TODAY S BUYER S REP A publication of the Real Estate Buyer s Agent Council, Inc. A wholly-owned subsidiary of the National Association of REALTORS October 2017 Volume XXVI Number 10 Dear Buyer: What Do I Do for You? Just as children frequently don t appreciate everything their parents do for them, homebuyers often fail to recognize everything involved in purchasing a home and how much of that effort is shouldered by their buyer s rep. With REALTOR Designation Awareness Month just around the corner, in November, it s a good time to revisit the topic of buyer representation, and to help you educate buyers about what you do for them including why it s better to work with an agent who s earned their ABR designation. Often, these things are explained in a buyer consultation session. To facilitate your conversations, this issue of Today s Buyer s Rep mirrors the format of a two-page consumer handout called Buying a Home: What Your Buyer s Agent Does for You. (You can download a copy at tinyurl.com/tbr-abr. 1 ) It covers 39 different points, organized into five major topics: Help arrange financing Assist in finding the right property Educate on market conditions Provide negotiating guidance when making an offer Assist in finalizing the transaction Inside this issue, you ll find tips and resources you can use to discuss these topics with buyer-clients as well as suggestions on ways to deliver on these pledges. Never forget that helping buyers understand what you do for them also goes a long way towards accomplishing another important goal getting their signature on a buyer representation agreement! 1 If this shortened link doesn t work for you, please log into the Member Center at REBAC.net, go to Consumer One-Sheets, and select Buying a Home: What Your Buyer s Agent Does for You under Choosing the Right Representation. LOOK INSIDE... Help Arrange Financing page 3 Finding the Right Property page 4 Educate on Market Conditions page 5 Making an Offer Getting to Closing page 6 page 7
MEMBERSHIP UPDATE WORTH QUOTING... I think that s the single best piece of advice: constantly think about how you could be doing things better and questioning yourself. - Elon Musk Special Savings on Home Buyer s Toolkits Buy 50 and get 20 more free! Customize your copies! For a limited time, REBAC members can order copies of the Home Buyer s Toolkit at a special discount. For every 50 toolkits ordered, receive another 20 copies free! Members can choose from personalized copies or generic toolkits. These popular 40-page booklets, produced especially for ABR designees, emphasize the benefits of working with an Accredited Buyer s Representative while completing 10 steps towards home ownership, including: 1. Find a Qualified Buyer s Representative 2. Assess Your Credit and Finances 3. Assess your Wants and Needs in a Home 4. Search for Your Home 5. Negotiate Terms 6. Obtain a Mortgage 7. Prepare for the Closing Day 8. Close 9. Move 10. Celebrate Front Cover H O M E B U Y E R S T O O L K I T 10 Steps t o C h o o s i n g a n d P u r c h a s i n g Y o u r H o m e Back Cover I am Your A B R S a r a h G o o d s e l l e r A c c r e d i t e d B u y e r s R e p r e s e n t a t i v e X Y Z R e a l t y, I n c. 123 Main S t C h i c a g o, I L 6 0 1 0 6 P h o n e : 5 5 5-5 5 5-1 2 3 4 C e l l : 5 5 5-5 5 5-5 6 7 8 E m a i l : s a r a h @ x y z r e a l t y. c o m T h e s e m a t e r i a l s a r e n o t i n t e n d e d a s l e g a l, a c c o u n t i n g, t a x, fi n a n c i a l, o r o t h e r p r o f e s s i o n a l a d v i c e. T h e r e a d e r s h o u l d s e e k p r o f e s s i o n a l a d v i c e with respect t o s p e c i fi c s i t u a t i o n s. C o p y r i g h t 2 0 1 6, R e a l E s t a t e B u y e r s A g e n t C o u n c i l ( R E B A C ) Visit the REBAC Online Print Shop via the Member Center of REBAC.net to order yours! Offer good through November 30, 2017. Connect online with fellow ABR designees for news, tips, and referrals! @abrebac REBAC.net 2 TBR October 2017
Buying a Home: What Your Buyer s Agent Does for You Help arrange financing Assist in locating sources of mortgage loans. Help examine how much buyers can afford, and may want to spend. Assist in comparing different financing options. Provide information on purchasing incentives that may be available. Educate and discuss the differences between being prequalified and preapproved for a mortgage. Most buyers finance their home purchase. While access to mortgages has improved in recent years, this is still an area where buyers can benefit from your help. First-time buyers, in particular, have no experience navigating the mortgage landscape. Even seasoned buyers, however, may be unfamiliar with how financing has changed since their last purchase. And every buyer has unique issues that will affect their options. In your buyer counseling session, discuss the five points listed above. Use this conversation to determine which of the following three categories best describes your buyer, as well as the appropriate next steps. 1. Ready to Buy If a buyer is in a good place to move forward, ask if they d like to contact your recommended lenders and point them toward any helpful resources to understand the process. The Consumer Financial Protection Bureau (CFPB), has several excellent tools, including: Your Home Loan Toolkit (a PDF download) Sample Loan Estimate Sample Closing Disclosure Visit consumerfinance.gov/know-before-you-owe/ 2. Credit Concerned Some buyers have sufficient income to purchase a home, but must improve their credit score before being prequalified, or preapproved, for a loan. The process starts by requesting a copy of their credit report (free at annualcreditreport.com or 877-322-8228) and checking for errors. There are numerous ways to improve a credit score some steps are quick and simple, while others require time and effort. Help this buyer get started, then follow up in a couple months to see if they re in a better position to resume their home search. 3. Requires Mortgage Assistance Many real estate professionals find deep satisfaction in helping buyers achieve home ownership. With a little effort, it s possible to find loans, grants, tax credits and other programs that help buyers clear the down-payment hurdle, cover closing costs, and/or reduce other expenses. Eligibility depends on 1) the buyer, and 2) the property. Tell your buyers about the many avenues to explore and, to whatever extent possible, learn about them yourself, to help facilitate their search. This includes: Federal Programs (for new loan originations) Federal Housing Administration (FHA) Veterans Administration (VA) Navy Federal Credit Union USDA Rural Mortgage Guarantee Program Closer to Home In addition to major federal programs, individual states, cities, and counties as well as non-profits and employers offer many other forms of assistance. To identify state agencies: ncsha.org/housing-help To search a database of roughly 2,400 homeownership programs: downpaymentresource.com/are-you-eligible/ TELL YOUR BUYERS! Mortgage assistance programs are often restricted to first-time buyers, which means the applicant hasn t owned a home in the past three years. Also, 37 percent of programs don t even carry this requirement. 1 1 Source: DownPaymentResource.com TBR October 2017 3
Buying a Home: What Your Buyer s Agent Does for You Assist in finding the right property Identify needs and wants in a property. Find appropriate available properties. Set up an automated e-mail alert system that immediately notifies buyers of properties that fit their requirements. Sort through inaccurate information about homes in the area. Provide ready access to all MLS-listed properties. Network with other agents for properties not yet in the MLS. Preview properties prior to showing. Help select for viewing only those homes that fit a buyer s needs. Aid in narrowing the search until top choices have been identified. Assist in analyzing the pros and cons of each property. Disclose all known latent material defects. Assist in evaluating properties for suitability, affordability, and resale value. For many buyers (and buyer s agents) this is the most enjoyable part of buying a home. It s a process that blends getting to know your buyers, understanding their priorities and preferences, and helping them find the perfect property. It can also be a time-consuming process. Many buyers enjoy scouring the Internet for potential properties. That s great, if they can augment your efforts! By the same token, don t make the mistake of shifting this responsibility onto their shoulders. It s not enough to say, I ll set you up for updates on new listings, and you let me know if you spot anything. Buyers want you to use your insider knowledge about available properties on their behalf. In fact, when surveyed, help find the right home to purchase is, overwhelmingly, the number one thing buyers want from their agent. (See below.) To save time reviewing and comparing properties, lean on the powerful tools in Realtors Property Resource (RPR ), where you can easily generate CMAs and property reports that provide a detailed and agent-branded snapshot of the property and the neighborhood. 2 (Did you know this is a free benefit offered to every member of NAR?) In addition to sharing these reports with buyers (printed handouts or emailed PDF files), you can also use RPR Mobile in the field. It s a great way to answer What about THAT house? while out viewing homes. Learn more at blog.narrpr.com. What Buyers Want Most from Real Estate Agents Source: NAR 2016 Profile of Home Buyers and Sellers Help find and arrange financing 3% Help determining how much homebuyer can afford 4% Help teach buyer more about neighborhood or area (restaurants, parks, public transportation) 1% TIP! Show buyers these tools in your counseling session to build enthusiasm about finding and comparing properties with you! Help with paperwork 8% Determine what comparable homes were selling for 8% Help with the price negotiations 12% Help find the right home to purchase 50% Help buyer negotiate the terms of sale 13% 4 TBR October 2017 2 Access to MLS records is dependent on MLS partnership with RPR. To find out if your MLS participates in RPR, go to blog.narrpr.com/ RPR partners.
Buying a Home: What Your Buyer s Agent Does for You Educate buyers on market conditions Educate clients on whether it is a buyers market or a sellers market. Show statistics on what percent of list price the sellers are currently receiving. Show trends, current average days on market, current absorption rate, and/or current months of inventory. Buyers may know what they d like to buy and how much they want to spend but they don t have a big picture perspective on the market. That s where you come in. Giving your clients deeper insights into current market dynamics will help them appreciate your professional experience and it will help shape their expectations at the negotiating stage. In the buyer counseling session, provide an initial snapshot of current market conditions. Show your buyers how you evaluate the local market, including tools offered through your MLS, or your brokerage. Two other free resources for evaluating market trends include: 2. Market Hotness Index Earlier this year, realtor.com launched a new Market Hotness Index that provides visual snapshots of market supply and demand, down to the zip code level. The proprietary index relies on buyer activity (property views/month) and active inventory data (See sample below.) Ohio Market Hotness Index By zip, for Q2 2017 1. RPR Market Activity Reports In addition to CMAs and Property Reports, you can use RPR to generate market activity summaries on active, pending, sold, expired, and distressed properties, including recent price changes. You decide whether you want a snapshot that goes back for days, weeks, or up to three months. Source: realtor.com There are also different mapping options for generating these reports. In addition to zip codes, neighborhoods, cities, or counties, you can create your own customized maps by drawing an outline, or using criteria like radius or drive time. It s another great way to show buyers where they stand, relative to sellers and which neighboring communities may put them in a more favorable position. To view (or download) data for your market, visit research.realtor.com/reports/hottest-markets. TBR October 2017 5
Buying a Home: What Your Buyer s Agent Does for You Guide clients through making an offer and represent their interests in negotiations Prepare a CMA so that buyers can make an informed decision when offering a price. Advise buyers on what comparable properties are selling for. Explain common contract contingencies. Obtain appropriate seller disclosures. Prioritize goals. Help create a negotiating strategy to achieve those goals. Ensure that buyer-clients receive and understand all state and federally required disclosure forms. Handle the completion of the offer to purchase or sales contract. Educate buyer-clients on the contents of the sales contract. Ensure that all appropriate additional forms are completed. Assist in getting the best property at the best price with the least amount of inconvenience based on current market conditions. Prepare for multiple offer situations and develop negotiation strategies specific to multiple offers. It s time to get serious. This is the biggest step in the purchasing process, when buyers sign on the dotted line and trust you to help them submit a reasonable and winning offer. In the buyer counseling session, you ll want to touch on the points listed above. When it s time to actually submit an offer, be sure to: Assemble the facts. Lean on the data you ve collected so far (from your MLS and RPR ) to develop an objective analysis of the property in question and how it fares relative to the market at large. If possible, present your buyer s offer in person (with the listing agent). Even if this isn t customary in your market, there are compelling reasons to do so. It s an excellent way to build rapport, make sure the seller(s) understand the strengths of your buyer s offer, and address any questions or misunderstandings. Even if you don t personally present the offer, at a minimum, have a brief conversation with the listing agent, pitching its strengths and adding any information that will help move the negotiation in a positive direction. Develop a negotiating strategy, based on the 1) property, 2) market conditions, and 3) your buyer s position and priorities. See the chart below for some strategies to consider: Strategies for a Buyers Market Keep up-to-date on price adjustments Shop around for good mortgage terms Request contingencies or extras like a home warranty Ask the seller to help with closing costs Shorten the time for the seller's acceptance All cash or a mortgage pre-approval provides even more leverage than in a seller s market Strategies for a Sellers Market Obtain mortgage pre-approval before making an offer Offer the list price or more Make the first offer the best offer as there may not be a counter offer or another opportunity Minimize contingencies Don t ask for the seller's help with closing costs or financing Pay cash for all or most of the purchase Source: The ABR Designation Course 6 TBR October 2017
rse Buying a Home: What Your Buyer s Agent Does for You Get buyer-clients to closing and serve as a trusted real estate resource Recommend inspectors, lenders, attorneys, and other professionals as necessary. Be an advocate and advisor during the closing process. Review and discuss home inspection concerns. Monitor and communicate required contract deadlines to ensure they are met. Assist in coordinating communications between the listing agent, lender, attorneys, title company, appraiser, and other professionals. Accompany buyer-clients on the walk-through prior to closing to ensure the property is in the same condition as when contracted. Remain a life-long trusted advisor regarding real estate questions, needs, or concerns. Your buyer is under contract. Now it s time to help them reach the closing table. If you re fully committed to buyer representation (and want to be compensated for your efforts) this is not the time to relax! Among your top priorities: BUYING A HOME What Your Buyer s Agent Does Immediately schedule home inspections (and make sure your buyer attends) Establish a timeline for completing any buyer s contingencies Help arrange financing. 1. Assist in locating sources of mortgage loans. 2. Help you examine how much you can afford but how much you may want to spend. Monitor the seller s completion of their contingencies 3. Assist in comparing different financing options. 4. Provide information on purchasing incentives that may be available. 5. Educate and discuss the differences between being prequalified and preapproved for a mortgage. Be sure your buyers understand they need to stay on top of details too, especially finalizing their mortgage and applying for property insurance. Assist in finding the right property. 6. Identify your needs and wants in a property. 7. Find appropriate available properties. 8. Set up an automated e-mail alert system that immediately notifies you of properties that fit your requirements. As closing approaches, remind them about the CFPB s sample Closing Disclosure form (at consumerfinance.gov/ know-before-you-owe), so they understand how to review their loan documents (three business days before closing). 9. Sort through inaccurate information about homes in the area. 12. Preview properties prior to showing. 13. Help select for viewing only those homes that fit your needs. 14. Aid in narrowing your search until you have identified your top choices. 15. Assist in analyzing the pros and cons of each property. 16. Disclose all known latent material defects. 17. Assist you in evaluating properties for suitability, affordability, and resale value. Educate you on market conditions. 18. Educate you on whether it is a buyers market or a sellers market. 19. Show statistics on what percent of list price the sellers are currently receiving. 20. Show trends, current average days on market, current absorption rate, and/or current months of inventory. 10. Provide ready access to all MLS-listed properties. 11. Network with other agents for properties not yet in the MLS. With any luck, closing will be finalized without a hitch and your buyers will be beaming with warm thoughts about their new home and how you helped them achieve their goals. AFTER CLOSING: Extend those positive closing day vibes by giving your buyers electronic copies of their closing documents. When January rolls around, reach out to them again, either sharing hard copies or a secure/encrypted link, to help them prepare and file their tax return. for You Continued on the back The Accredited Buyer s Representative (ABR ) designation is awarded by the Real Estate Buyer s Agent Council (REBAC), a subsidiary of the National Association of REALTORS (NAR). To learn more about REBAC and access various home buyer resources, please visit REBAC.net. A Final Note You can download copies of Buying a Home: What Your Buyer s Agent Does for You in the Member Center at tinyurl.com/tbr-abr.1 This two-page consumer handout includes all 39 items outlined in this issue. It s one of MANY resources that REBAC offers exclusively to ABR designees. If this shortened link doesn t work for you, please log into the Member Center at REBAC.net, go to Consumer One-Sheets, and select Buying a Home: What Your Buyer s Agent Does for You under Choosing the Right Representation. 1 TBR October 2017 7
Real Estate Buyer s Agent Council, Inc. 430 North Michigan Avenue Chicago, IL 60611 1-800-648-6224 REBAC@realtors.org TODAY S BUYER S REP October 2017 Volume XXVI Number 10 Why Attend the REALTORS Conference & Expo? Friday, November 3 through Monday, November 6 in Chicago This once-a-year four-day event includes: THREE SPECIAL PRE-CONFERENCE COURSE OPTIONS Accredited Buyer s Representative (ABR ) Designation Course Pricing Strategy Advisor (PSA) Certification Course e-pro Certification Day 1 Course LARGEST TRADE SHOW IN REAL ESTATE Nearly 400 exhibitors! Plus Meet 23-time Gold Medalist Michael Phelps at NAR Booth (#2825) and hear him speak at the General Session Visit the ABR booth (#2425) for a chance to win special prizes ABR, GREEN, AND SRES NETWORKING AND AWARDS RECEPTION Always a highlight of the conference social scene! MORE EDUCATION OPPORTUNITIES 100 sessions featuring nationally recognized speakers, trainers and industry experts. Don t miss out! Visit REBAC.net/courses/conference-expo today!