Hello, I'm a new broker and I've been trying to decide on how to run my business. Recently I've become very interested in exclusive buyer agency. There are many good reasons for this such as: no dual or designated agency problems, it could be a good niche and a good marketing tactic, it could also reduce the escrow usage (I hate doing that), it also enables me to expand my coverage area. We are in an area where 3 or 4 counties are bordering or very nearby, but require separate MLS membership to list properties along with separate print media, which I found is extremely costly here. It could also greatly reduce my overhead and liability allowing me to concentrate more on marketing my business instead of advertising individual properties and making sure they are compliant.

Obviously the downside is that I will not be able to accept and list properties for sale (other than what I/we own personally).

I guess my question is does anybody have experience with this type of business model and/or what your thoughts are on it? Please keep in mind I don't have a very large budget to compete with the 3 or 4 already established and well-funded agencies in my area and I think this could be a good way of becoming established in a good niche.

Any comments and opinions are welcomed. thanks.

from my experience as an agent i can say that most buyer leads come from sign calls. to have no listings means that i get no sign calls. the best marketing is a listing as people will call you for information and you can convert them from customer to client. if you have no signs out there it will be a 100% marketing dollar to get your name out and about. as an agent, i would not hang my license at a shop that limited me from doing what agents at all of the surrounding brokerages are doing.

just my opinion.

set up a seperate entry-only company that charges $99 per listing. get signs all over the place and generate tons of EBA leads. since brokers like referrals, refer out what you can't handle.

how many sellers would want a company like that representing them? <<<<<the ones that want to sell fsbo<<<<that is not the majority of sellers out there<<<<<right back to how would you get signs up to get the buyer calls.

Thanks for your opinions. I cannot setup a separate entry-only company because that may cause a conflict of interest and appear deceitful. And being an EBA prohibits me from doing that because in Pennsylvania there still is a limited amount of representation even as a transactional licensee. On the other hand, I could conduct referrals to brokers. According to the NAR less than 10% of buyers inquire about property from listing signs so I'm not too worried about that. There are numerous other ways to gain clients without listing signs too. I have had some success with lead services as of lately and although there will obviously be marketing involved, I don't think it would be a 100% marketing dollar. Also, word of mouth can be very powerful. I think my largest obstacle would be how to educate the general consumer on the benefits of utilizing an exclusive buyer agent.

I was also considering offering a recurring 20-25% commission bonus to agents who recruit others to work in my office. This would be in addition to a 50/50 split.

Thanks for your comments Estate and Broker, I really appreciate it!

I don't think it's decitful as long as you disclose the relationship if you are selling one of your own affiliated listings. You are not providing brokerage services to the seller.. simply a marketing package.. big difference. And it's a totally seperate business entity. But it's your call.

"According to the NAR less than 10% of buyers inquire about property from listing signs so I'm not too worried about that."

That doesn't sound right at all. It's a much higher percentage than that... much higher. They might mean that only 10% purchase the property they call from the sign on. Most buyers come from sign calls in my experience.

it is my understanding that about 6% of sales come from signcalls. that is not really what i was talking about.

when a property is listed it goes on realtor.com and all of the other sites that give it traffic. the internet leads (internet signcalls, if you will) are what will be lacking without listings. i should have been more specific.

Thanks Broker,

"According to the NAR less than 10% of buyers inquire about property from listing signs so I'm not too worried about that."

I'm sure it fluctuates from place to place but I believe it's in the 2007 NAR Profile of Home Buyers and Sellers.

As for the marketing package you mention I will give it some thought. Thanks for your input and I welcome more from everyone.

Thanks Estate - that's a good point! I'll have to consider that too. I think realtor.com does some banner advertising, which I may have to look into as well. I really appreciate everybody's help.

The problem you will run into is with everyone except probably investors and first-time homebuyers they will need to sell there home before they purchase another.

They usually like using the same brokerage to handle both sides.

You can generate leads by holding homebuyer seminars,how to buy foreclosures,etc.

You can't do it once you have to committ to months of seminars to start building results. It's like the first year they hold a barbecue a few show up and then each year after it grows and grows.

Most buyers look on the internet for inventory.You should get a website specifically geared toward buyers to draw them in.

Thanks Super! I was considering working with lead generation companies and ppc advertising to bring buyers to my website to view the IDX feed. I'm not completely sold on the EBA thing yet, I'm just weighing my options before actually committing to a business plan. Thanks for your input.

Great topic Zellin.

I am also considering this model for my company. In my location (Riverside County CA) the overwhelming majority of listings are REOs. I don’t think I want to chase the REO listings for several reasons: Asset managers seem to be requiring more and more out of their listing agents, I’ve seen massive amounts of time wasted by agents trying to find one more list to get signed up on, some agents are not being reimbursed (per their agreement) for trash-outs/utilities/listing expenses, there is considerable overhead with utilities and marketing, etc.

From personal experience when I bought my 1st home 15+ years ago (not in the industry then), my wife and I went to a homebuyers seminar and used an EBA broker to find us a home. The seminar was well done and highlighted the benefits of exclusive agency. We had a good experience.

Estatereal said “i would not hang my license at a shop that limited me from doing what agents at all of the surrounding brokerages are doing.” I’m seeing < 3% of listings that are not REO or Short Sale in our area, so I don’t think agents here are looking for a place to list. The one’s that are moving to different shops are looking to sell. Many are going to the brokers that got in early w/ REOMAC and the like. They have a lot of signs around town but their agents still get most of their leads by sitting open houses and not from up calls.

I have already contacted several “out of area” (and even a couple "in area") listing agents who have properties here and they have been VERY receptive to me holding their properties open. (They get to report back to their asset managers that there was an open house so it makes them look good.) There is plenty of opportunity to hold an open house anytime I want even though I don't have any listings.

super realtor said “The problem you will run into is with everyone except probably investors and first-time homebuyers they will need to sell there home before they purchase another.” For my area this represents the majority of buyers right now. Most others have no equity - so lateral or upward moves are few and far between.

It would seem that between internet traffic (need to look into this a bit more) open houses and seminars, you should be able to get a steady stream of buyers. Maybe a tri-fold brochure outlining EBA w/ a die cut for your card to hand out at Open Houses to differentiate yourself from a traditional brokerage?

As a new broker I think an EBA may be the way to go (for now?). As the market improves and regular listings return to the area (in years to come) I may change direction.

Thanks for your input New Broke. You make good points and I like the idea of offering to host open houses for other agencies.

This concept started out with a flurry in the last century but it appears to have died out. Do you know of any successful EBAs to draw ideas from? The only ones I've ever seen around my area were new agents who gave it up when their buyers started coming back as sellers.

When I read the title of this post I can't help but wonder why anyone would want to restrict their business to a limited segment of the market. Admittedly we can't be everything to everybody but surely we can serve a broader market than just buyers.

Thanks Bigtoe and Foreclosure! Actually I've been in contact with a few EBA's who swear it's the way to go...of course. Foreclosure - you're right, it does limit business to a point. The EBA's I spoke with said they get alot more business now because the public has become educated of the benefits to using an EBA when purchasing homes. When they sell they come back to the EBA for referrals of listing agents too. There is no dual agency or any other reduced representation and when their prospects fully understand agency agreements they almost always turn into clients. I'm not exactly sure being an EBA would exactly reduce my business once the public becomes educated. The problem is actually educating the public. I also found that there are people that don't care who represents them or if there is dual, designated, or any other type of reduced agency agreement implemented...until there are problems. I'm not agreeing or disagreeing with anyone here, I'm just trying to understand all viewpoints in order to make an educated decision on how to run the company. Thanks again for your opinions!

UNDIVIDED LOYALTY is one thing that most people understand and expect . That is what I chose to offer and pledge to my clients.

In my practice I only offer what has been called "single agency" in that I will only represent one party in a transaction whether it’s buying or selling or both selling and buying and will execute both a listing agreement and a buyer’s brokerage agreement at the same time.

I also educate the client with respect to agency law and to further assure them, that my pledge of undivided loyalty, is more than just lip service, I attach a schedule to their agreements that entitles them to terminate said agreements, without cost or obligation in the event that I develop a conflict of interest or that I fail to fulfill my fiduciary obligations to them.

The Key to success and longevity in my humble opinion, is to develop a long and trusting relationships with all your clients, who value your loyality and service and wouldn't hesitate to recommend you to their friends and relatives.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

Thanks everybody for your input. Please keep posting your thoughts and comments about this topic.

Been doing it for 14 years as an EBA and would never change it!

Hi Zellin!

Lots of interesting comments below. I have run my brokerage as a Buyers Brokerage since we opened our doors in March of 2005. By 2007 we were the Number 1 Buyer Brokerage in the county out of 500 offices and continue to be number 1.

With that said, we do sell about 25 listings per year. Almost always it's one of our buyers who needs to sell their home first.

Our business model is 100% Internet lead generation. We don't spend any money on print, radio, tv or anything else. The reason being, the Internet is the most cost effective means of marketing your company and services. It can turn a brand new agent/broker into a successful agent/broker in a matter of months, not years. I'll give you a quick example below.

Three years ago, prior to me stopping all other forms of marketing, I ran tv spots for two months at a cost of $30,000. I received about 10 leads from it and no sales that I can attribute to that campaign. Let's look at what those dollars spent on Internet marketing would have done for me. Once you see this, you will understand why we don't do anything but Internet.

$30,000 would equal about 30,000 unique visits to my website based on a $1 per click marketing campaign. We capture 12% + in leads from this traffic, but for easy sake, I'm going to use 10%. So this $30,000 would equal 3,000 leads. Our current 100MPH Marketing Software program helps us convert leads at 1 out of 24 leads. However, for simple numbers I'm going to use 1 out of 50 leads bcomes a sale. This 3,000 leads would have meant 150 sales to us.

It's pretty easy if you do the math. $30k of tv got me 10 phone calls and no sales. When I spend $30k on Internet marketing, even with one of our worst agents (selling at 1 out of 50 leads) would have created 150 sales. Once I realized this, I stopped all my other marketing and now spend about $75k-$100k on Internet Marketing.

In the end, not matter how you generate leads, you need to have your Agents trained properly if you intend on succeeding in this business. I have built my company as a lead driven model for my Agents. I supply all their business and it's obviously working well...especially in this market. Other benefits:

1. Agents never leave so once you are set up, you don't have to continue to recruit. I get an average of 3-5 Agents calling me per week to work at my company. I'm not hiring any new Agents right now.

2. Our splits start at 50% and go up to 70% based on volume, and then go back to 50% at the beginning of the year.

3. It gives you, the Broker/Manager better control of your company and your revenue. I can predict my sales every year and have been only 5% off each year. It's great knowing how much we are going to do in business every year. Last year we had a total of 282 transactions (our goal was 250), this year we are predicting 350 transactions.

As I said earlier, this type of model is great, but before I would decide on an Internet model, I would be sure you have a good lead conversion system in place or you will just throw your money away. I am always willing ot help brokers build their business. I started The eHomes Realty Network for that reason. I have so many Agents and Brokers calling me from all over the world, that it made sense to start an education company too.

I hope this helps. Good luck!

As a new broker and having had much success as a agent, I can tell you working with buyers in itself is challenging.

Think about a time when you were showing a prospect one of your own listing and trying to get them to sign the no brokerage realtionship agreement, or the look in their face when you were simply explaining the issues with the house.

Maybe I want to have my cake and eat it too.....well as a listing agency, I at least can have the cake even if someone else gets to eat.

Good luck, if you decide to go that route.