In last month’s edition of REM, I wrote a column entitled The real point of buyer agency. I have since received a wide range of comments and inquiries. I am thrilled that brokers and salespeople from coast to coast are demonstrating such a keen interest on a subject that is long overdue.
I’m going to dip my toe into uncharted waters today and risk ruffling a few feathers. If you choose to read on from this point, I would ask that you read the entire article, and not stop at a point where you may find yourself at odds with my opinion. The reason for this will become self-evident.
Last month, my main point was that the Buyer Representation Agreement is a document that protects the buying public, but our approach to it is not consistent with that truth. Today I would like to explain why our industry as a whole has led us down a path that has been inefficient and ineffective.
For far too long we have bought into the notion that spearheading our prospecting approach towards obtaining listings is the be-all and end-all. This notion, I will argue, is simply wrong.
Not only is it wrong, I am suggesting that the opposite holds more water. Specifically, we would be much more effective prospectors if we reverse our thinking and prospect for buyers first. Why?
1. Buyers are easier to find
Currently Toronto and Vancouver are experiencing a sellers’ market. By definition, this means there are many more buyers in the market looking for a home than there are sellers who are selling their home. In the Greater Toronto Area, there are approximately 15,000 listings on the Toronto Real Estate Board at the time of this writing. Simultaneously, there are over 43,000 members. That’s about one listing for every three members. Yet, almost every training session that deals with prospecting focuses on approaching sellers. All the while, there are likely tens of thousands of buyers looking for a home, the vast majority of which have not yet hired an agent to represent them. In addition, buyers are more willing to approach you and inform you that they are interested in buying real estate, than sellers are in letting you know that they are thinking of selling their home.
2. Buyers are easier to sign under a BRA than sellers are under an MLS listing
From 1986 to 1993, I considered myself a “listing agent”. In 1993 I reversed that approach and became a “buyer agent”. After 29 years of active service in this industry, I can say with absolute certainty that obtaining a BRA from a buyer is significantly easier than getting a seller under an MLS listing agreement. This is true with one caveat; if you give the buyer enough reason why they should.
3. Buyers are easier than sellers to develop a relationship with
We all understand that we are in a relationship business. We also understand, due to our nature, all relationships develop over time. The greater amount of time we spend with another human being, the greater potential we have of deepening and strengthening that particular bond. That being said, it is an accepted truth that working with buyers is more time-consuming than working with sellers. (I actually disagree with this perception, but I will have to leave that topic for another day). But isn’t that the point? By spending more time with our buyers, we develop a stronger relationship with them. After the bonds have been formed and their level of trust and respect for us have risen, that would be a more powerful time to seek out their listing.
4. Buyers give twice as many referrals as do sellers
I read this statistic a number of years ago on NAR’s website and I believe it to be true to this day. The reason it’s true is because of the high level of trust an individual must have in us before they are willing to refer us to their friend, relative or co-worker. Trust comes as a natural by-product of a deeper and stronger relationship, which is exactly why buyers give more referrals.
I am by no means suggesting that we should not be actively seeking listings, quite the contrary. What I am saying is that by first obtaining a repertoire of buyer contracts, we are in a much stronger position to obtain a greater number of listings with much greater ease.
In my next column I will provide you with four more reasons why working a buyer first plan is a more powerful and a more highly leveraged position.