The following is video produced by the National Association of Exclusive Buyer Agents. The National Association of Exclusive Buyer Agents (NAEBA) is an organization of real estate professionals who have chosen a business model that requires that they represent only home buyers, never sellers. Learn more about exclusive buyer agents by watching the following 10-minute video.
The following is the transcript of the video about exclusive buyer agents.
Jackie: These days, there are certainly plenty of homes on the market to choose from, but as a buyer, how do you choose who will represent you in your search and how do you know the real estate agent you've chosen has your best interest at heart? The truth is, they may be really representing the seller or both. That's why the National Association of Exclusive Buyer Agents or NAEBA, was created, and we're happy to have joining us today, Benjamin Clark, the President of NAEBA, and Kimberly Kahl, Executive Director of NAEBA. Welcome to both of you.
Kimberly Kahl: Thank you very much.
Benjamin Clark: Thank you.
Jackie: Benjamin, first of all, tell us why it's important that buyers of properties have their own representation.
Benjamin Clark: Jackie, buying a home is one of the largest financial decisions most people will ever make, and in most cases, the seller has hired a professional agent to represent them, trying to get them the highest price and the best terms for that seller. It only makes sense that a buyer should have somebody on their side of the table trying to get that property at the lowest price and the best terms for the buyer.
Jackie: Kim, tell us how the National Association of Exclusive Buyer Agents came to be.
Kimberly Kahl: In the mid-1980s, a group of real estate agents felt that buyers deserved the same representation as sellers. Because prior to that date, all real estate agents, even if hired by the buyer, actually worked for the seller. They formed exclusive buyer agency in the mid-1980s, and then in 1995, formed the National Association of Exclusive Buyer Agents. This allowed them to pool their resources so they could create even more consumer education and advocate for the consumer in Washington.
Jackie: It would certainly seem that today's economic situation would make this even more of a necessity, and for more, let's go to this 21st Century Business Field Report.
Steve: Buying a home is one of the most significant purchases people make in their lifetime, but most homebuyers are unaware of their options before they begin the process, which often leads to them getting a lower level of representation than they would had they been better informed.
Karen: Our experience with our exclusive buyer agent was definitely better than any other experience we've ever had in any large purchase.
Steve: Exclusive buyer agents advise, protect, and guide consumers through the home-buying process. They can negotiate more aggressively to get the home desired at or below true market value.
Joel: If I hadn't used an exclusive buyer's agent, I am confident that we wouldn't have gotten such a nice home and I'm sure we wouldn't have gotten such a nice deal on it.
Kristen: I would only work with exclusive buyer's agents from now on. The experience was amazing.
Karen: We definitely achieved a much better outcome because there was someone on our side 100% of the time.
Steve: For 21st Century Business, I'm Steve Michaels reporting.
Jackie: Ben, let's get specific. What is an exclusive buyer agent and how does an exclusive buyer agent differ from traditional real estate agents or even from other buyer agents?
Benjamin Clark: Okay. An exclusive buyer agent not only does not list property themselves, but they work for a company that takes no listings and never represents sellers. A traditional real estate agent works in a real estate office that has listings. They have inventory to sell. Because they have that inventory to sell, there may be incentives to push that inventory, there may be conflicts of interest that arise if they're trying to represent both the buyer and the seller. An exclusive buyer agent works for a company that has no listings so you avoid that conflict of interest, and you can be assured that your agent will always be looking out for your best interest.
Jackie: Then there's something called a buyer agent, but not an exclusive buyer agent.
Benjamin Clark: Right. They work for those traditional brokerages. They may work underneath a listing agent, they may field phone calls from an agent who has a particular property or properties to sell, or a company that has those properties to sell. The conflicts that can arise there is maybe in the office. They're trying to purchase one of the company's listings and the fax machine, the e-mails, the phone conversations can be overheard by that other party that's actually trying to get you to pay the most money for the home.
Jackie: Good point. Kim, what about financing? Will an exclusive buyer agent help clients find financing?
Kimberly Kahl: An exclusive buyer agent will certainly work with people to find financing. If you want to find it on your own, they will do that, as well, but the nice thing about working with an exclusive buyer agent is that if you need them to, they will look over things like your good faith estimate and the paperwork that you receive from your mortgage company or your lender, and make sure that you're truly getting the best deal over the life of your loan.
Jackie: There are also many more choices now than ever. Then would an exclusive buyer agent show their clients all types of properties, including, say, foreclosure, short sales, for sale by owner, even new construction? Would they do all that, too?
Kimberly Kahl: Absolutely, Jackie. An exclusive buyer's agent will show you any property that you're interested in.
Jackie: Kim, people can also now find houses for sale on the Internet. Why should someone buying a home hire an exclusive buyer agent instead of just cruising the Internet and going it alone?
Kimberly Kahl: I think that's actually a common misconception. People think I can just find a house on my own, but that's actually such a small portion of what a real estate agent does for you these days. Certainly, a real estate agent, as I mentioned before, an exclusive buyer agent will help you look at your financing, make sure you're getting the best deal with that. On top of it, most exclusive buyer agents are expert negotiators. They will actually negotiate on your behalf and on average, per report from the Consumer Reports last September, people who use a buyer agent on their side save an additional $5,000 on their home.
Jackie: I really like the part about the negotiating. That is just so important for consumers. Benjamin, tell us, how overall does the experience of buying a home change when working with an exclusive buyer agent?
Benjamin Clark: It's completely different than the old way of buying a home. When you have an agent on your side negotiating for your best interest, you have this level of trust that exists that doesn't exist in most traditional real estate transactions. An exclusive buyer's agent is there to negotiate on your behalf and to protect your best interest even when that means protecting your interest while taking you out of a contract. Having someone that you can completely trust working on your behalf and on your best interest is something that doesn't exist in a lot of real estate transactions. It actually makes the whole experience very enjoyable and very stress-free for buyers.
Jackie: Ben, it kind of sounds exclusive. Exclusive buyer agency. It almost sounds like it's kind of secret. Who are the people who have found out about exclusive buyer agents before this time?
Benjamin Clark: Exclusive buyer agents, you didn't ever hear about it before because number one, they didn't exist, but once it started, you would only have heard about them if you had worked with an exclusive buyer agent yourself, maybe they were in your market and you had been exposed to some of their local marketing. If you had done a lot of research, you could find them mentioned in a few publications and things of that nature. It wasn't very widespread. Today, more and more consumers are hearing about exclusive buyer agents because of the Internet, because of the increased exposure from the media and from consumer groups and consumer advocates.
Jackie: It's not just exclusive in the sense of exclusive-type properties, high-end properties.
Benjamin Clark: Right. Any property. We represent buyers of any property.
Jackie: Got it. Kim, what about consumer groups? Do any consumer groups recommend exclusive buyer agents?
Kimberly Kahl: Certainly. We've been in Consumer Reports a number of times. Our association as well as exclusive buyer agency. The American Homeowners Foundation also released a pamphlet last summer that also recommends that people use an exclusive buyer agent. Most consumer groups understand that buyers who have someone actually representing their interest will fair better.
Jackie: It just makes sense.
Kimberly Kahl: Exactly.
Jackie: It's a no-brainer. How do I find out more information about exclusive buyer agency and about NAEBA itself?
Kimberly Kahl: You can certainly go to our website, and that's the best place to find information. We not only have information on our organization but on an exclusive buyer agency financing, inspections, we have a complete FAQ on there so people can find all the information they need as well as find a way to find an agent that is an exclusive buyer agent.
Jackie: Excellent. Ben, what kind of consumer do to ensure that their agent is a true exclusive buyer? I know there are some traditional real estate agents who sometimes may be innocently represent themselves as an exclusive buyer agent. How do you really know?
Benjamin Clark: Right. There's a lot of confusion in the market, even amongst agents. There's a lot of states use a form when you hire a buyer's agent that's called the exclusive buyer agency agreement form. What consumers don't realize is that just because they signed an exclusive buyer agency agreement, that doesn't necessarily mean that the agent they're working with is a true exclusive buyer's agent. The only way the consumer can really be sure that they're working with a truer exclusive buyer agent is to confirm that neither that agent nor the company they work for lists any properties or represents any sellers.
Jackie: Overall in a nutshell, if someone's going to buy a house, they know they're in the market. What's the first step they should take?
Benjamin Clark: They definitely owe it to themselves to research exclusive buyer agency before they go looking at homes.
Jackie: Kim, you want to add anything to that?
Kimberly Kahl: I would also add that when they meet with a real estate agent, interview several. Make sure that you know who you're working with and that you're comfortable with them, and one of the first questions you ask them should be does your company take listings? Because then they'll have the answers to whether or not they're working with a true exclusive buyer agent.
Jackie: That's a really good point. With so much going on currently in the real estate world, it really sounds like having an exclusive buyer agent offers protection that no one should go without. Thanks to both of you, Kim and Ben, for joining us and sharing this with us.
Kimberly Kahl: Thank you.