On this 229th episode of my Monday Morning Pep Talk, I will break down what you'll need to address in your business to prepare for the changes our industry will experience this summer. Today, we'll start with the buy side and we'll focus on what you can do to best demonstrate your unique value proposition to prospective buyer clients by mastering the Initial Buyer Consultation.
Before we get into the content, I've got a few reminders and updates that I feel I need to continue to express so when you listen to this MMPT you'll be even more prepared mentally for the upcoming changes. If I am redundant, it's by design:
- I want to remind you about "The Law Of Compensation" according to Bob Burg via his book The Go Giver. Your compensation is determined by how many people you serve and how well you serve them. Your ability to "serve" is based on your value proposition. As we move through this call, you will hear the word "value" over and over.
- Pages 28-29 of the NAR settlement state that a buyer broker is required to have a signed buyer agency agreement with a negotiated commission structure signed prior to showing properties.
- On page 28-29 of the NAR settlement, a buyer broker can only get paid what has been negotiated with the buyer even if the listing agent/seller offers a higher compensation amount.
- Your fee will not be protected by the MLS "advertised compensation field" so all compensation must be verified, negotiated, documented and agreed upon by all parties.
For those of you in the 18 states where many of these changes have already been in practice, this transition will not be as significant but for those of us in Illinois and other states, this process will require a complete upgrade to how we transact with buyers. The first area that needs an upgrade is the Initial Buyer Consultation process.
Not unlike a listing presentation, the initial buyer consultation process will need to occur and result in a signed buyer agency agreement. That agreement must include a negotiated commission structure. I see the initial buyer consultation being broken down into several parts and the presentation should be done in person or on a Zoom:
- Prior to the initial buyer consultation, send a digital marketing brochure complete with a synopsis of your experience while reconfirming the appointment. This would be a great time to include testimonials.
- "The Listening Presentation": the portion of the consultation where you decipher the needs and goals of the buyer. Why are they moving? What is their timeframe? Do they have a property to sell? Do they need to sell their property first before purchasing a new property? This is when you connect with the buyer(s) and the relationship is formed. The presentation will take on a different tone if you have already worked with them and there is already a trusting relationship that exists.
- Expectations Setting: describe the current real estate market and the seasonal trends that are apparent in the current market. You start to weave in your value on how you've helped your clients navigate the market.
- Discuss Financial Qualification: Where are they in the mortgage commitment process? Are they cash? Will they be getting a mortgage? Do they have a mortgage lender? Do they need an introduction?
- Search process: Describe your search process and how you evaluate the market to identify properties of interest. Again, you are weaving in your value throughout this part of the conversation. Talk about how successful brokers navigate low inventory markets and how properties get identified.
- Contract to Close process: this is where most brokers need to summarize and explain the value a talented broker brings to a transaction. How many steps/tasks does your process include? What are the major transaction milestones? "I have 17 major milestones and 121 sub tasks within those transaction milestones between contract to close". (This is just an example. Each broker and hyper local market has a different process). What can they expect from you post-closing.
- Discussion of Your Professional Fee: Present the buyer agency form, what it means and discuss your professional fee, timeframe and other business terms. Explain that you cannot start your search process and show properties until the document is signed.
- Signed Document: Once explained and negotiated, the document can be signed in person or via Docusign or equivalent.
- Follow Up: Post presentation, send them the signed document and the highlights of your presentation including next steps. Set up your search process.
- Introductions to your loan officer (if needed) and other service providers when needed.
At this point you move into your search process which will not be all that different. I encourage you to use this "reset" to completely level up all aspects of your business processes. I've presented these 10 steps of the Initial Buyer Consultation process at an extremely high level. For those of you that have been in this business for a while, you understand that there are hundreds of steps and tasks that it takes to get a prospect turned into a client and eventually to the closing table. Those of you that develop the best repeatable processes and provide the most complete and predictable experience for your clients will not struggle to explain your value and your fee. As a result, you will take market share in this new environment. For those of you that already have your processes in place, documented and in use, this is a real opportunity to create the dream scenario for your business.
My guiding principle for today is: Your Value Proposition is Only As Good as Your Processes.
Next steps? I would sync up with your accountability partners and really beat up your Initial Buyer Consultation Process. Get it out of your head and documented (Excel or Google Sheet). Each state, each local market, each association and each brokerage will have different requirements that address the NAR Settlement so hopefully you found today's call helpful as a high-level guide. If you are listening as a broker with us at Jameson Sotheby's International Realty, we will be updating Propel (our intranet site) with all of the changes and requirements as they happen.
Next week, we will discuss talking points on the importance of including a buyer's agent in the listing process.
