Is it better to be a buyers agent, or a sellers agent? Ever since the first days of real estate, or deal-making in general, this question must have been asked.
Read any book or blog article, and you’ll find the same answer every time: work with sellers, only prospect listings, don’t waste time on buyers. The great minds of real estate seem to have passed judgement: only sellers need apply.
I’m not going to debate this wisdom. Do I like working with Sellers? Of course! Anyone looking to make a great living will take any hot lead coming their way. But if you really want to gain an edge in your market, and quick, taking a better look at a neglected piece of the pie could be just the ticket. You can reap massive benefits while everyone else scrambles for the same small pool of leads.
Let’s break the mould and talk about why it’s actually better to be a Buyers Agent.
Every deal consists of a Buyer and a Seller.
OK – so we know the conventional wisdom spouted everywhere is to focus on sellers and listings. Got it. But guess what? If everyone is going after the same advantage, it ceases to be an advantage. Every other agent in your marketplace is thinking the exact same thing: sellers sellers sellers. Unless they read this blog, of course.
Consider this: every deal consists of a buyer and a seller. Thus, 50% of the marketplace for real estate services (which is what you sell) is for buyers. Why would you neglect 50% of the marketplace for your services outright?
If you’re new to real estate, you’re already starting from a far weaker position than your competition. If you’re planning to advertise or prospect for sellers – get in line. Legacy players in your market have multiple times the marketing budget than you do – and many of the Sellers in town will already know them (something we will discuss in reason 3 below).
Focusing your efforts specifically on Buyers will pay off much faster and easier than going after Sellers. Less competition = more opportunity. Advertise yourself as a Buyer’s Agent, host seminars for new homeowners, and put out information to educate the curious public about their rights as buyers. Once the gears start to turn in consumers’ minds that they need someone like you in their corner, you’ll be off to the races.
When you represent a Buyer, much of the work is in the hands of the marketplace and the client themselves.
Having 50% of the marketplace basically to yourself is a great way to earn more money. But when you work with buyers in residential real estate, you also have the opportunity to make more by giving less away. You also have a massive advantage: advertising your services as FREE (or at no cost to the buyer). Talk about a value-add!
The drawback with buyers may be (in some cases, without proper vetting), endless showings and driving around. But – you never have to negotiate with them about your commission. In nearly every market, buyer side commissions are paid by the sellers. So it’s up to the sellers agent to ply their wares on a skeptical owner. Often they have to discount their side commission – but the buyer fee remains unchanged. Your costs will also be lower as you don’t have to pay for photography, measurements, etc. So gas is a small price to pay by comparison.
When you represent a Seller, you are making them a promise to sell their home at a price in a window of time. If that doesn’t happen – the blame often falls on you as the agent. Why didn’t you spend more on marketing? What about the network you told us you had? What are we paying you so much money for?
When you represent a Buyer, much of the work is in the hands of the marketplace and the client themselves. The market will provide options; it’s up to the buyer to select them and ensure their offer is competitive enough to secure their desired property. If one gets away or a deal doesn’t work out – its hardly something that can be blamed on the buyers agent (assuming you do your job well).
There should be no reason for them to call anyone but you when it comes time to sell.
In The Millionaire Real Estate Agent, one of the top books new agents tend to read, Keller states that somewhere around 75% of Home Sellers already know who they’re going to work with when they consider listing. Do you want to know who they have in mind?
The agent who helped them purchase the property in the first place!
Why is this? Well, it’s simple. Most consumers engage in property transactions very infrequently (like, every 10 years). Ask any consumer to name five real estate agents in their community: they won’t even have a clue who the “big names” you compete with most are. That’s because they “already have a real estate agent”, in their mind. That’s the agent who helped them buy.
When you help someone purchase a property, you go through a lot of work with them and get to know them well. They get to learn about your process and communication style, and build trust in you as you help shepherd them along. If you do a great job and they are happy with the work you’ve done, keep in touch. There should be no reason for them to call anyone but you when it comes time to sell.
Consumers are really just looking for the easiest solution to complete a transaction. They want to take the simplest route. If you’re a new agent, you stand a slim chance of competing with an agent who has a long relationship with sellers. BUT, by capturing buyers, you can start those relationships yourself. You’d be surprised at how quickly some buyers can turn around and need to sell; my quickest buyer-to-seller transition was just 5 months (due to a job relocation).
If you’re new to the real estate game, absolutely. And even if you have a business that is rolling along well – take heed of buyers and give them the time of day. Sure, there will always be tire-kickers. But if you can draw the right kinds of buyers to you (first time, newcomers to your community, investors), expect your business to grow and not stop. Let the dozens of other agents un-creatively market to Sellers Sellers Sellers. Set yourself apart and speak the language the other half of the marketplace, the Buyers, want to hear. Prepare to be rewarded handsomely!
Cheers and Happy Selling.