Last month in REM, I suggested that the commonly accepted notion of spearheading your marketing and prospecting approach towards sellers is obsolete. I offered an alternative suggestion that working with buyers first is a more powerful and a highly leveraged position. Today, I would like to offer four more reasons why I believe that’s true.
1. Once you work with a buyer, their listing becomes yours, or at the very least, yours to lose
When I am vying for a listing, there is a strong likelihood that I will be up against other agents chasing the same listing. I view that as my listing to win. In other words, I must be better, in some way, than my competition.
When I work with buyers first, I have a much better opportunity to develop a relationship so when it comes time for the client to list their home, I am the only agent they will even consider. That listing is now mine, unless I do something to blow it. It’s my listing to lose.
2. No competition
If you build your business around seeking out buyers first, you will find the field of competitors to be practically empty. That’s because only a very small minority of agents will take the time to get a buyer into the office, explain to their buyers the difference between customer service versus client service, and allow the buyer to choose the service that is best for them, all before showing that buyer a single home. If you put forth this time and effort, the amount of competition you come across will be minimal, if any at all.
In addition, you will have little or no competition when it comes time to listing your buyer’s house. After having already built a relationship with the buyer, in all likelihood, that buyer will naturally choose you as their listing agent. This is not always the case, but it is certainly very common. In this situation, you will not be subject to competing for that listing. Your relationship building in effect has served as your listing presentation.
3. The buy side of the transaction is the easier side
It’s the side of the transaction that almost everybody prefers. I can’t honestly say that I have ever had a seller who enjoyed the selling process, but practically all my buyers over the years have enjoyed some aspects of the buying process.
We pride ourselves over the rest of the animal kingdom because we possess a cerebral cortex; that part of the brain responsible for logical thinking. However, we have all experienced what happens to logic when shown something we fall in love with, be it another person, a pair of shoes or a new home. How many times in your career have you witnessed emotion override logic? The emotion a buyer experiences often serves to assist us in completing that deal, whereas the emotions a seller experiences normally hinders our efforts in that task.
4. Working with a buyer often results in a higher commission than working with a seller
Not always, but most of the time. However, this is market specific. As an example, the GTA is currently experiencing a strong sellers’ market. There are approximately 15,000 listings on the Toronto Real Estate Board and over 43,000 TREB members. About one listing for every three salespeople. By virtue of this fact alone, the law of supply and demand dictates that there is a downward pressure on listing commissions. Simultaneously, the vast majority of co-operating broker’s commission offered by listing brokers on MLS remains at 2.5 per cent.
As an added bonus, when it comes time to list your buyer’s home, and they have already made the choice of using you as their listing agent, you are now in a stronger position to negotiate a higher commission on the listing side, than if you had approached the seller initially, without first having the opportunity of building a relationship.
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.
Ken Wilder is a 29-year veteran in the real estate industry. In 1993 he pioneered buyer agency. Since 2000, Ken has been a motivational speaker, coach and author and has spoken to more than 20,000 real estate agents and brokers across the country. Email Ken.
