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This post was updated May 20, 2024.
Editor’s note: On April 23, 2024, the judge in the Sitzer | Burnett case granted preliminary approval to the National Association of Realtors’ proposed settlement and set a final approval hearing for November. Rule changes are expected to go into effect beginning in July.
As we enter a new reality mandated by the NAR lawsuit settlement once it’s approved, the required changes in practices — decoupling compensation, not displaying commission in the multiple listing service (MLS) and requiring a signed buyer-broker agreement before showing houses — could have a silver lining. As an industry, we’ll likely get much better at buyer relationships.
Having been in the business over 20 years, I’ve lost count of the number of clients I assumed were mine but who actually ended up using someone else to purchase a home. I am not alone. It’s safe to say many agents have played “fast and loose” over the years and have consequently failed to take the necessary steps to ensure a potential client’s loyalties.
Here are five key activities that can prevent buyer migration going forward:
1. Secure the potential client’s full contact info
When talking to agents about their database, I begin by asking how many contacts they actually have. While some may give a decent number, my follow-up question usually puts things into perspective.
“For how many of those,” I ask, “do you have their full name, mobile number, email and physical address?” The answer is usually dramatically fewer.
All of which brings up an interesting question: “Exactly how do you plan on staying in touch with them?” If you want to succeed in the new reality, this information will become critical as it will be required to fill out buyer-broker agreements correctly.
A person’s willingness to provide their full information will demonstrate whether or not you actually have a potential client ready and willing to buy.
2. Formalize your relationship
If there is any bonus resulting from the current commission upheaval, it is that we will (in most cases) be required to use a buyer-broker agreement with all future buyer clients. We are already seeing this reality as many brokerages and Realtor associations are moving toward mandatory usage of a formalized agreement.
While there may initially be pushback from buyers, once the practice is universally accepted by all real estate agents, a buyer will have to sign an agreement regardless of who they choose to work with. At a minimum (depending on how the forms are filled out), this should help cement clients to their agent for a specified period of time.
In the past, our team members were encouraged to use our proprietary buyer agreement form which provided a list of benefits when working with our team and detailed the expectations we had from our clients.
Even though our form stated that it was not a binding contract and could be canceled at any time, the very fact that our clients agreed and signed the document emotionally tied them to us with the result that I can only remember one time when someone who had signed our form used another agent to buy a home.
The irony here is that those getting buyer agreements signed (potentially leading to a commission) may well not be the first person who initially dialogued with the buyer. Their past failure to get a signed agreement could be your future opportunity.
It is essential to understand, however, that like any contract, official buyer-broker agreements must have a beginning and ending date. Put a reminder into your CRM or calendar that reminds you to reach out to extend the agreement as necessary.
3. Stay in touch
In addition to needing a client’s contact information to fill out the buyer-broker agreement, you also need it to maximize your ability to stay in touch. Not every potential buyer is going to need or want to buy right away.
We recommend a minimum 36-touch program to stay front and center in their mind, including phone calls, texts, emails, note cards, newsletters and so on. By constantly communicating with your clients and providing items of value, you maintain your top-of-mind positioning with them.
If you have a robust CRM, you can send them automated property alerts, market updates, client events and more. The bottom line is touch, touch, touch.
4. Script up
Now more than ever, this is the time to develop the skills necessary to succeed in this new reality. In the short term, with the significant changes in buyer agent compensation, there will more than likely be a lot of pushback from buyers. Rather than winging your dialogue, locate scripts and then practice them until your responses become automatic.
5. Start now
While the NAR settlement will not become reality until July and is contingent upon the judge signing off on the terms, it is clear that the rules of engagement are shifting now. Agents who want to come out on top should be making changes now so that they will be locked and loaded once the new reality is official.
In the classic movie, Mary Poppins, Bert, seeing the changes in the direction of the weathervane, states, “Wind’s in the east, mist coming in, like somethin’ is brewin’ and ’bout to begin. Can’t put me finger on what lies in store, but I fear what’s to happen all happened before.”
The only constancy in this business is change. At the end of the day, agents can be divided into two groups: Those who saw the change coming, adapted to the new reality and cemented their relationships with their clients, or those who never adjusted and, while they may have had the first contact, lost out to those who seized the day.
Carl Medford is the CEO of The Medford Team.
