Real Estate Teams - Do Buyers want to Play?

Real Estate Teams are growing in popularity and size. It used to be a Team was two maybe three people; today some Teams can have 30 or more members! Many of these Teams may be "Top Producers", meaning they close a lot of deals - great for real estate companies!

The book The Millionaire Real Estate Agent, by Keller Williams founder Gary Keller and co-authors Dave Jenks and Jay Papasan has been instrumental in promoting the Real Estate Team concept. A "Team" typically divides it's members; some work with Sellers, some with Buyers. The Team usually works out of a larger real estate office/company (Brokerage). The key is cordinating all the different members of the Team to maximize the number of closed deals so that the Team makes enough money to support all it's members. Closing the deal, making the sale is the driving force in this form of Sales Organization.

The foundation of the Team is based on the typical Real Estate model of "Dual Agency". Dual agency is where the same real estate Brokerage represents both Buyers and Sellers. Part of the Team focuses on getting listings contracts - contracts to sell property for a property owner. These contracts create an obligation for the Brokerage as well as the Team to market, promote, display the Seller's property in the most favorable light and sell for the highest price possible. Another part of the Team works with Buyers.

From a Buyer's perspective how does this Team concept benefit the Buyer? The Buyer's main objective is to find the best property for the lowest price. A Team member will want to show and sell one of the Team's property listings - first. Buyers often complain that Team/Brokerage properties get "talked up" while other properties get "talked down" or are just not shown at all. Why? Because by selling a property the Team has listed the Team could double it's commission.

Can you imagine your Buyer Agent Team member "fighting" fellow Team mates to get the Buyer the best deal?

While many professions do have team concepts: surgeons, contractors, sports, etc.; these team members typically do not serve clients that have opposing objectives.

Real Estate Representation de-Mystified?

For the most part when Buyers start to look for a property to buy they don’t think about who they are going to be working with, they pretty much assume all Realtors© are the same, an assumption that could cost them cash.

To set the stage we need to define what an “agent” is. An agent is defined as a person or business authorized to act on another’s behalf. A real estate agent is a person who works for you to effect a successful real estate purchase.

Unfortunately when it comes to who represents you – the Buyer – in the purchase process State laws and regulations are not uniform; rather a mishmash of methods to avoid litigation and ensure the most profit for real estate franchises and brokerages.

For years a form of buyer representation known as sub-agency was widely practiced. Many multiple listing services required that the brokers listing property in their service offer compensation to “co-operating” brokers only if the co-operating broker acted as a “sub-agent” of the listing broker. What that meant was that buyers were not really represented. The agent they thought was working for them had a contract with the seller to get the seller the best price for the property since as a “sub-agent” they were working under the direction of the listing agent.

Sub-agency proved a legal nightmare so in the early 90’s ways were sought to allow real estate brokerages to keep the commissions from both sides of the transaction and avoid getting sued for misrepresenting who was working for whom.

The result is a host of “relationships”; from dual agency – where one “agent” works for both parties in the transaction to “non-agency” relationships (Transaction Brokers) which does away with agency relationships altogether. Even though the National Association of Realtors© has never endorsed transaction brokerage, Florida and 24 other states allow Realtors© to act simply as “facilitators”, providing services to Buyers without representing them as their agent.

In Florida it is assumed that all real estate sales associates are acting as Transaction Brokers (non-agency). Florida law changed in 2006 and with that change sales associates do not have to provide consumers with disclosures letting them know that they are working as non-agents (Transaction Brokers).

Interestingly according to a survey conducted by the National Association of Realtors© only 10% of Realtors© said they practiced Exclusive Buyer Agency; working exclusively in the Buyer’s interest.

For a more in-depth discussion visit this Inman News story.