[Full Lecture on Exclusive Buyer Agent]
The simple truth is, a buyer or seller cannot avoid agents -- so if given a choice, he might as well deal with the RIGHT kind of professional agent who functions according to his need.
This article will describe in detail one particular type of real estate agent (among the 5 types), which is the Exclusive Buyer Agent or EBA. I will discuss (1) how to distinguish an EBA, (2) who are the clients of EBAs, (3) who needs EBAs, (4) why do buyers need representation, (5) what an EBA does best for a buyer, (6) who pays the agents, (7) how EBAs are make a living, (8) when should buyers consult with an EBA, and (9) where do EBAs get listing information.
Go to PART 2
A Buyer Agent is also known as Independent Shopping Assistant, or Price Bargaining Assistant, Purchasing Professional, Consumer Representative, Buyer Advocate, and Property Finder.
An Exclusive Buyer Agent (EBA) is a buyer agent who is not tied up to any seller or real estate developer, therefore free from any conflict of interest. An EBA is a professional real estate agent who renders 100% loyalty representation services on the buyer side.
The word "exclusive" refers to his "entire career", which means that an EBA is an agent who has made a decision and choice to represent buyers only and never sellers in his entire career.
While Traditional Listing Agents (TLA) train on salesmanship negotiation, EBAs train on purchasing negotiation. Through the years of experience, he sharpens his skills in negotiation, concentrates his research in knowing where to get best-value listings, and focuses his learning activities in this specialized field of price bargaining. An EBA is not a product of an overnight reading on how to become an EBA, but a product of years of experience and study in this specialized field.
An Exclusive Buyer Agent is the ideal agent for first-time home buyers. For bigger transactions, the EBA is highly recommended to be engaged in expropriation proceedings by Government and major land or business acquisition by Real Estate Investment Trust Corporations (REITS).
HOW TO DISTINGUISH AN EBA?
The other type of real estate agent who is always confused with the EBA is the Dual Agent. I have described what a dual agent is in my blog article entitled Types of Real Estate Agents.
If you are a prospective buyer in search for a real EBA, it is necessary that you interview the agent first before releasing any piece of buying information (budget, prefered location, etc). An EBA is distinguished by the following characteristics:
Formal Office. Look for license and registration. An EBA is a professional licensed real estate broker who has a legitimate office and official receipt.
One-sided Servicing. Test the agent's loyalty. An EBA is one-sided in his entire career, represents buyers only. I would say that this is the most distinguishing mark of an EBA that you can easily catch. Here is the trick - tell him that you are a property owner and you want a help of an agent to sell it and willing to pay a commission. If that agent is not an EBA, he will say YES he accept that deal. If that agent is an EBA, he will respond with something like "I can help you advertise your property for free in various multiple listings but I am not interested on the commission that you offer because I represent buyers only".
Remember, an EBA is not on the seller side. An EBA does not peddle properties. EBAs never never never never NEVER approach a property seller and offer his buyer-hunting services with a stipulation (asking) of commission. If you force the EBA to help you sell your property, he might help but will refer the buyer directly to you for you to negotiate directly to the buyer because he won't care about the commission.
Unlimited Listing Sources. Ask the agent if he will help you buy a property by which the seller is not willing to give any commission. something An EBA presents an unlimited and unrestricted source of listings to buyers. Unlike the other types of agents who will confine you in their "fence", an EBA is comfortable in telling you all his sources of listings.
One-sided Protection. An EBA protects the interest of buyers only and never sellers in real estate transactions. EBA will read all those fine prints in the Master Deed and in Contracts and watch your back about the advantages and disadvantages on your part in the written instruments before you sign. The only reasonable price of a property he knows is the lowest possible price.
Non-aggressive Salesman. An EBA does not pressure a client to buy on a "rush". The EBA will normally advise you on the "best timing" and he does not care if the correct timing is years from now.
Professional Satisfaction Fee instead of Commission. The first consultation is usually free. When you present yourself as a client, he will normally conduct a needs-analysis interview on you. Then he will enumerate the breakdown of workload that needs to be done in order to achieve your goal. You will see that each item in the workload will have a corresponding specific professional fee based on the time-period needed to accomplish the task. You will be given a chance and option to participate in any part of the workload so that you will save money. You will get the best value for your money for every sweat that is rendered by an EBA.
Price Bargainer. An EBA has a passion of pulling the price down to extreme depth to maximize the savings of the buyer. Passion could be an understatement, perhaps obsession is the right word.
Always with a Written Contract. An EBA will not start working for a buyer client without a written EBA engagement contract. This contract binds the buyer and EBA so they will work as a team towards a common and specific objective. This contract is what makes EBAs obliged to render 100% representation loyalty to the buyer.
No Conflict of Interest. An EBA avoids conflict of interest inherent in the traditional seller-oriented purchase transactions. Please read the article about Conflict of Interest in My Blogs.
Secret-keeper. An EBA does not disclose identities of current and former clients. The other types of agents normally brag about their clients and wave their names to attract a bandwagon of more clients. EBAs don't, because they believe that client identities are private information that must not be used for personal gain of the agent.
WHO ARE THE CLIENTS OF EBAs?
-INVESTORS, especially Purchasing and Investment Portfolio Managers are individuals who habitually buy good quality real estate at the lowest price possible.
-Procurement for the purpose of Right of Way (government and consolidators)
-Organizations who watch over, review, and investigate real estate procurement of any of the other types listed above
-First-time home buyers in general, such as newly-weds (see Themes and Motiffs)
WHO NEEDS EBAs?
Practically, an EBA is needed by every real estate buyer who (1) wants to make a decision based on unlimited line up of choices and (2) who needs assistance in bargaining the price! So basically, I am saying that "all" real estate buyers need EBAs, not just first time home buyers.
Even a lawyer needs an attorney representation if he becomes primary respondents in a court trial. A dentist needs to go to another dentist if he has teeth problems.
Using the same analogy, we can say that even the most skilled real estate broker needs an EBA if he buys a property for himself. Everyone needs an EBA. Even an EBA needs another EBA when he buys a property for himself.
Without an EBA, a buyer is always defeated in the price bargaining process because a buyer is a decision-maker of the purchase. A buyer could lose hundreds of thousands and even millions without an EBA.
For those who have used an EBA, they know it’s a win-win situation. Under the present market situation, even more so than ever before, the best interest of the buyer sits on the hands of a true EBA.
How about property owners? In what instances they go to EBAs for services? Property seller or a listing broker goes to an EBA to advertise in the multiple listing database of the EBA because loading data in the database of an EBA is totally free and it does not require stipulation of commission or share of commission.
Although everyone needs an EBA, there is not much available EBAs in the field of real estate service because EBAs provide more services but gets lesser income compared to what listing agents get from commissions.
Below is is a YouTube short video clip by book author and consumer guru Jean Chatzky that will supplement my explanation why a buyer should go to an EBA. Jean Chatzky will be discusing the different types of real estate agents in the U.S.A.
By the way, in the U.S., the number of EBAs has already increased to at least 4,000 members. They have an organization called National Association of Exclusive Buyer Agents (NAEBA) and their website is at http://www.naeba.org/.
In the Philippines, as of today, December 3, 2009, I am the one and only Exclusive Buyer Agent yet so far; and I have been an EBA since 1998. I am recently starting up a group called EBA Society, hoping I could pass on principles of consumerism to more real estate brokers so that more buyers will enjoy our loyalty-based services.
WHY DO BUYERS NEED REPRESENTATION?
There is an old wisdom that says only a fool represents himself.
It is always advantageous for any wise buyer if he will come in represented by a highly skilled buyer's agent. If the buyer will personally go into that negotiation ring all by himself, the sellers agents can always defeat the buyer in almost any part of the transaction.
Unrepresented buyers normally end up (1) buying something without exploring a wide range of choices and (2) paying more than how much they could have paid with an EBA representation.
Listing agents love it when the buyer is not represented because they know they will be dealing with a "soft target" -- this is the reason why you always see signs saying "For Sale, Direct Buyers Only".
Remember, when listing agents ask questions about the buyer, the question is always centered towards qualifying the buyer and determining the maximum limits of his purchasing power -- this is how listing agents are able to sell on overprice.
Just like any other normal human being, most buyers feel stupid and dishonest if they cannot answer a question of seller, so they answer almost all questions. When a buyer is put in this scenario, he normally becomes careless in answering the questions of sellers. Every piece of information given by a buyer to the seller-side is a disadvantage of the buyer.
A buyer is the decision maker -- just like a Commanding General of the Army, he is not supposed to do a soldier's work at the front-line. A buyer gets the services of an EBA so that the expert agents from the seller-side will find their match in the negotiation ring.
Do you know when a negotiation starts? It is at the moment the buyer or the buyer's agent makes the first contact call to the seller or the listing agent. This first contact is most critical, even more critical of the end-part of haggling the price, and this first-contact is the moment the buyer must be represented by an EBA.
Go to PART 2