Chuck Paustian is a former REALTOR® Magazine senior editor.
Focus On: Buyer Representation
REBAC milestones mirror growth of buyer representation.
November 1, 2005
In a little less than three decades, buyer representation has grown from a business concept on the fringe of the real estate industry to a common way of doing business.
NAR’s 2004 Profile of Homebuyers and Sellers report, based on responses from 8,205 consumers who bought a home between August 2003 and July 2004, found that 64 percent of homebuyers used a buyer representative, up from 47 percent in 2001. Of the survey respondents, 42 percent had a written agreement with their agent.
Still, Bill French, ABR®, broker-owner of William French Buyers Real Estate Services Inc. in Chesterfield, Mo., remembers the bemused looks he used to get when he explained the business model—exclusive buyer representation—behind the company he started in 1977. His was one of the first companies to embrace the concept. He says people couldn’t understand why he didn’t want to accept listings, but his results speak for themselves.
His company did $118 million in sales in 2004 and is on pace to exceed that total this year. French also notes his business used to come almost exclusively from people moving to the St. Louis area, but a growing number of local residents are using him to find homes. He says that’s an indication of the increasing popularity of buyer representation.
Indeed, the Real Estate Buyers Agent Council Inc., founded in 1988 to promote buyer representation skills and services, this year passed the 50,000-members milestone. The council, an affiliate of NAR since 1996, awards the Accredited Buyer Representative (ABR®) and Accredited Buyer Representative Manager (ABRMsm) designations and has had more than 150,000 people participate in its educational courses.
“Now that people have been educated about buyer representation, they don’t see a company like mine as an aberration,” says French.
A couple of factors have driven the growth of buyer representation. Beginning in the late 1980s, groups, including NAR, state and local associations, and consumer advocates, started examining how the interests of buyers were being represented under the traditional agency/subagency model. In the 1990s states began adopting legislation that established the designated and disclosed dual agency models and outlined the duties of practitioners based on the role they were assuming, such as seller’s agent, buyer’s agent, dual agent, or transaction facilitator.
Of course, there’s also been an increasing demand for buyer representation from consumers. “You have educated consumers, and they like the idea of having their own representation,” says James H. Crocker Jr., principal broker at Wianno Realty in Osterville, Mass., and president of the Cape Cod & Islands Association of REALTORS® Inc.
But as buyer demand for representation grows, so do the stakes for practitioners who want to work with them. “If buyer representation is going to be a business model that more practitioners want to operate in, they need to get training continually,” says French.
“I don’t know of a better course for understanding buyer representation than the ABR® program,” says Crocker, who’s completing it. Some 2,000 members, from a variety of boards, have taken the two-day, basic ABR® course through the Cape Cod & Islands Association.
And, French says, when trained practitioners work with educated consumers, buyers get a better transaction all the way around. He adds that buyers’ understanding of and satisfaction with their real estate transaction increase when they work with their own representative.
Jules Wade, executive vice president of the Memphis Area Association of REALTORS® Inc., agrees. He sees a correlation—though not necessarily a cause and effect—between the impact of increased buyer representation and fewer buyer complaints filed with his association against practitioners. Although he doesn’t have specific figures available, Wade estimates the association receives about half the number of complaints from buyers it did 10 years ago.
“Buyer representation puts the industry in a more professional light,” says Bob Churchill, ABR®, GRI, Broker-Owner of Churchill Associates Inc., an exclusive buyer representative in Yarmouthport, Mass., and president-elect of the Cape Cod & Islands Association. “This business model bodes well for the real estate industry in terms of higher customer satisfaction.”
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Updated: August 22, 2019