follow.

Top professionals are proactive rather than reactive. They are versatile, stable and don’t stand for unnecessary drama. They do not let their emotions eclipse their purpose, which is serving their client at the highest level, while at the same time expressing compassion for their client and their client’s interests.

This habit of leading rather than following is well served by the expression we previously mentioned: “It’s too soon to tell.” It reinforces that unbridled, passionate optimism and it gives you permission to stay calm and neutral regardless of someone else’s emotions, mistakes, or omissions.

The bottom line here, brokers, is to help your agents row their own boats by reinforcing the above habits of top professionals. If you’d like to learn more, check out our podcast, where in each episode, we break down what it takes to be a successful real estate practitioner..

National Association of REALTORS®
Reprinted with permission

Brokers and team leaders can use these tips for delivering constructive feedback with tact and authority.

As a broker-owner or team leader, your agents look to you for
leadership and guidance. Offering sales associates constructive feedback
is an important way to share your vision and help them improve their
skillset.Here are five tips to help you provide advice that associate brokers,
agents, and team members can use to reach their sales goals. Chances
are these tips will lead to more trusting relationships among those in
your office and greater productivity for everyone.

National Association of REALTORS®
Reprinted with permission

As the broker for CarMarc Realty Group, Carrie J. Little views content creation as one of her biggest job responsibilities. Here, she shares her top social media tips.

When it comes to mastering social media in real estate, there are dozens of sites and apps that offer advice, content creation, and even outsourcing for agents. Brokers, on the other hand, are often left wondering how they should handle their channels. Should they focus on agent-facing recruitment messages? Buyer and seller content? Listing highlights, agent successes, and company appreciation events?

While many brokers are left unsure about how to harness social media, CarMarc Realty Group’s designated managing broker Carrie J. Little has a clear outlook. In a session at the 2021 REALTOR® Broker Summit on June 30, Little offered seven proven social media strategies that brokerages can employ as they build or rebuild their social media presences.

1. Create content for the agents in your office.

A smart way for brokers to reframe their social media, said Little, is to consider what their agents may want to share with their clients. One example that Little gave was to create visual market snapshots, using local data that may interest and excite agents and the customers they serve. ​​​​​

Beyond data, brokerages can also highlight their agents with exclusive, personal content. “Agents like to be acknowledged,” Little said. They also need content to share, and content that will help them bolster their reputations. That’s why CarMarc Realty Group creates new listing graphics for agents and then posts on the brokerage page. These graphics can then be shared by the individual agents. “It gives them content, it lets the consumer know that they’re working, it lets their sphere of influence know they’re working, and it shows that they’re actually working a transaction from beginning to end.”

2. Create professional and organic content.

A broker’s online image is dependent on the images and videos they’re posting, Little said. That’s why she always recommends posting high-quality photos of everything—from listings to agents and brokers to images used in posts about staging, gardening and more. Whether or not each agent is in a suit coat or a jean jacket matters less than the quality of the photographs, said Little. “[Brokers] need to think about hiring that professional photographer.”

Professional imagery doesn’t mean stuffy content, though. Little encourages brokers to create and share organic, less-filtered content about how their business life operates. Whether it’s a series on what it was like to build the business from scratch, a behind-the-scenes peek at what it means to comply with the REALTOR® Code of Ethics or tips on how agents and brokers help buyers navigate the market, Little believes that it’s important to tell honest stories about the real estate profession. Video content provides an entry into creating honest, “real life” style content.

3. Collaborate with industry partners.

Next, Little recommends that brokerages work with loan officers, inspectors, attorneys and other partners to get different perspectives and unique content that consumers can’t find anywhere else. “Why not interview a loan officer about how, instead of being prequalified, maybe you should be preapproved or … fully underwritten.”

Other options are to interview inspectors about what they are seeing in today’s homes, or real estate attorneys about what happens behind the scenes during escrow. For these interviews, Little recommends that brokers use Facebook or Instagram.

4. Use hashtags and locations.

“When we talk about hashtag and location-based marketing, [that’s] when the end user can find you based on a hashtag or location,” Little explains. She offered this example: If someone is looking for an agent in a broker’s city, and the broker has properly used hashtags or location tagging in their posts, the consumer would be able to find them more easily.

Beyond this use case, consumers who are looking for local content are more likely to come across a brokerage’s posts if they are properly tagged. Whether posting images of a city concert series, a new café, or other local attractions, a brokerage’s posts will gain traction if they are hashtagged or tagged by location—it allows users to find a brokerage’s content on their own terms.

But brokers should be careful not to go overboard with hashtags, Little cautions. Each platform has its limits on hashtags and for some platforms, like Linkedin, going overboard isn’t necessary and can actually stifle a user’s efforts because it messes up the algorithm.

5. Engage on social media.

Engagement, said Little, “is having a conversation with your followers. It’s just as important as seeing people in person.” She recommends that when a broker or brokerage employee responds to a post, they always use five words or more. Not only will this come off as more authentic and conversational, but many social media platforms move longer responses to the top of the page and make them more visible.

6. Include video content.

Video content doesn’t have to be high-production or take a long time, said Little. “You can build a 60-second story on Instagram. You can build a 60-second story on TikTok.” The key is to just get started.

Making the videos accessible is also important. Little recalls a time when her son told her to add captions to her videos so that he could “watch your videos while we are in class.” While she didn’t encourage that behavior, it did help Little to understand how important captions and accessibility are to gaining more views from users who aren’t able to watch in a traditional way. Much of the time, users have the volume on their devices low or off, and captions make it easier to garner the message of the content without having to turn the volume up.

7. Social recruiting.

Instead of the typical broker outreach where you message an agent about their production and ask if they’d consider moving companies, Little recommends that brokers offer something of value to agents. This allows agents to begin the recruiting process on their own.

Acknowledging that agents are overwhelmed by continuing education classes, but still want to learn about new tactics or business tips, Little shares that she has been creating chunks of educational content shares through Instagram videos. The goal is to show potential recruits that she is a hands-on, digitally minded broker who is there to help agents succeed. When they reach out, she is ready to help them join her brokerage or to connect them with brokers in their own markets.

Whether you’re the broker-owner, designated managing broker or a digital marketing person, Little said, these seven strategies will put you on the path to a stronger social media presence. She also reminded digital newcomers to pick one new strategy, rather than trying to implement every strategy all at once. “Don’t make this hard,” she reminded the brokers in the audience. “Start today.”

National Association of REALTORS®
Reprinted with permission

In this digital age, your agents need an active, authoritative online presence. Help them build one with this step-by-step breakdown.

I recently met a newer agent who shared that despite networking, door knocking and even a bit of advertising, he hadn’t landed his first listing.

After discussing some of the ways he could get in front of potential sellers, I searched his name online and found very little. He had a website provided by his brokerage, but that was it. When agents come to their brokers and are unhappy with how their businesses are advancing, one suggestion a broker might make is that the agents spend time honing their online presence.

Build a Strong Personal Brand

People do business with people they know, like and trust, which is why a strong personal brand is so important today. The foundation of any effective brand is based on three factors you’ll want to counsel agents to embody in their online marketing.

Principles

Principles guide all humans. Ask your agents to consider what they believe in so strongly that it affects who they work with and how they conduct business. An agent’s answer will be the foundation of their brand.

Brokers can help agents understand why they serve a particular niche, what they do and don’t do for clients and what causes or passions they stand for outside their work. Whether it be service, equity or even building wealth, these principles guide how they live and work and should be communicated. Using principles to guide their online presence will help them attract their ideal clientele.

Messaging

Everything an agent says or does needs to align with their brand. Once they’ve figured out their principles, brokers can guide agents to develop their pillars. They serve as a North Star, guiding all the messaging in a cohesive direction.

In my public relations firm, I start by having clients identify the five principles they’re most passionate about and use that to direct all messaging across all media. Agents can do the same.

Aesthetics

While this is the first thing most people think about branding, it’s the last part of the equation.

In crafting an online presence, aesthetics refers to color palettes, graphic elements like a logo, cover photos and marketing materials. Encourage agents to make sure these elements are cohesive across platforms. Explain to them that this helps them form a recognizable brand. If your brokerage already has a color palette, logo, fonts and styles picked out, consider putting a branding package together for your agents to use.

Acquire Testimonials & Reviews

There are a couple of distinct differences between testimonials and reviews: Testimonials are usually solicited by the agent. Reviews are usually written by the customer and posted on a third-party website, like a Google Business Profile. Also, reviews are usually only text, whereas testimonials can be in any format.

Ideally, your agents will want video testimonials because they can be more persuasive. Think about it like this: When you see a written testimonial on someone’s website, attributed to “Mike S.,” how convincing is that? But a video where someone is describing their experience working with an is far more authentic and persuasive.

People tend to get nervous on video, so you can encourage your agents to provide clients with some bullet points. This gives them structure, which helps put their minds at ease, and tees them up to use stories that highlight what makes the agent stand out.

Advise your agents that testimonials can be embedded on their website and used in newsletters and social media posts. They can also create a montage of their best testimonials, which should be embedded on their website homepage.

Leverage Case Studies

A case study is a brief report about a problem a client had, how the problem was solved and what the outcome was. In this case, the problem was that your agent’s client needed to sell their home or buy a home. The solution was your agent’s approach to helping the client achieve their goal. The result was the end: the client achieved that goal and was satisfied with their service.

You can tell your agents that the key here is to leverage storytelling to get people emotionally engaged. They will want to include enough details and data so readers can clearly see how your agent can help them with their buying or selling goals.

Three to five should be plenty but advise your agents that they’ll also want to replace case studies from time to time with new ones as they move forward in their career. This is important because the market changes frequently, and if the circumstances of a particular transaction don’t align with current market conditions, the case study may not seem as credible to potential clients.

Agents will want to make these available as pages on their websites, and they should also make a PDF download available as well. The download gives potential clients something they can walk away with and use when comparing agents.

Use Search Results to Inspire Trust

Before a seller lists their property with an agent, they will run to their favorite search engine and look that agent up. Help your agents by highlighting the importance of crafting a strong presence in the search results.

Step 1: Have a Complete Profile on the Brokerage Page

The first step is to make sure they have a profile page on your brokerage website, because it has some degree of authority from an SEO perspective, so it should be easy to get that page to rank for their name.

Step 2: Use Social Media

Next, you’ll make sure they have a profile set up on at least one major social media network—preferably more than one—and that their profiles include a descriptive bio that differentiates them from other agents. Make sure they include a professional headshot and cover photo as well. They should also be active on these platforms, by consistently posting useful content that demonstrates their expertise.

Step 3: Publish Articles on the Brokerage Website

If you can publish articles on your brokerage website, you should encourage your agents to do that because it benefits them and you. If your website is built and optimized properly, these articles will rank for your agents’ name so they’ll show up in the search results when someone looks them up. Over time, by helping your agents demonstrate their expertise in this way, you’ll also increase the overall organic search traffic, and as a result, leads to your website.

Step 4: Become a Media Source

You can also encourage them to start writing for other publications and getting featured in the media. Doing so adds third-party validation to the equation. Think about it like this—these publications have a barrier to entry, meaning they won’t feature just anyone, so when they do, it sends a clear message to prospects that the person featured is among the best of the best. Plus, these publications tend to be authoritative from an SEO perspective, so the content will likely rank well for your agents’ names.

For a technical step-by-step guide that breaks down SEO, here is a comprehensive article Entrepreneur magazine asked me to write on the topic.

Earning a listing requires the kind of online presence that clearly demonstrates an agent’s expertise, positions the agent—and thus, the brokerage—as an authority in the market and inspires trust in potential clients. These steps help an agent cultivate and communicate their authority in the profession and their dedication to their clients.

National Association of REALTORS®
Reprinted with permission

The Sitzer-Burnett verdict spotlights the need for more transparency when it comes to compensation. Help agents understand the importance of the written buyer agreement and how to communicate its value to their clients.

The October 2023 Sitzer-Burnett verdict has reinvigorated the conversation around compensation and transparency among real estate professionals. The topic of written buyer agreements is top of mind in the real estate industry, and for good reason: due to the proposed settlement reached in the litigation brought on behalf of home sellers relating to broker compensation, all MLS participants providing services to a buyer will soon be required to enter into a written agreement before the buyer tours a property on the MLS.

The legally binding contract provides protection and transparency for the agent and consumer alike. 

“It solidifies and quantifies the responsibilities of the broker to the buyer and the responsibilities of the buyer working with the broker,” states Lynn Madison, a REALTOR® in Schaumburg, Il. and CEO of Madison Seminars.

Rather than relying on a verbal conversation or assuming an understanding, a written agreement during a transaction spells out expectations, including the services provided to the buyer, the agency relationship, how the brokerage is compensated, and how that system serves the buyer’s best interest.

In recent months, more brokerages have been working to relay the importance of written buyer agreements to help ensure clarity and transparency between the broker and the consumer. Consumers deserve transparency and need to understand the full breadth of the services provided by buyer brokers, which means agents need to be able to communicate their value effectively. Given the coming practice changes, Madison feels that brokers should train their agents now on the use and significance of written agreements and how to present them to consumers.

Make Sure Agents Understand the Buyer Representation Agreement

“They help the buyers, the sellers, the agents and the broker,” says Gretchen Pearson, president and owner of Berkshire Hathaway HomeServices Drysdale Properties in Danville, Calif. Written buyer agreements have been mandatory for her 900 agents since the start of the pandemic.

She started training agents on written buyer agreements before the pandemic hit, but when it did, real estate professionals in California were required to have buyers sign statements regarding exposure to the virus. Certain public health requirements had to be followed, like airing out the home for two hours before a property could be shown, and the statements acted as a binding contract stating the agents would adhere to those requirements.

Pearson said the written agreements formalized the relationship and the responsibilities of each party. When regulations around the pandemic lessened, Pearson says it was a natural fit to continue using written buyer agreements even after the COVID protocols were no longer required.

To help agents understand the importance of using these agreements, they need to understand them. Explain to agents that written buyer agreements are legally binding documents that are designed to protect both the consumer and the broker, and that they clearly outline the duties and responsibilities of both parties. With everything outlined clearly, the consumer will understand what they can expect the broker to do for them.

When thinking through the use of written agreements, consider these points:

• Written agreements will soon be required before a buyer tours properties listed for sale in the MLS.
• Expectations and duties are on paper for all to see and understand. 
• Written agreements explain how consumers can work alongside agents to ensure ideal outcomes are reached.
• Through transparency and clear expectations, the written agreement fosters trust and understanding for the consumer. 
• Consumers will better understand that many agents are self-employed, make a living helping people buy and sell their properties, and how they are compensated for these services.

Buyers will understand how the broker will be compensated for their work.

Explaining the Buyer Representation Agreement to the Consumer

Ensuring agents understand what’s in the agreement is the first step in helping agents realize the importance of using them. The next step is to quell any fears they have in presenting the written agreement to consumers by making sure they’re comfortable explaining the terms of the agreement.

To start, the agent should be able to explain to the consumer how the agreement protects both parties. The agent should also explain how a written agreement makes the homebuying process more transparent.

Madison is a frequent instructor of the Accredited Buyer’s Representative (ABR®) designation course for the National Association of REALTORS®, and she speaks to brokerages across the country about the topic. “The Accredited Buyer’s Representative (ABR®) course, which NAR is currently offering to members at no cost, includes many ideas and resources to help the agent articulate their value proposition in order to get the buyer representation agreement signed,” she adds.

What to Include in a Written Buyer Agreement

If your brokerage does not have a standardized written buyer agreement, reach out to the state or local REALTOR® association.

“There is no (national) standard buyer representation agreement just like there’s no national standard listing agreement for sellers either,” states Madison. 

If neither your brokerage nor your local or state REALTOR® association has a written buyer agreement, consult legal counsel to draft an agreement to ensure it complies with your state laws and MLS policies.

Madison says a written buyer agreement should include the amount of compensation for the broker’s services, how the broker is compensated, as well as statements describing the agent and the consumer responsibilities. For example:

Agent duties may include:

• Use diligence in its search to locate a property which is acceptable to the buyer.
• Arrange showings of properties of interest to the buyer.
• Disclose to buyer any known information that would materially affect the buyer’s decision ot acquire a property.
• Use professional knowledge and skills to assist a buyer in negotiating for the purchase of such property.
• Assist the buyer throughout the transaction and to represent buyer’s best interests.
• Protect any confidential information that a buyer discloses to the buyer’s agent.

Buyer duties may include:

• Provide accurate and relevant personal information to buyer’s agent regarding buyer’s financial ability to purchase real estate.
• Advise the buyer’s agent of any home offered for sale to the buyer where the buyer may have an interest in purchasing such property.
• Submit through buyer’s agent any offer to purchase or contract on a property which was shown to buyer by buyer’s agent.

“A buyer representation agreement memorializes everything you have said to your buyer, and they can’t come back and say, ‘You didn’t say that,’” Madison comments. “Now, everyone knows what their responsibilities and duties are.”

National Association of REALTORS®
Reprinted with permission