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Dealing with Unrepresented Buyers in Real Estate | Protecting Your Sale & Earnings Post NAR Settlement

 

When you're a listing agent today and coming into the NAR settlement, which will happen in mid-July, but you're going to start to see this already: You're going to see a rise of unrepresented buyers.

These are going to be buyers that are going to be knocking on your door as a listing agent saying, I'm unrepresented. I want to make an offer on your listing. Are you going to, as the listing agent, treat them the same as if they're represented, or are you going to treat 'em differently?

This is interesting. I just saw a top agent, he did an internal study with his team, and he found…

70% of the deals that came from unrepresented buyers in his market where people knock on his door failed.

So think about that, and I believe that to be true because they just don't have somebody walking them through the process. When I'm sitting with my seller, I need to have an unrepresented buyer conversation going forward. And here's what that conversation might look like:
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“Mr. And Mrs. Seller, there's been some changes with the way that we're selling real estate based on an NAR settlement. You probably have heard about it on the news, but basically what it means is that buyers are going to now have to sign an agreement with their agent, and that agreement's going to include what they're going to be paid. Now, a lot of people are going to still come to us and ask for us to pay that representation fee in their offers, okay? But there's going to be a group of buyers that want to forego representation and just kind of knock on our door and present us with an offer.

First of all, I have to present all offers, and I will, of course, I'm going to give you every offer that comes to me, but I also want to clue you in on a couple things, and that is when we're dealing with an unrepresented buyer, there's a higher likelihood of deal failure. The reason is because they don't have somebody walking them through the financing, walking them through the offer process, walking 'em through the highs and lows, emotionally talking about disclosure statements and inspections and appraisals, and all the things that escrow that go along with this entire process.

So when you see that and you have an unrepresented buyer, we're going to have to make a couple of decisions. First of all, do you want to accept an offer from an unrepresented buyer? Because we know that the number of deals that fail with them is higher. So are we going to say, no? We want you to go get representation from an attorney or another agent? Are we going to do that?

Second question is, and it's important for me, is if we're going to accept offers for unrepresented buyers because they're going to come to me and basically I'm going to have my work doubled because I'm going to be the one holding their hand, I'm going to be the one with them on inspections, helping their appraiser get into the house, telling them about how to actually write the offer, getting them in an escrow, get them in closing. My work kind of doubles, and because of that, I would have to charge a little bit more. It's not going to be a full fee, but it's got to be something. So if I'm charging 3%, maybe I'm going to add 1%. If it's an unrepresented buyer, you're still saving money because if we had a represented buyer, they'd still be asking you to pay part of their fee, but there's got to be something paid because it's a lot more work.”

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I truly believe you have to charge more for an unrepresented buyer, and I think sellers will get it if you have the conversation. I also think you have to consider whether you'd even accept an offer from an unrepresented buyer. These are important conversations that we're going to have to start having in this industry. I want you to start having them right now. Don't wait until July. Do it right now with every seller, because you're going to start to see these numbers rising.

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+ 32 Years of Real Estate Sales, Management, and Coaching Experience
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