How are you compensated?
EcoRealty does not expect compensation unless our buyer client has successfully purchased a property with our help. In 90 percent of such sales, we receive a co-broking commission from the listing agency for bringing a qualified buyer to the table and for shepherding the deal to closing. This is often 2% or 3% of the sale price.
Moreover, unlike traditional brokers, we also help our clients purchase For Sale by Owner (FSBO) properties (the other 10 percent of sales). We usually build our commission into the offering price when dealing directly with the owner-seller. Most often such private sellers are willing to pay our commission. See the Buyer Agency Contract for further details.
On FSBO properties, it sometimes happens that the buyers have to pay my fee themselves (competing bids; a property that is not advertised anywhere and that the buyers have found through a friend). In such cases, unless I've been working with the buyers for a few years, I cut my fee in half, from the usual 2 percent of sale price, to one percent of the sale price.
If I see a For Sale by Owner property advertised, should I contact the owner first?
No, it's far better if I make the first contact. I can usually get the seller to agree to pay my fee if I make the first contact. And the seller then tends to accept me as your representative. This certainly goes for all FSBO properties advertised in CraigsList, the newspaper, online real estate sites, lawn signs, etc. Let me make the first contact. Otherwise, it will create complications later in the transaction and may slice my compensation in half (with no gain for the buyers).
Sometimes, though, you may come across a property being sold by a friend or a relative or a neighbor that is not advertised. In such cases, the buyer can be the main contact with the friend initially, but my services will be no less valuable. Here a reduced fee (one percent of sale price paid to me by the buyers) is usually in order. Think of it not so much as a fee for the transaction, but as compensation for the entire process of finding the right home with a well-informed and trusted advisor who is working in your best interests. It is a journey we take together with a common goal, and it is, in a sense, irrelevant how the seller chooses to market the house.
Can you show us as many properties as traditional realtors can?
Yes, we can actually show you more properties. We are members of a cooperative organization of realtors called the Multiple Listing Service (MLS) Property Information Network and we can show you every property on the market. Our clients are often the first buyers in the door of many listed properties.
We also show clients For Sale by Owner properties. Many sellers often test the waters themselves before listing with a realtor, and we generally monitor this private market as well. Ten percent of our sales are typically For Sale by Owner properties.
What does "Buyer Agent First Showing Only" mean (on the MLS listing sheets)?
This is a condition often laid down by listing agents in MLS listings. It simply means that if you saw a property for the first time with a listing agent (does not include open houses), and if you then engaged a buyer agent to negotiate for you and to evaluate the property, this buyer agent would not be given a co-broking commission by the listing agent. In such a situation, the buyer would have to compensate the buyer agent. If you've been working all along with a buyer agent, the problem does not arise.
Some have questioned the legality of this, since the buyer should have a right to full representation, with the counsel and advice that a buyer agent can provide.
Do we have to sign a buyer agent contract with you?
I have a contract that I like buyers to read, so that they understand my responsibilities and theirs. But I don't require that buyers sign one with me. Since the aim of being a buyer agent is to establish a relationship of trust with the buyer, it seems counterintuitive to enforce this with a written agreement, complete with veiled threats if you don't honor the agreement. I prefer a verbal agreement to work together in good faith. If we don't seem to be a good match for whatever reason, we can talk about it and go our separate ways.
Most traditional agents seem to offer buyer agent services now. How does this differ from your service?
The traditional agencies saw the way the wind was blowing and quickly changed course from opposition to buyer agency to embracing it. Most smart buyers are insisting on full representation today. For why should they not get the same level of professional advice and information and service that the seller gets?
But these self-styled "buyer agents" are often showing buyers listings that are being offered by their own agency and so they are dual agents, working for both the seller and the buyer. Even if the listing is not their own, they are legally subagents of any seller who has contracted with their agency and are required by law to act in this seller's best interests.
So this puts them in a bit of a quandary. They get out of this by disclosing to the buyer and the seller that they are a "dual agent" and that they cannot give the usual advice to either the seller or the buyer. So neither party gets the professional advice that should be part of full client service. All this so that the agency can double-dip and get commissions for both sides of the deal (buyer and seller). It is only a matter of time, I believe, before this is outlawed in Massachusetts. It is patently unfair to both buyers and sellers, both of whom have a right to full representation and full professional counsel.
Is buyer agency a new wave in real estate?
Yes, for residential sales it has only been around since the early 1990s. Previously, you walked into a real estate agency looking to buy a house, and the realtor who showed you houses may have been a perfectly honest person, but he was in fact a subagent of the seller. How individual realtors dealt with this situation varied, but they often formed a real friendship with the buyers they worked with and wished they could stop up their ears when the buyers spoke freely of how high they'd be willing to go in price, or how they could get extra money from a parent or relative. The realtor wished he could stop up his ears because he is legally required to pass on to the seller's agent any information that may be advantageous to the seller. This was an unnatural, intolerable situation.
Buyer agency for residential sales emerged in the early 1990s in many states, with the enthusiastic support of Ralph Nader and other consumer advocates. After fierce initial opposition by the real estate industry and one landmark U.S. Supreme Court decision, buyer agents have become an integral part of the real estate landscape.. But only exclusive buyer agents provide full representation and they alone are free of conflicts of interest. They do not need to plug up their ears or cover their eyes or mouth (as in the three monkeys). They can speak freely with their buyer clients and vice versa.
Won't I hear of new listings earlier if I work with a large agency that has most of the listings in town?
If that happens, it is quite rare. And it's rare because it violates the regulations of the Multiple Listing Service, a cooperative network that no real estate agency can survive outside of. I often hear from listing agents that they have a property coming up that might fit my client's profile, but they refrain from telling me anything more than the town and the property's features. Probably they do the same with their colleagues. But even the listing agent cannot show the property to his own clients or customers until it comes on MLS. Occasionally the seller will inform friends about the listing and let them in the house earlier. But usually it is in the seller's best interests to give all interested buyers an opportunity to make a bid on the house.
EcoRealty was one of the first in the Valley to provide daily email updates of new listings. Now with MLS's WebHunter, this is fairly common. We are still one of the only agencies that provides our clients access to an MLS extranet, where clients can access MLS itself and see new listings (with addresses) the moment they come on, as soon as any realtor can.
It is a very tight market here in the Valley and buyers have to be quick on their feet, but if they are energetic and committed buyers and in regular communication with us, they do get an opportunity to view virtually any property that comes on MLS--with the rare exceptions of properties previewed by friends or relatives of the seller.
How do you deal with environmental health issues differently from other realtors?
We bring a greater breadth of knowledge to the
property regarding environmental health issues. Many of our clients, or their
children, have allergies or asthma or other environmental sensitivities, and we
look at properties with a trained eye for signs of, say, mold or moisture or
offgassing materials. In the same way, we look at the drainage of the site,
circulation of air around the exterior of the house and in each room, water
supply, any potential biohazards. We check nearby powerlines with a gaussmeter
for electromagnetic field strength and nearby cell towers with a radio-frequency meter. We follow environmental health news for
Hampshire and Franklin counties, and have marked certain areas with red flags on
our atlases (due to polluted soil, microwave transmittal towers). We offer, to
clients with young children purchasing an older home, far more information and
advice on lead paint abatement than most realtors. We are not, though, experts
or qualified air quality or water quality experts, and we generally refer the
buyer to qualified professionals when we suspect a problem in a house our buyer
is making an offer on.
Are you "green" in other ways, apart from this environmental health focus?
Yes, we have worked with organic farmers, horse and llama farmers interested in a more organic approach, clients interested in green building or in cohousing, environmental educators and nonprofits, but most often with clients simply interested in a healthier, more natural living environment.
We have a fairly good layperson's
understanding of passive solar design, energy efficiency, daylighting, and
ventilation, especially since light and air are such important features of a
How do I know what price to offer on a property?
We generally do a rough estimate of the fair market value of the property on the spot, if the buyer is interested in making an offer. If time permits, we send the buyer data on recent sales in that town. We also try to find out the price the current owner paid for the property.
We then price out the property by two or three different methods to arrive at the fair market value. This is usually provided in writing (often in an email). On the basis of this, we suggest a negotiation strategy. This is perhaps a buyer agent's most critical service to his or her client, for it could save the client many thousands of dollars if the property is grossly overpriced.
But the buyer client makes the final decision on what is
What towns do you cover?
We cover all of Hampshire and Franklin counties, as well as occasional short forays across the two-county border into Berkshire, Hampden, and Worcester counties. We refer clients who wish to also search in southeastern Vermont or southwestern New Hampshire to an excellent exclusive buyer broker in Brattleboro, Vermont. We also do nationwide referrals to other exclusive buyer agents.