Nick Martin, Realtor ®, EBA | February 20, 2019
I had the honor of going to the 25th Annual National Association of Exclusive Buyer Agents (NAEBA) Convention this year in Scottsdale AZ. NAEBA is a professional organization of real estate buyer agents and buyer brokers who only represent home buyers. Members of NAEBA do not accept listings, advertise properties for sale or represent sellers at any time.
The NAEBA convention this year was seen as a turning point. A new outlook for the next 25 years in Real Estate. One thing Exclusive Buyer Agencies (EBA’s) have struggled with in general over the years is the fight for notoriety in the public eye.
NAEBA was formed to do just that and it has done so with only moderate results. In some states, an EBA is well known and just telling a potential client that you are an EBA was enough for them to understand your intent and purpose. In other states like Massachusetts, the state I’m from, EBA does not distinguish us from any other agent out there. So where to from here?
For those who do not understand what I’m talking about, let me recap what an EBA really is in comparison to any other “buyer agent” out there. Back in the 80’s, all agents were “seller agents”. They offered full representation to the seller. So it would go, that when a buyer wanted to buy a house it would be for them just like walking into a used car lot. A “salesperson” who represents the “seller” would come out and try to sell you the house. The buyer ultimately would be on their own. They were a customer to be sold to and nothing more. They did not have the option to have representation in the deal. It was them against a professional negotiator and salesperson.
Then in the early 90’s, some agents decided that buyers should have the same type of representation in the deal as the seller. Thus, “buyer’s agents” started popping up. At first, most agents turned up their nose. They didn’t understand the purpose behind representing the buyer. The money is in selling and they were sure of it.
Mid 90’s rolled around and “buyer agency” was taking off. Seller agencies saw that there was money in buyer agency, so they decided to jump on the bandwagon… but instead of actually jumping to the other side, they decided they would do both.
This opened up a major problem. How are they supposed to fully represent the seller AND the buyer in the same transaction? They can’t. That was the simple answer. But to drop one or the other would lose them a big chunk of the Real Estate Market. So, the large companies got together with the National Association of Realtors (NAR) to establish a way around the law.
This is where the EBA comes in. Exclusive Buyer Agencies wanted nothing to do with representing the seller. They knew the seller already had representation with all the seller agents out there. The buyers needed the representation. This is where NAEBA was formed. The purpose was to fight against the new regulations that validated dual agency, something any attorney will tell you is a conflict of interest, and reestablish buyer representation.
The problem is, it’s hard for a small group of people to fight against the Real Estate big wigs with all the money. Despite their efforts in the last 25 years, NAR and other big agencies spent millions to make sure dual agency stayed, and so it is as it is today. To be clear I am not trying to put down NAR. NAR represents their members and is understandably influenced by the larger companies.
So back to the NAEBA convention and the next 25 years. Instead of trying to fight legal battles that will never be won, the approach is now to encourage certification of EBA’s. Only members of NAEBA can become what is known as a CEBA (Certified Exclusive Buyer Agent).
The idea here is to attempt to show the public a unique trait that only EBA’s can have. We can become certified in Exclusive Buyer Agency and that will assure the buyer that we are truly trying to advocate only for the buyer in any and all transactions in real estate. A CEBA will only work for a Brokerage that ONLY works for buyers. That is the only way to not have a conflict of interest and allow the buyer full fiduciary duties without exception.
Will this be enough to catch the public’s eye? I had a question about this. Behind the scenes, an EBA broker is in the process of trademarking “EBA”. Like the NAR certification, CEBA requires additional time and money to obtain and retain the designation. EBAs would just need to be a NAEBA member which assures that they and their brokerage don’t do listings and follow NAEBA guidelines and code of ethics.
This as I know as an agent and many others believe, should be enough. This way, the logo will become a familiar sight nationally to buyers who are looking to have full, representation. The hope with trademarking EBA is to get brokerages to adapt the visual logo so that we appear to be a familiar name in the Real Estate industry to the likes of the Realtor ®.
Why is this so important? Why is this a focus for the next 25 years? Generally speaking, a real estate agent has a bad rap. There is a perception that real estate agents are out to trick buyers, scam them, sell them. That has come from years and years of seller agency like I talked about in the 80’s. When EBA was attempted, millions of dollars were spent to pretty much invalidate that in the public eye despite its good intentions.
The purpose and effort of NAEBA and all EBA’s across the country is to reverse that perception. When you see “EBA” or hear of an Exclusive Buyer Agency or NAEBA, that should be an assurance to you as a buyer that these people are actually out to help you, advocate for you and protect you. You should be able to feel at ease with these people because they clearly aren’t in it for the money, or they would be working with a dual agency that can promise them many more ways of making money. They are in it for you, the buyer.
All skepticism should wane away when you see the “EBA” logo or “CEBA” symbol. They’ve got nothing to hide. They’re not out to get you, they’re out to help you. They are professional offensive and defensive advocate in the transaction of Real Estate.
Most sellers have an expert on their side, fully advocating for them and negotiating on their behalf to get them the most money for their house. The best thing you can do as a buyer is make sure you have the same type of representation.
Most people are concerned about how much that costs. Yes, EBA’s do need to get paid. Here’s the thing. If you go at it on your own and go up against… or even hire the help of a listing agent. You are more likely to end up paying more for the property than you would have if you had someone negotiating on your behalf.
You may feel like you’re a really good negotiator and maybe you are. But you’re going up against a person who’s job it is to get the best and highest price for the property they’re representing. They’re hired to do that and typically they have years of practice. The higher they get the sale price, the more money they make. They have a stronger motivation and likely more experience than you.
Think about it, if someone who is not a Real Estate agent has more negotiating experience than the hired agent, I wonder how that agent is still in business. They would not be as successful as they are. You may know how to negotiate, but they do it day in and day out in real estate. They’ve learned all the tricks and are not thrown by someone like you who may have some negotiating skills. They are used to negotiating with other real estate experts. You are no challenge to them.
Here’s how an EBA can save you money. First of all, you’re likely paying the same commission whether you have an agent working for you or not. How is that so you ask? The listing agent comes to an agreement with the seller before they even list the property to take a certain percentage off the top of the sale. That percentage they take is taking into consideration that they will share likely half with a buyer agent that brings in a buyer. If a buyer comes without a buyer agent, the commission amount paid by the seller does not change. In fact, that listing agency pockets the whole thing. No money back to you.
Many EBA’s will take only the cooperating fee from the seller and nothing more. Some might charge a small fee to you. Assuming an EBA does charge you a small fee, you’re still likely saving more money because they will in turn work hard to get you the lowest price possible for a property. Also, they will connect you with a lender that can give you a competitive rate AND can be trusted to work the transaction in a timely manner (something that can be costly in the end if not done properly).
They will connect you with a top-notch home inspector that will reveal any major issues that you and the agent might not have picked up on saving you possibly thousands of dollars down the line. They will also connect you with a trusted attorney if that be applicable in your state. That attorney typically will not nickel and dime you as their goal will be the same as the EBA, to protect you in the transaction of your new home.
All of these factors when combined are 90% of the time going to save you more money than if you chose to go at it on your own and ultimately buy through the listing agent, OR work with a “buyer agent” that works for a dual agency. They may promise you savings, but it might be just a few thousand off the commission or price of the house when you paid several thousand more in the end.
I welcome feedback and questions on any of the topics covered in this post. I can be reached at nick@buyerschoicerealty.com.
