Deeded Interest: A Delicate Dance
Since I started this column, it’s been my goal to offer sage and helpful advice regarding the business of real estate. Also, in part, because I find there are many misconceptions about how it’s all supposed to work and brokerage in general. Clients admit privately the process can be confusing and intimidating. After all, they are being asked to “hand over” their largest tangible asset to a third party in hopes of a good outcome. For their part, brokers hope that their clients will consider their time, experience and expertise to get the job done.
Ideally, it’s a dance of mutual respect based on trust. It’s when that relationship breaks down or is abused that the proverbial turd hits the fan. That obviously can create an unfortunate set of circumstances for clients, but perhaps surprising to some, can be equally challenging for brokers. Therefore, I beg your indulgence this go ’round as I talk about our business from the perspective of the broker. I do this in an effort not to selfishly pontificate or ask for special consideration for me and my fellow brokers, but rather to educate, make the process smoother and more transparent, and, in the end, hopefully help buyers and sellers, as well.
To begin, many buyers aren’t aware realtors in Colorado enjoy several types of agency. What that means simply and in layman’s terms is a broker can act solely on a buyer’s behalf, or as the seller’s representative or even both. In Colorado it is legal for brokers to transact for the buyer and the seller. In that instance, they are trained to treat each party equally or disclose which party might have the advantage as a result of who came first or what arrangement they have.
Let’s consider the following scenario: Bob is looking to buy in a specific area. His search begins either online at his desk or on his smartphone while driving around. When Bob sees something he likes, he has two options: To call the broker on each sign or call a single broker to act as his sole representative. By doing so, Bob establishes a single point of contact with a local expert that can provide him all options within his parameters, including other homes or lots not formally listed or currently in the MLS.
So Bob now has his own broker in his corner, ready to negotiate and protect his interests as a buyer. He might think he’s being clever by casting a wider net, but in the end it’s extremely inefficient and can create problems. Inexperienced or unscrupulous brokers looking for both sides can focus on the extra commission rather than providing proper agency and protection. Good brokers know how to properly navigate those deals, but some states don’t allow dual agency arguing conflict of interest. Keep it simple and empower yourself.
Some other helpful rules include respecting a broker’s time by knowing your price point and being prequalified with a lender. Don’t ask to see homes you know you’ll never buy and don’t ask to see them last minute. It’s tough on the owners who need to pick the underwear off the floor and make the bed. Being pushy or inconsiderate might even work against you if you decide to bring an offer. If you engage with a local realtor, be prepared to make offers and buy within 90 days. If your broker senses they have become less of an agent and more of a tour guide, they are likely to put your needs on the back burner and move on to the next client.
When you do choose an agent, don’t contact other sellers or agents. Let your own broker do the work and handle all the back and forth. If they miss something you might be interested in, bring it to their attention and let them run it to ground. Take it from me, good brokers appreciate the feedback, the input and their client’s participation. For example, if you pull up to the curb or open the front door and know immediately it doesn’t work for you, ask your broker to tactfully and politely explain it’s not a fit and move on to the next one.
Be prepared and don’t be offended if your broker asks you to sign an exclusive agreement to represent them as a buyer’s broker. Sellers must sign listing agreements and, likewise, buyer’s agreements just help to say, “You’re my guy (or gal). I trust you. I’ll be loyal to you.” I can’t emphasize enough how much a client’s fidelity means to a broker. It demonstrates we are valued and respected, and ensures your needs are the first thing on our mind when we wake up in the morning. If your agent isn’t getting the job done, voice your concerns and, if necessary, tell them to their face (not by text or email) before moving on to the next professional.
For sellers, don’t kill the messenger. From the start, the selling broker needs to be a straight shooter, sometimes telling you things you might not want to hear. Starting with the asking price, suggested repairs and upgrades, even staging and cleaning, the job of properly preparing a home for market can be a daunting task. It’s a lot to digest, but don’t take it personally. Listen, then heed the advice. And please, if you have your own ideas of value or are reluctant or don’t really need to sell, don’t put it out there. You’ll save everyone a lot of time and money.
Don’t ask for a commission reduction. Six percent is the industry standard and is only earned when the deal closes. Listing brokers then split that money with the buyer’s broker. When you deduct the up-front costs of photography and advertising, add in desk fees to the brokerage firm (typically 33 percent), and then subtract taxes, your broker’s windfall is likely much less than people realize. I tell my clients that my net commissions are my salary and what I use to pay my bills and feed my family. Sellers should want to incentivize and motivate their selling agent, not to mention reward the broker that brings them the buyer.
Again, it’s a delicate dance and like any healthy relationship, it requires trust, mutual respect and, above all, effective dialogue. It might sounds trite, but remember the Golden Rule, stated simply, treat others the way you wish to be treated. The best clients respect the professional they’ve chosen to represent them, carefully consider their advice, suggestions and remain loyal to them. The best brokers work their asses off to earn that respect and loyalty, know their given markets, and always remember why they have two ears and one mouth.
Scott Bayens is a broker with Aspen Snowmass Sotheby’s International Real Estate with more than a decade of experience with buyers and sellers. Scott can be reached at firstname.lastname@example.org.
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