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The National Association of Exclusive Buyer Agents (NAEBA), the standard setting organization for real estate agents who represent home buyers, conducted a member survey recently on the topics of Appraisal shortfalls and using Comparative Market Analyses (CMAs) to benefit home buyers.
Survey results showed that 87.1 percent of Exclusive Buyers Agent respondents said that they personally have not had issues with their clients’ homes under-appraising, however 38.6 percent of respondents said that under-appraisals are typically an issue in their market area.
As Richard Rosa attorney and exclusive buyer’s broker at Buyers Brokers Only in Haverhill, MA explained, “It appears that the problem with appraisals is a result of an emotional homebuyer who offers far too much money for a property because of his or her fear of being outbid and not having a buyer agent willing to explain that the house just isn’t worth that much money.”
Among the Exclusive Buyer Agent respondents, 94.3 percent said they complete a Comparative Market Analysis for their buyers to assist with a purchase offer.
Often in traditional brokerages, especially those with teams, buyer agents are the newest, least experienced agents, while the more experienced agents focus their efforts on taking listings. The Exclusive Buyer Agent respondents said that 52.9 percent of typical buyer representatives in their area seem to be the least experienced agents in the brokerage.
NAEBA member Jon Boyd, exclusive buyer’s broker at The Home Buyer’s Agent of Ann Arbor, said, “Since working with buyers tends to be more time intensive, it is very common to see brokerages give that work to the least experienced agents in the office. When we view properties with buyers, we actively help evaluate the homes while we are there. An inexperienced agent can’t provide that service. Property evaluation skill is one of the five critical skills buyers should consider when interviewing potential agents to work with, but inexperienced buyer representatives tend to leave buyers on their own in that regard.”
And Anthony Askowitz, broker-owner of Re/Max Advance Realty in Miami, FL, reportedly recommends the practice of assigning buyers to the least qualified agents with his recent article for Inman News: “Buyer representation is a C-level service that could easily be assigned to a less-experienced agent in the office, team or partnership or outsourced to another agent in return for a referral fee.”
One way that Exclusive Buyer’s Agent Julie Tuggle, Broker with Carolina Buyer’s Agent, addresses the risk of an under-appraisal is to include an addendum where the seller agrees to lower the purchase price, or return the earnest money deposit in the event the home appraisal comes in low and the seller is not willing to adjust the purchase price.
These survey results conclude that the prevalence of under-appraisals is proportional to the level that demand is outstripping supply in the individual market area.
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About NAEBA
The National Association of Exclusive Buyer Agents (NAEBA), created in 1995, is an organization of companies dedicated to representing only buyers of real estate. NAEBA member brokerages do not list homes for sale and never represent sellers. This restriction to one side of the real estate transaction avoids conflicts and ensures that the interest of the homebuyer is protected at all times from house-hunting and negotiation to inspection, financing and closing.
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About The Home Buyer’s Agent of Ann Arbor
The Home Buyer’s Agent of Ann Arbor is the oldest Exclusive Buyer’s Agency in the state of Michigan and has helped hundreds of home buyers save millions of dollars on their home purchases. Since Exclusive Buyer Agents only represent home buyers and never sellers, these companies avoid the conflicts of interest of traditional real estate companies and offer home buyers 100% loyalty
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