For the longest time I have been a proponent of the idea that sellers should have a broker and buyers too should have a separate broker. Under this system, both parties have access to professional representation and both are hopefully equals in the marketplace.
Although the brokerage community has been very good about representing sellers, buyer representation has yet to catch up. The 2006 Profile of Buyers and Sellers from the National Association of Realtors shows that 44 percent of all purchasers had a written buyer brokerage agreement while 84 percent of all sellers listed with a broker.
Within the realm of buyer brokerage there are "buyer brokers" and "exclusive buyer brokers" or EBAs. Buyer brokers represent purchasers but in other transactions may represent sellers. Exclusive buyer brokers only represent purchasers and never list properties.
Over time there has been a lingering debate within the real estate community regarding which form of buyer brokerage is somehow "better," however it is that one measures such a concept. The discussion has been useful in the sense that it's raised a number of agency issues, but in the end one either is or is not exclusive and most licensees have opted for a non-exclusive practice model.
What virtually everyone does agree to is this: In a marketplace crowded with competitors, being an EBA gives one a way to stand out, to be different. From a marketing perspective, different can be very good -- after all, half the consumers in the real estate marketplace are buyers and only a small percentage of professionals are exclusive buyer brokers. The odds of a successful realty practice would seem to favor exclusive buyer brokers rather than listing brokers, all things being equal.
Paul J. Frank, with Homefinders Real Estate in Foxboro, MA, started with buyer brokerage as a salesperson in 1992.
"I was living in a condo complex with my wife and the couple below us wanted to rent their condo and buy a house. They were having problems dealing with agents and heard I got my real estate license. They asked me to help them. I told them there was this new way of doing real estate and I could work for them not against them. It's call buyer agency. They loved the concept and that's how I got into real estate and became a buyer agent."
By 1995 Frank had a broker's license and in 1996 he opened his own office.
One big attraction of exclusive buyer brokerage was that Frank had little competition.
"At the time in my area you could count the EBA's on two hands. All the other agents were seller agents. It was a great way to differentiate myself from all the other agents and get business."
As it turned out, a lot of purchasers liked the buyer brokerage concept and so real estate firms began to adapt. Most now offer "buyer brokerage" but not "exclusive buyer brokerage." Also, many jurisdictions adopted the idea of "designated agency," in essence a disclosed dual-agency situation where two agents working for a single broker can represent different parties in an individual transaction. The public, however, largely does not see a distinction between exclusive and non-exclusive buyer agency. The result has been that a marketing advantage -- the uniqueness associated with being an exclusive buyer broker -- ebbed over time. Changing marketplace realities began to impact Frank.
"I had been thinking about it for a couple of years and started to make changes to my business in the fall of 2005 so I would be set up to list a property," he said. "I guess the official exit of being an exclusive buyer agent was when I listed my first property in March of 2006. The really neat thing about that listing was that it was a referral from one of the owners of the office I worked for in Canton, MA so many years ago."
Franks' background as an exclusive buyer broker actually helped as he began to offer listing services.
"I have a database of very happy past buyer clients who I keep in touch with on a regular basis and it seemed kind of stupid to keep asking them if they knew anyone who wanted to buy a home and not be able to help them sell their property when they needed my help. Just about everyone I know owns real estate.
"I got into real estate to help people," he continued, "and if the market was rejecting me as an exclusive buyer agent but I was able to find sellers who wanted my help it was better to help them than go out of business and help no one. The decision to stop being an EBA wasn't an easy one. I was an EBA for almost ten years. I grieved this loss for a good six months."
And what did other EBAs think of Frank's move?
"The vast majority have been supportive. They understand how tough business is these days and many of them are struggling with the same issues I struggled with. I am not the first EBA to give it up and list properties and I won't be the last."
Now that Frank offers to represent both buyers and sellers, what are the attractions of listing homes?
"With a great listing you get to draw from a much larger pool of buyers so you have a better chance of getting a better buyer. While as a buyer agent you can only work with a handful of buyers and still have a life. If you get a group of buyers who seem motivated to buy at the start of their search but in the end don't buy you have nothing to show for you efforts."
Oddly enough, once he started representing owners Frank found a surprising benefit.
"The other interesting thing that happened when I started to take listings was that I found it easier to get buyer clients. Because I am now a real estate agent it aligns up better with what people expect." Today, explains Frank, "I am a single agent and I don't do dual or designated agency and I have contingency plans to avoid conflicts and it's working great. The buyers and sellers I talk to are cool with it and find it more desirable than the dual or designated buyer agency the big companies promote. Now, that I have more to offer the market I am better aligned with the market and business is much, much better."
Brokerage should always include listing brokers and buyer brokers, exclusive or not, so that individual professionals can pick the practice strategy they prefer while consumers can find the widest array of services. Exclusive buyer brokers changed the marketplace by popularizing the core concept of buyer brokerage. That's a transition which now helps millions of purchasers get a better deal in the marketplace -- and that is a significant accomplishment.
"What we have learned about the public," says Frank on his website, "is that the public is really looking for an experienced agent who will look after them throughout their transaction and to treat them honestly and fairly."
Frank, of course, is exactly right.
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