Buyer Representation What You Need to Know
with Cynthia DeLuca
TRT: 1h 26m 35s
Video Transcription

Cynthia Deluca directly addresses camera:  Thank you. Good morning. I need the coffee that you have, Nikki. All right, well, thank you and welcome, everyone. To buyer representation. What you need to know and for today, we're just going to have basically a conversation. It's going to be, just a flowing conversation about a lot of things that are on my mind, a lot of feedback we're getting about the new changes that went into effect last month.

So we're well, we're right out a month in, some of us a little longer, depending on when our MLS rules made the changes. And, we just wanted to kind of have an update, an update of conversation to make sure that everything is clear. Kind of clear up some of the confusion. And, you know, again, just from feedback we're getting both at Florida Realtors® and myself as I travel the state and teach many different, buyer types of classes, whether it's the ABR designation or other types of buyer representation or forms classes.

So we just want to talk about a little bit of an overview today. And I want to go with you, on all kinds of different topics. So let's get started. I got a lot to cover. First, I want to make sure that it's clear the antitrust statement, right. That was mentioned in the intro video. But just to be clear, this applies all the time, any time that you're with two or more competitors.

So anytime you're in the in the room, you're at an open house, you're on a training session or education class, with another competitor, you have to make sure we all have to make sure we're following the antitrust laws. And that's just to make sure that we're not setting and fixing our prices. We're not, talking about boycotting or not using certain vendors or companies.

We're not specifically and only individually using, certain companies as well. And we're not going to divide up our geographical locations of where we work. And, basically, we want to offer open and fair trade for the consumer. That's really what the antitrust, laws are all about is to make sure that as a consumer, the consumer has choices.

So I wanted to touch on this because we're going to talk about of course, antitrust a lot today and kind of how how it got us here. So so let's talk about that. Where are we? Well, we're nearing kind of the end of this timeline, but this is the settlement timeline, that NAR has published on their website.

And just as a brief overview of how we got here, there were some parties that filed some lawsuits that claimed, that the real estate, industry, specifically the Realtors®, NAR and other companies and various organizations, were setting those prices and kind of fixing the market and over evaluating properties to, you know, with compensation built in, and that we had this monopoly.

Now, I've been in real estate 25 years. I know a lot of you have been in a long time as well. We know that that's not the case. It's a very competitive industry. But that's how we got here. And so we want to make sure that moving forward, it's very clear in what we do and how we do it.

And that's why these the settlement that occurred, that made our rules change back by August 17th. Why that settlement and those rules changes are so important, right. To make sure that we know and fully understand what they are, especially now that we are a month in and we're kind of working through this progress. If you would now, just as a little bit of a background many of you probably know about, I have been a Realtor® for this is my 25th year and, I have been using buyer broker agreements and kind of doing the overview of this process for my entire career.

So basically, for almost 25 years, I've been handling my business this way. But now we have some additional forms, so we'll, we'll talk about that in our paperwork. But I want to take a look today at the overview. So we're not going to dive specifically into the nuances of what each form says, because Florida Realtors® Juana Watkins has already done a wonderful job with a lot of webinars that are available going through each form as they were released and presented.

So please take a look at Florida Realtors® website, go back and review those other webinars. There's so much information available to us. So we want to make sure that we're up to date on that. We're going to take kind of an overview of, where we're at today in our industry and how this process works, really, from start to finish.

In working with the buyer and the seller, we're going to talk about both today. So first let's talk about, you know, have we seen change before. Yes. These are MLS books. If you've never seen one. These are prized possessions because they haven't been around for a long time. But you know, when we went through the the change, of books to computers and then computers to IDX, meaning that we were starting to share all our data and information out there was massive upset in our industry that no one would ever use us again.

No one would ever need us. It was a massive change and in my mind it was worse. That change than what we're going through now. And that's my opinion. So what I want to say is we came out of this massive change of MLS books better, stronger and, more deeply connected in the transaction. And I believe the exact same thing is happening, with these rule changes.

I've said from the very beginning, I thought the settlement was a great move. I think that there's a lot of positivity that's going to come from it. And so we'll hopefully see that as we move forward. It's interesting, a couple people that were very vocal to me in the beginning of the settlement being announced back in March that they were not happy about it and that this was terrible and horrible.

I've actually come back to me recently and said, you know what? Now that we're kind of in the groove, it's not that bad. It's actually a positive and I'm starting to see the benefit that comes from it. So hopefully we'll we'll get there. Right. Well, I'll get there. So I believe that we're we see two different camps today.

Right. As Realtor® members, we have two different groups. Kind of a of where we're at today. A month later we've got this group that's kind of freaking out, right. There's a group of Realtors® that are still in freakout mode. And we have to understand that not everyone has had the ability, to go through a transaction yet. Right?

And a lot of people who even have started the process haven't closed on the transaction yet. To fully see the whole process. Right. However, you know, there are people who still haven't had the ability to list a property since these changes have occurred or have not, they haven't worked with a buyer and so they haven't had to sit down and have these discussions yet with a buyer.

So we have to understand and acknowledge that there are still people freaking out. Right? Then there's another group of Realtors® that are like, okay, I did it. It isn’t that bad, right? This is actually a plus, a positive. Let's just move forward and conduct business. And so we also have another group that is fairly calm. I'll say, about it and about the changes and have been through the process or are going through the process currently.

So here's what I would ask of you and of our industry of all Realtors® is to understand first which camp you're in, right? Are you still in the freak out camp? And that's okay. Again, lots of education, lots of, you know, opportunities out there to learn about it. But sometimes it's just it's you're not fully aware until you go through that process.

And that's okay. Right? It's the experience also brings a lot of education. But if you're in the other camp where you're like, okay, this isn't so bad, let's keep calm and carry on. Right? Maybe let's have some empathy with each other, understanding that there are these two different camps in our real estate industry right now and in the Realtor® organization, and we want to make sure that we're understanding to both.

Right. If we can work together and just kind of check in on each other, you know, there's so much stuff we see on Facebook, I'm sure you've seen these groups that are out there and, and just Realtors® posting on their pages. I'm friends with many, many of them. And, you know, I've seen a lot of posts on, on social media in general.

And, I think that the, the one meme that I've seen that I love the most is Realtor® to Realtor®. I hope you win. And, you know, that's the kind of calmness that we need to have with each other and the kind of empathy I'm moving forward. So hopefully, you'll take some time and not just rush into a transaction with someone, but actually talk to the other Realtor® and, you know, see what their experiences are and see how they're doing.

I mean, don't talk about compensation or violating antitrust, but it's it's great to learn from each other and say, hey, what's your experience with this? And am I using this form, right? And is this the way that you think this should be done and just check in with each other? It's okay to do that. Along with your broker and along with our legal hotline, along with, you know, all the other opportunities that we have, for learning.

So with these two different camps, there's some concerns that I am seeing happening. And I'm sure you've seen a lot of this as well. And that is what's what I consider the public perception versus the internal shenanigans that we have going on and that we're continuing to, exacerbate, basically. And so, you know, when we go onto social media and we post, negativity, we post about all the new forms and all the different changes and how ridiculous these rules are.

Or I still see people posting, ways that they're going to circumvent the rules and not follow the rules. That changed from the settlement. And I would just encourage you, Realtor® to Realtor®, you don't have to be a Realtor® member if you don't want to follow the rules. However, when you joined the Realtor® organization and you raised your right hand, you swore that you would abide by the rules.

Now, the rules might be the code of ethics. They might be the MLS rules. They might be also your broker's policy manual. Right. We have a lot of rules that are in place. And these are additional rules that have come out. But don't worry, there'll be more there'll be other stuff happening. Right. We've got new laws that change starting October 1st.

And Juana Watkins is doing a webinar on Friday, September 20th. This, I think, and, you know, on that webinar, whether you're watching this later or now, you know, you can go back in and, review that, on Florida Realtor®, website, if you don't have the opportunity to take that webinar Tuesday morning. But our Friday morning, I'm sorry, Friday morning at 10 a.m..

But we have these different options that are available because these rules are changing. Right. And that's some state laws that are changing. We've got a new kind of disclosure, new flood disclosures or new condo, rider. Or a new flood disclosures. And when we think about those rules to change, we just have to keep calm and carry on, right?

So when we're out on social media and we're posting a lot of this negativity, I really want you to take a step back and think about what does the public hear about what do you buyers and sellers care about? They are watching us and they're watching us to see how we react to this. If we maintain our professionalism and believe me, if it's not now, in the future, a potential buyer or seller will go on your social media site.

They will search you over and they will determine based off of whatever they see, if they're going to reach out and contact you or not. And I believe that most buyers and sellers want to hire someone that's professional, that's ethical, that knows and understands the process of conducting a real estate transaction. Right. And can assist them through that.

And we'll talk about some ways to do that today as well. But consider the public perception, please, versus our internal shenanigans, because yes, we're always going to have new forms. We're always going to have updated forms. We're always going to have these things that occur. Because if there's one thing that's constant in real estate, it's change, right? I know many of you agree with that.

We have to adapt to change in the real estate industry. So let's try to keep the public perception what it should be. It's about their goals. It's always about them, and it's about them buying and selling. So with that let's consider the temperature of the market right now. What is the market. What is it been doing. Yeah it's not the market of 2020 I get it.

Which sellers love buyers didn't. But you know we have to really look at the market and say, okay, what is going on and what can we share now, today and tomorrow, Tuesday and Wednesday of this week? The fed is meeting and some are thinking it'll be a quarter of a point. Some are thinking a half sone are even saying three quarters, I don't know, we'll see.

But hopefully there will be a rate reduction which will help the real estate economy and other things as well. Right? Just the economy in general. But here's some good news that you might consider shouting. If you want something positive to talk about on social media in the public perception, look at what rates have done just since this summer.

So this is just since June going through how much rates have declined, over the past few months. That's news. We should be shouting. Right. That's what we should be promoting is that, hey, have you considered buying? Because if you've been putting it on hold, have you seen what rates are doing? That's really a positive thing. So consider what you're sharing, how that public perception is taking place.

And and what we do intentionally want to share and want to discuss. Right. And want to talk about. So bring that, bring the focus back in on the market itself. All right. So how do we start this conversation. Let's talk about that. So now that we've got these rule changes and we may or may not have been through it a time or two so far, let's go through the whole process.

And you know, the claim was in the beginning that, from these lawsuits that we were, we had no value to buyers. And so we have to make sure that we start that conversation with the buyers. And I will tell you how it does not start. It does not start with documentation. Right. You know, think about what we do when we meet with a seller.

It's pretty much the same process. We're just going to carry that over now to a buyer. So, you know, when we go in and we meet with the seller, we tell them all the wonderful things we we do for them, what we offer as soon as they hire us and then we give them the opportunity to hire us.

Right prior to that, we're discussing our compensation. We're discussing everything we're going to do for them. Then we bring out the documentation and go through the legal side of the paperwork. Right. And really, when we're working with a buyer moving forward, that process is very similar. It is the same basically, and moving forward. So we don't want to start the conversation with shoving a form in their face.

Right? That's probably not what buyers really want to, what what they want to start with. Right. They just want to buy a house. They just want to talk about what they need to do to get ready to purchase a house. So I'm going to give you, some ideas here and hopefully something that's memorable to help you through the process when we're talking and working with buyers.

Right. And I call it embrace. Let's embrace the changes. Let's embrace the new forms. Let's embrace all the opportunities we have given to us. Right. And, so let's start out first with E. And that is to earn their trust. It's really hard to ask someone to hire you if they don't know you and if they don't trust you.

And, honesty, trustworthiness. Those are the top reasons, or top things that the, the buyers and sellers look for when they're hiring a Realtor®. And so we want to be, you know, we want to be trustworthy. We want them to earn, we want to earn their trust and know that we are a partner with them through this process.

So how do we do that? That's really where the buyer meeting comes in. So you want to sit down with them. It can be over coffee. It can be at your real estate office. It can be at Starbucks or Panera. It could be anywhere. Right. I would recommend a public location, but it can be anywhere where, you can just sit down and have a conversation.

Now earning their trust means going forward and explaining to them, here's what I do. Here's what I bring to your real estate purchase and transaction, and here's why. You can trust me. So by, by educating them and answering questions for them. Through that process, we're building our value, which I know we've talked about a lot building our value over the past few months, but it is so important that we are clear and what we do and what we don't do, for them and what our services, each of us unique and individual to us and our brokerages, what we offer.

So we want to really work hard and going through and earning their trust. Next we need to talk about the money. So once we've gone through that conversation and once we've earned their trust, the next thing we need to do is is clearly disclose and talk about how we get compensated. Right. So that's where, again, the agreement is going to help because it's going to clarify all that.

But we want to explain to them, here's how we get paid, here's what we charge. And you go back and clarify that with your broker at your brokerage company. But, you know, here's what we charge in exchange for what we do for you, in the transaction. Are you interested in hiring us? So we need to be transparent about the money.

Always. When you're transparent and you're disclosing the money situation or anything, for that matter, nobody can feel like they've been taken advantage of or that there's an unfair advantage somewhere or another. So again, doing this now for 25 years, roughly with these forms, including the buyer broker agreement, it's one form or another like that has been around for different updates.

But, using that form for that long period of time in my business, it forces you to talk about the money, and there's nothing better, in my opinion, than being transparent. So then we'll move on to B, and that's our buyer brokerage agreement. So then we want to ask them to hire us. And they officially hire us through that buyer brokerage agreement.

So we've earned their trust. We've talked to them about everything we're going to do. We've clarified with them what our compensation is. And then we take out the documentation and put it in writing and make it formal. We want to make sure that we do this as well, because it's important. We'll talk about the triggers of the settlement and the rule changes.

But we want to be clear that once we start working with a buyer, that's a term from the settlement. Once we're working with the buyer, that we have an agreement in place. So then the next thing we want to do is make sure they're ready, willing and able. Buyer. So now they've decided, yes, I like you, I'm going to hire you.

You're going to be my representative. So now we want to move forward and make sure they are ready, willing and able. Well how do we do that? Maybe that's helping them get pre-approved. Right. There are studies that show a lot of a lot of buyers ask their Realtor® for financial guidance. And so it's close to half of all of our buyers, ask for for financial guidance from their Realtor®.

So they're wanting help. They're wanting assistance, to know, is my pre-approval the right option for me? Are there other options? You know, or do you have other lenders that you could recommend? So basically make sure that we're going to go through and get them ready, willing and able. Maybe they're paying cash. Well we need to verify those funds.

We need to make sure that they have liquid funds or if they have them wrapped in an investment, how long is it going to take them to liquid? You know, make those funds liquid so that then they can use them for their home purchase. And they can set themselves up as a ready, willing and able buyer, to look as, as advantageous to a seller as possible.

Right. That's going to help them, accomplish their goal, which is to purchase this property. Okay. Next, we're going to work towards advising them. Now, what are we advising them about the process, what the expectations are, what comes next. So, you know, these are things that you've probably been doing all along. We just need to make sure now we're going through and clarifying and communicating right.

Communication can be one of our biggest advantages is our value goes, to making sure that the buyer clearly understands what's coming next. So, you know, once you write the offer, what will come next if they accept it, you know, or they can counter it or they can reject it. Once we go back and forth and let's say we come to terms and everybody's in agreement, then we're going to move forward with your earnest money deposit, scheduling your inspections, getting estimates for your homeowner's insurance, all of these things right.

Just communicating with them what some of those next steps are. And that's how we're going to advise them through the real estate transaction. We do this every day. Right. This is our job really as a Realtor®. We're doing this every day. But how often are buyers going through the purchase experience? Maybe they've never bought a property before, or maybe they have.

But it's been a while and the process has changed. The process has changed quite a bit. So we need to make sure that we're educating them as we go forward through the process. Now, “C” is for confidence. We have to have confidence in ourselves, confidence in the process, confidence that we know the process or else we can't really educate the buyer on it.

So we want to make sure that we are, clarifying what our jobs, roles and duties are. And in that, as we're earning their trust and we're clarifying our compensation and we're going through and advising them and all of these steps, we're building confidence in ourselves, but we're also building confidence for them in us. I don't think as a buyer, a buyer really wants to hire a Realtor® that doesn't know what they're doing or isn't confident.

And so we need to make sure we've got opportunities to gain confidence. That's through education again. We've got tons of webinars available. There's classes happening. I'm sure your local Realtor® association, your brokerage may be having classes. Or if you're within a franchise, there might be some of those options. There are so many options that we have right now for education.

It might seem a little overwhelming, quite frankly. So we've got to make sure that we're building that confidence and we are clear in what we're doing and how we're doing it, through the process. And then we're going to place, we're going to practice our ethics. Now, with ethics again, we raised our right hand and we swore that we would abide by the code of ethics.

But I think it goes a little bit beyond that. Even right now, we're going to talk a lot about ethics today in the code of ethics specifically, and how it applies once you are hired as a buyer representative. But, ethics is a big term. And I also want you to think about professionalism. Again, I think most buyers want a Realtor® that is professional.

They want a Realtor® that provides them with ethics and with opportunities. If they see online that someone is trying to skirt the rules and not follow the rules and try to figure out a way to wiggle around it or get out of it, that may show a buyer all they need to see that, you know what? I'm not sure I want to work with this Realtor® because they're not very ethical.

And if they're trying to skirt the rules there, where else are they trying to skirt the rules? Are they going to shortcut me as the buyer? And so we want to make sure that our ethics are clear to us. We understand what they are and we go through the whole process of embrace. So again, earn their trust, right.

Show them the money and explain that to them. Ask them to sign the buyer brokerage agreement. We'll get more into that. And then make sure they're ready, willing and able buyer. Then you want to advise them on the process. Build the confidence in both you and them, and then continue moving forward while applying our ethics through the process.

All right. So let's talk about the triggers for our agreement. So the practice change the you know the settlement came out March 15th. The rule changes went into effect no later than August 17th. So we've all been in this now a month. And the triggers for the agreement. First, I just want to say that NAR on their website facts dot realtor has a lot of frequently asked questions or FAQs, those have been updated continuously, even up until the rules change.

You know, the change went into effect, I should say in August. We've had so many updates to these FAQs that if you have not looked over them in a while, take 15 minutes, scroll through those FAQs to make sure that it is clear, because they have really expanded on them. They've added detail. They're very, very helpful. They've also, released some consumer reports that you can print and provide to consumers about written buyer broker agreements, about open houses, about VA buyers, all of that.

So if you, click on the link that's been provided to you through the chat box, you will gain access to a folder that has all kinds of information in it, all the forms that we're going to talk about today. You will see also a copy of the current code of ethics. So if you'd like to download that, because we're going to talk quite a bit about the code of ethics.

There's a, buyer broker agreement, frequently asked questions. That Florida Realtors® has put together for you. Along with some helpful links. And then the helpful links is, one of those is a link to facts dot realtor that is a website that has all these different options and opportunities available for you with the consumer reports, the FAQs, and so on.

So the trigger for the agreement, there's two triggers basically, and the triggers for the agreement. And those links just got place. Thank you Miriam, back into the chat. So they're there for you. But the practice change requires written agreements with buyers, and it's triggered by two conditions. The first and only applies to MLS participants working with buyers.

So we're going to talk about that and to find that a little bit more. And it's triggered by touring a home. So when you're working with a buyer that is you're identifying potential properties for them to view and go look at. Your’re arranging for them to tour a property. So you're scheduling those showings and appointments you're performing or facilitating negotiations on behalf of the buyer, which maybe means making an offer or asking for their questions.

Getting more information about the negotiations, any of those types of things. And you're presenting offers by the buyer or any of their services, basically, that you're performing for the buyer. This could include getting them financially ready, willing and able. Right? There's a lot of other things that this could include. And so once we've started working with the buyer, we are specifically working with and for that buyer to gain them the the process through the transaction, right to work with them and help them through that versus marketing your services and talking to a buyer at an open house, or providing an unrepresented buyer access to a house that you have listed.

You would be doing that on behalf of the seller, and that does not require a written agreement to be put into place. But let's say we're working with the buyer. That's what's going to then trigger, trigger this written agreement. Right. So it's required prior to the buyer to bring a home. And the MLS participant, just to point out, working with the buyer can enter into a written buyer agreement at any time, at any point, but must do so no later than prior to the buyer touring a home.

Now, I will tell you that there's lots of different ways you could do this practice. But, you know, I if I'm meeting with a buyer and they want to ask about purchasing a property and kind of what the process is and getting started, that's the opportunity to do a buyer meeting. That's the opportunity to earn their trust.

That's the opportunity to explain the money, the compensation plan and then to go and ask for the buyer broker agreement, right, to formally be hired. So then I can go and start working with the buyer, getting them ready, willing and able start advising them through the transaction in the process and explaining what's going to happen. Right. Moving forward and building that confidence, and confidence basically overall with them and then showing and proving my ethics and my professionalism through the entire process.

Right. You got it. That's embracing and or embrace, these new rules. So we definitely want to embrace that. And that's really the process right in my mind. So we may have sat down with this buyer a long before they've ever actually gone and looked at a property. You do not have to wait until you go to your property to wait and get a document signed.

That's not what has to happen. So again, if they're if they're wanting to sit down with someone, talk about the process and work towards what do I do next? This is your perfect opportunity to start that process. And so embrace that and embrace that as you move forward. Okay. So what is a buyer brokerage agreement? Well, basically, to put it again, from kind of a 10,000ft view, in a nutshell, a buyer brokerage agreement, it's just a formal agreement, kind of like a listing agreement with the seller.

But for a buyer that exchanges the duties that both parties are going to offer. So as a buyer, what is the buyer obligated to do? And as the buyer's broker, what is the brokerage obligated to do along with the representatives, the agents working within the brokerage? So basically it's a it's a two way communication and it's a two way team effort to accomplish a goal.

And of course, the main goal is to buy a house right by house and and close on that transaction. So it's really clear, you know, kind of spells out those, those guidelines between the two of them and ask for a formal hire. So I'm asking them to put it in writing and sign on the dotted line that they're willing to commit to me, hire me, and move forward right in that okay.

So let's talk about the transparency. A buyer brokerage agreement really forces transparency upon the conversation. And this is one thing I've always loved about it is make no mistake. You know, I want to outline everything I do for you. And so it helps when we're sharing and talking about those values. Again, going back and forth of what we're going to bring, what we're going to do, all of the task in the transaction that we do.

And specific needs for this particular buyer. Right. So we're going to talk about what we can do specifically for them to help them. If they have a unique type of property they want to find, what are some certain ways we can help them in that search and seek process to go find those properties. It may not just be looking in the MLS, right.

There may be a builder that has that opportunity available. It may be we have to go find it. I've marketed to neighborhoods before to find a particular property for a buyer that I had with a buyer broker agreement, maybe it's finding a for sale by owner. I've sold many for sale by owners over the years to buyers. Isn't that have hired me in a buyer broker agreement.

Because that turned out to be the property that that was, you know, perfect for them at the time. So forcing this transparency forces a conversation. It's going to outline our compensation and disclose that compensation is not set by law. And fully negotiable buyers and sellers have options to go seek any type of real estate brokerage company services offer and compensation structure that's out there.

So they're welcome to shop around and see what's the best fit for them. And that's why those disclosures are necessary in all of our forms moving forward. As part of the, settlement, agreement. So it also can clarify those rules between the party, with who's doing what, depending on which agreement we're using. And we're going to we're going to talk about that here right now.

So that transparency is a must. Okay. I love the Olympics. I don't know about you, but, I love the athletes from the Olympics. I had a, or, I have a nephew who lived in the Olympic Training Center for just over three years and was on track to go to the Olympics in Rio and got injured. And so anyways, didn't didn't work out.

But I know the energy, the the sweat that they put in. He traveled all over the world, to make trials and, and just, you know, raising money and doing so much stuff. So I know how tough it is for these athletes to get their act together and get to the Olympics. That's a big stage. And I think that when all athletes make it, whether it's the Summer Olympics, the Winter Olympics, the Paralympics, any Olympics, when they get the opportunity and they are going to the Olympics, I think they have one main goal in mind and that is to go for gold, right?

They want to win gold. No one goes, I don't think, and says I'd love to come in eighth place. I don't think that happens. I think they want gold, right? That's what everyone remembers. They they want to win gold. So I want you to keep that in mind. As we talk about now, we have three agreements or written documents that we can use, with buyers to a certain extent.

We're going to talk a little bit of an overview of each one of these. So we're not going to go into details specifically line by line, because there's already other webinars that have been done by much smarter people. Our attorneys for that. So take some time and go back and review those. If you're so confused or concerned about any particular verbiage in agreements or anything like that.

But we have these three different agreements. So we have the exclusive buyer broker agreement, we have the showing agreement and then we have the property pre touring agreement. Now in my mind I like to kind of put everything in an analogy as you've probably already figured out or know me. So I think the property pre touring agreement is bronze right.

That's our bronze agreement. The showing agreement bumps it up a little bit to silver. And then our exclusive our brokerage agreement is our goal that's going for gold. So the one thing to remember about all three of these forms they all get you to the podium. Right. So you know, you're oh you're on the podium. You're doing okay because you're in compliance.

And you're on the podium. But I, you know, there's just a couple things to keep in mind with each of these because they are different agreements. And that's why I've kind of ranked them in these order, so. Well, during agreement and the property scoring agreement. Again, this gets you on the podium, but really it's nothing more than a disclosure.

Because what it says is if the consumer, wishes, right, when they move forward, to use, the, the, broker services will enter into a separate agreement. Right. And you go and read the agreement, that's what it says. And this is only that they're using the broker services to view the properties. So this is only going to get you to bronze.

Okay. Now what I want to point out with this agreement is that sometimes can you get bumped off the podium. Yes. We just saw this happen with gymnastics in the Summer Olympics of this year. Right? That sometimes you think you're bronze and then all of a sudden somebody else comes along and takes it away and you're bumped off the podium, which means you've got nothing.

So I want you to keep that in mind because again, this is not a hire agreement. They're not officially hiring you. It's just completing the mandatory terms of the settlement and disclosing to the buyer. Then if the buyer chooses to move forward in the future and work with you and hired you, then you're going to enter into a separate agreement.

Okay, so let's move our way up the podium and the next agreement are showing agreement, right. Which basically says that we're going to outline specific, properties. It could be one property address. It could be three property addresses or whatever you can stuff in there basically. But it's only for those specific addresses or properties that you note on this showing agreement.

So that's why this earns silver because again, it gets you up, you're hired on the podium. And you are hired by the buyer. However, it's only for a specific group of properties or one property. It's not for everything that the buyer decides that they want to see and work with you on. And that's where really going for gold, I think is, is probably, I mean, it is best everybody wants to win gold, right.

And that's exclusive buyer broker agreement. And that's where it's going to cover everything and anything that the buyer wants to find and see and purchase and whatever you find. And that's why you might be more willing to mail to neighborhoods and locate property owners that have unique properties that your buyers looking for, but they may not be on the market yet.

That's why you might be willing to seek through for sale by owners, whether it's websites or driving around or whatnot, and find opportunities for them that aren't readily at your fingertips. That's why I keep a database of all the builders in my area, and what their starting prices are, and where their neighborhoods are, and what size properties, and all of these things, along with builders in my area that build on private property and not in communities.

So I've kept that spreadsheet for years and years. You want to have, access to all kinds of ways to help them find their property, because that's what the Exclusive Buyer Broker Agreement is really about. Right. So that's the gold agreement to get you all the way to the top of the podium. It's pretty hard to get bumped off the podium when you're all the way at the top.

Right. Just consider that it's pretty hard to get bumped. Okay. So just going through some of the next forms. And again, we're not going to dive into each specific form because that has already happened. There's already tons of webinars about that. So at this point what happens. Well let me let me first, let me just tell you what the forms are.

And then we're going to go through a bunch of scenarios. Okay. So there's ways that you can modify both the exclusive buyer broker agreement and the showing agreement. Because again those are the two agreements that you get hired okay. So the buyer has hired you either for specific properties or for any properties. And there may be a need to go back and modify that.

Maybe you need to extend or change your termination date. Maybe you need to change the compensation. Maybe you need to change at the protection period, or any of the terms that are completed and filled in within those documents. So we do have the option now, I'm so thankful we have this form. I've been wanting this form for years.

I had to go back and modify the buyer broker agreement and make amendments or extensions, or change things within it. Basically from that. So just know that that's available. All of these forms are available in Form Simplicity, where we go and get all of our other documentation and, so, you know, feel free to go there and search out all these forms that are also in the link in the Google Drive folder that is been shared with you many times in the chat box of today's session.

So you can also go there for a quicker access maybe. Now the compensation agreements, we have two different compensation agreements. So I underlined the differences because there's still a lot of confusion about these compensation agreements. And why do we have two of them understand the flow of money right now? In the end, it all shows up on the closing statement.

We all see it and it's all there in docs the same basically at the end of the process to us. But the actual legal flow of the money is very different with both these forms and one of the forms, the first one on top here, the seller to the buyer's broker, the seller is the one paying compensation directly to the buyer's broker, of whatever compensation amounts they want to share.

Right. Whatever they want to pay, whatever the seller has agreed to and is willing to do that. And we'll talk about that in a moment as we go through the process, from start to finish. But it removes the seller's broker. So this is what I like to call the new way, the seller paying directly to the buyer's broker.

And then the seller's also paying directly to the listing broker for their services. Now the other option, the second one listed down here, is the seller's broker to the buyer's broker. Now what's the difference? Well this is what I call the old way. If you go back a year ago, right the way that you might have done business at that point is the seller paid all of the money, let's say, this big basket, and then paid it all to the listing broker and then the listing broker took a portion of that and shared it with the buyer's broker.

And that's where it's seller's broker to buyers broker. Right. I keep calling it listing broker because that's a hard habit to break. But it's seller's broker now. So the seller's broker has taken all of that basket and then is sharing a portion of that with the buyer's broker. Now there's some liability reasons right? I am a broker who has been in many situations before where I might have had to pay in the past a buyer's broker, even when the seller was refusing to pay my compensation at the closing.

And so there are some liability there with that. But.

Consider that this is the old way. Understand it's still legal to do this. There wasn't a law change that happened. There was a rule change that happened for Realtor® members. So as a rule change, this is still legal to do. But let me just ask you a question. Does it make sense to do it? This is your broker's decision, right?

Does it make sense to do it? If that's the complaint initially that got us in trouble, we're there. Said that in the in the lawsuits in the complaint and said, hey, brokerages are having control, sellers brokers, are having control over what the buyer's broker is getting paid regardless if the buyer broker is any good or not. That's basically what they said.

The buyer broker could show up and be stellar. They could do a wonderful job in representing their buyer, managing through the transaction and working hard for that buyer. And they've earned that compensation that was offered by the other broker. However, they may not be that great. And in that case, they're still getting paid the same way. Either way, that's why the push was to have buyers in control of what they pay for compensation.

Right. And that's where we go back to embrace. We're going to embrace by earning their trust. Right. And telling them about the money and then clarifying that in a buyer broker agreement. Because when you look at the buyer broker agreement, what it says and the showing agreement, what it says is that the buyer owes the money to us but will be reduced, credited, basically offset by whatever is received from an outside source, whether it's the seller's broker or the seller directly.

And so these compensation agreements, there's two options. And it's really based upon what the seller and the seller's broker decide at the time of the listing and then get these documents. And again, we're going to talk more about that because I'm sure you still have some questions there. So let's dive into that. This is what I call the start of the food chain.

And by the way, while it's on my mind, I just want to mention there are also modification forms available to those documents as well. So the compensation agreements can be modified as well. Okay. We got lots of documents now that's for sure. So the start of the food chain, this is what I call the process, right?

It doesn't matter how many buyers you have and how many buyers you sign up if you don't have something to sell them. So we've got to go first. Take a listing, right. Or gain a property to be able to sell them. And so the way that this works really is starting all the way back at the beginning of the process.

And that's in the listing agreement. Now there's also a webinar that Juana Watkins did on the listing agreement, the new updates that were released in July. I would encourage you to go back and watch that or rewatch that if you haven't. I even have it memorized that it's right at the 45 minute mark that she starts talking about the compensation section.

So you're welcome. You can fast forward to that if you want, but I would encourage you to watch the whole thing. So the listing agreement, this is the exclusive right of sale listing agreement. And there's two different paragraphs that coincide with each other. There's there's three technically, but the two we're going to talk about today is paragraph eight and paragraph ten.

Now in paragraph eight that's where the compensation goes that the seller is compensating to the broker being the seller's broker. Right. The listing broker. So depending on what you put in paragraph eight a completely depends on what they've decided in paragraph ten. So you really have to have a conversation with the seller first to say, here's what I do when I list your property for sale and I market it and I maybe you do open houses, you do whatever you do, right?

So you kind of share all of that information with them. Member. You're earning their trust. Then you're talking about the money. This is what I get, paid. This is what our company charges or whatever for those services. And you have that conversation from the listing side because we've really decoupled the compensation, right? Decoupled it, meaning separating it from that big basket and saying, here's what we charge for the listing side.

Now, what would you like to offer for the buyer's brokers compensation, if anything? And then you go through the conversation of how much they want to offer, if anything, for the buyer broker side. And that's where once you have that conversation, you'll know how to complete paragraph ten. Do you want to check 10 A, 10 B or 10 C?

See, that depends of course, on the seller's wishes. So ten A is the old way where it's authorizing the broker to take the whole basket and share some of that basket with the buyer's broker. So if they check ten A, let's go back to paragraph eight. In paragraph eight, A it's the whole basket, right? The old way of doing things, as I like to refer to it.

Let's go back to paragraph ten. If they check ten B and again, you really should discuss this with your broker for guidance as well of what your broker chooses. The seller authorizes the broker to offer compensation to the buyer's broker from the seller. So you understand this is where either the the seller's broker is going to pay the compensation, or the seller directly is going to pay the compensation to the buyer's broker.

So let's back up. I mentioned I have been through several scenarios, true stories actually, they're not scenarios. They're true. Where the seller at closing decided they weren't going to pay compensation. And, as the listing broker seller's broker did, the buyer and the the buyer's broker did the buyer's broker bring a ready, willing and able buyer?

Yeah. They're sitting at closing literally across from the table. And so they're expecting to get paid. They want to go out for a nice dinner tonight. Like they want to celebrate the closing. And so they're looking for their compensation. But now. So listing broker if I'm not getting anything I still owe that buyer's broker. According to all the legal documents, they brought a ready, willing and able buyer.

And now there's some complications there. That's ten A and ten B if the seller says I'm not paying compensation at all. Now, as the seller's broker, I have my listing agreement to fall back on. And as the buyer's broker, that's why I have the compensation agreement to fall back on that. They they stated in a compensation agreement document that they were going to pay this match, whatever that is.

So ten B is the new way as I refer to it. This is the new way of the seller paying directly to the, the buyer's broker. Okay. Now both of those sections say this compensation will be set forth in a separate written agreement between either the broker and the buyer's broker or the seller and the buyer's broker.

So again, depending on which one of those, that they agree to is going to depend on which form, then you're going to go get. So just to point out here before we leave the slide, “C” if they're not going to offer any compensation at all to the buyer's broker. That's fine. They check that box. No compensation is being shared.

There's talking points on, NAR’s FAQs about, you know, how you could talk and discuss that. Basically what they say is explain the process. And I'll give you some of those talking points at the very end. But, you know, the buyers just can't finance it. That's one big issue. And do they have the ability to come and pay it out of pocket?

Maybe, but maybe not. So we kind of walk through what those scenarios would look like. So let's move forward. The compensation agreement. So this is the seller's broker to the buyer's broker. That's where both brokers would fill this out. Now remember in the listing agreement what it says here. If we go back this compensation will be set forth in a separate written agreement.

So at the time we've listed the property the seller has agreed. Here's what I'm going to allow or here's what I want to do. Okay. They check the box. We fill the information in. Then the seller's broker, the listing agent is going to go get the appropriate compensation form. So whether that's compensation seller's broker to buyer's broker or directly from the seller to the buyer’s broker, we need to make sure that we have the appropriate compensation form and that, we get that executed and filled out because the seller to the buyer's broker, the seller is completing it, filling it out and signing it.

Right. So we want to make sure that we go ahead and complete all of that and share it. Okay. That way we have it available when a buyer's broker calls and they want to show the property and they ask because now that's the first question, right? Is there any compensation being offered which is the correct question. We're going to talk about that.

With our ethics and and do you have a compensation agreement that you can share with me? So the compensation agreement, if you go back and watch the webinars, please do. This is as a buyer's broker for your protection legally, because it's an agreement directly from who's going to pay you to the buyer's brokerage stating, yes, I'm going to pay you whether that's the seller of the seller's broker.

This is your absolute best and only protection, really, with some other variances that we've got. So we want to make sure that this is the way the cream of the crop, right, to get the compensation agreements. So if you're a listing agent, which I hope all of you are, please make sure you're getting these compensation agreements.

If you don't have them in place and the seller is offering or seller's broker is offering, compensation to the buyer's broker, now's a great time to go back and have that conversation with the seller and say, you know, some things have changed. We've got some new documents in place. I'd like you to, you know, I'm going to present this to you, and I'd like you to sign this.

If it's a seller offering or, you know, whatever it is. And, I just want to make you aware of it. Doesn't change any terms of our agreement. Whatever. Right. So now's a great time to go back, get all those in place so you have them because it's really going to make the the transaction a lot smoother. Now let me tell you a couple of concerns

I’ve had from people. Why would we have a seller, let's say sign this particular document when it's not completely filled out and it's not completely filled out because we don't know who the buyer's broker is yet. Right. And it's not going to be signed by the buyer's broker, because maybe we're at the listing table at this point. Well, don't we do the same thing with the HOA disclosure community?

HOA disclosure don't we do the same thing with the lead based paint form? Disclosure? So many of us. Yes. The community HOA disclosure must be disclosed to a buyer prior to them receiving even the offer to fill out. So, yeah, we're already doing this with some other documents. It's not that out of line to think about. Also doing that having an available for then the buyer's broker to immediately receive do not upload it in the MLS.

Can NOT do that. But to receive you're sharing that with them upon their request. And then from there they can complete it filled out, send it back. Right. And then your good. Compensation is, clarified. It's transparent and it's protected. Okay. Now, because this process wasn't always happening or it isn't always happening. As a buyer's agent, we cannot always control what the listing agent or seller's broker has done.

And so from that standpoint, if the buyer wants to make an offer, we don't want to hold up the offer waiting to figure out this compensation, even though that might be in the best interest of the buyer. Buyers don't always want to do that, right. They want to get their offer out right away. So because of that, rider FF and GG were released recently.

So if you haven't looked at these, please take a moment to go in and find them in Form Simplicity, and look through these agreements. But basically FF says that the buyers, you know, entered, into a separate brokerage agreement. In other words, there is no compensation agreement place. And what they're doing is they're asking for the seller to credit the buyer directly, and then the buyer will pay the buyer broker compensation.

All right. So this works great. If the buyer can receive a credit no problem. It's clear you put it in there. However much it is. And and then they go through and that's, that's a condition basically contingency in your sales contract, which, by the way, is a little side note. We did get new sales contracts released as well.

For the FAR Bar. We now have 6XX. That is the latest version to clear up. A sentence about compensation. So not major changes, but it's important to note we always used the most recent form, so please go grab that as well. On Form Simplicity. So when it comes to this follow the flow of money. The seller is crediting the buyer.

So it's going to show up as a credit on the closing statements. And then the buyer is going to use that basically to pay the buyer broker compensation. Right now, what it says in there though is that we're not sharing our buyer broker compensate or buyer broker agreement. This is something that has been really confusing to a lot of people.

And I will tell you that the only times I have ever had to share my buyer, my exclusive, our broker agreement in all the years the 25 almost years I've been using it is when there's then a concern, who's buyer is it? So in other words, someone claims that's my buyer. Sorry, I've got a buyer broker agreement.

Let me show you. Here's when it was executed. Whatever. Whether it's an arbitration case, because I happen through arbitration as well with, an exclusive buyer broker agreement or whether it is just in upfront in the beginning. But they stopped at my open house. I understand, but I have a buyer broker agreement, you know, and you can't interfere.

So other than that, we don't share these back and forth. This is a terrible habit. No no no no no. Because when we start sharing a bunch of buyer broker agreements all over the place, that's a whole nother legal nightmare we're not even going to get into. But oh my goodness. Just think of like, antitrust and price fixing and no no no okay okay then rider GG, let's get through this.

And then I want to talk about one more thing that's happening a lot in the marketplace. This is the seller's agreement with respect to the buyer's broker compensation. And what happens if the buyer cannot accept a credit from the seller? Like, what FF allows? Sometimes maybe the buyer is already getting concessions from the seller and they're already maxed out.

So in other words, you check with the lender and the lender says they can't get any more credit. Okay. Because what FF does is the seller is literally giving them a credit, and then the buyer is paying the compensation. They may not be able to do that if their credit is already at the peak with their loan program.

So instead, this is where the contract is contingent upon having a compensation agreement completed within so many days. Now it says three. You can put a different time frame, but within three days after the effective date. So basically the compensation agreement, either one of those the seller's broker to the buyer’s broker or the seller to the buyers broker, whichever one be completed and filled out.

So it makes the contract contingent and if the buyer doesn't receive it in a timely manner, and if the buyer isn't satisfied with what they've been told versus what they received in the compensation agreement, they have the right to cancel the contract and be refunded their deposit. So it is still protection for the buyer. They can make the offer.

They know that there is compensation coming to offset what they owe, however they just don't have that yet. So it puts the compensation agreement in place. All right. So those are the two options there. Now before I move on, I want to talk about a practice that I'm hearing. A lot is happening. I shouldn't say a lot.

It's just happening I hear in the marketplace and it is concerning. So I just want to point this out as a listing agent. If a buyer's agent is calling and says, hey, I want to show your property and are you offering compensation? Some listing brokers and outside sources as well. You know, it could be builders or it, you know, whoever outside are saying, well, what is your compensation?

So they're asking the buyer's broker what their compensation is on their agreement. Understand that when you start that mix and mingle, could you be setting fees? That's a concern. Right. So I really encourage you to be cautious about that because if the listing agent, let's say, gets several offers at the same time, right. Let's just think through the practice of this.

If we go back to a crazy market or there's a property that has multiple offers and the listing agent has three offers, and they fished out and said, hey, how much is your compensation? Well, how much is your compensation and how much is your compensation. And then they pick the lowest one and try to keep the difference. Could that be a form of steering as well, that they've steered the seller in the direction of where the seller's broker is going to make the most money?

So we have to be very cautious about the long term effects of what we're doing. And the we've decoupled the compensation. So what the listing broker earns is not shared with buyers broker. We've never shared listing agreements. Right. That just doesn't happen. So we're not going to share buyer broker agreements. And what the listing agent is being paid or listing brokerage, sorry, is being paid for their compensation has no bearing on what the buyer's broker is being paid. And again, the buyer's broker what they've negotiated with their buyer. Maybe they've agreed to something different, because maybe this buyer has bought ten investment properties this year from this brokerage. And so the brokerage has agreed to a different compensation structure with them based off of that.

That's that has no bearing on the seller and what they're offering. And what the buyer gets to negotiate, because that's the buyer's great negotiation skills in that scenario. So again, we've decoupled. We've separated never to be married again. Right. We've decoupled these compensation structures. One is not dependent on the other. So just think of how much is the seller or seller's broker willing to pay to offset the cost that the buyer may have for paying their buyer's broker?

All right. Let's go through some of the ethics now that come into play, because we have quite a bit of this. And you may not have ever noticed this before I guess is the word because we, a lot changes once you have a signed hire agreement, right? Let's say a buyer broker agreement. Once you have a buyer broker agreement in place, the code of ethics completely changes on what the requirement is and what needs to happen.

So let's talk about understanding our ethical duties okay. Code of ethics article one first and foremost says that when representing a buyer got it seller and so on, or other client as an agent, Realtors® pledge themselves to protect and promote the interest of their client. The obligation to the client is primary. Basically, what standard practice one two says is that if we're in a, contractual agreement, there our client.

And so once they hired us, whether it's an exclusive right of sale listing agreement or an exclusive buyer agreement, we now, the client comes first. It's all about them. It's not about us. It's about them. So we always have to make sure we're putting them first. It also goes on to say in article one that we have to be honest, that is like a no brainer, right?

Realtors® are obligated to treat all parties honestly. Everybody, I'm going to touch on that because again, if you call and they won't tell you, let's say that. Let's say that a buyer's broker calls the listing broker. And let's just think through the scenario. The listing brokers already listed the property. They've already had a discussion at some point with the seller about compensation because they had to complete paragraph ten and know what to put in paragraph eight.

So they've already discussed if there's compensation being shared or if there's no compensation being shared. So if there's no compensation being shared, that's the answer. When the buyer broker calls, sorry, there's no compensation being shared. And then the buyer can take action. We'll talk about that and make an offer. Asking for compensation or credit. But if they say, well, tell me your compensation and they won't share with you what the seller has agreed to in the listing agreement, are they being honest with all parties?

And that not only is a concern for article one, that's a concern for chapter 475. So we have to stay honest because whether we're a transaction broker, a single agent or no brokerage relationship, honesty is number one. Okay. All right. Understanding our ethical duty standards practice 113 says Realtors® must advise potential clients when we're entering into these buyers agreements.

Our company policies regarding cooperation, the amount of compensation being paid by the client, and any potential for offsetting compensation from outside sources. So we're having that full, transparent conversation with them about money because we're required to. And it just makes sense, right? It just makes sense. So a couple other things as we go through these, because I got a lot want to talk about is when we're establishing this contractual relationship, let's say in a buyers agreement or listing agreement, and we're doing it electronically, let's say through zoom, or we're sending them documents to digitally sign, we have to make sure we're explaining to them what we're asking them to sign.

That's super important, right. All right. 16-3 says that they do. The buyer can, let's say, can enter into multiple buyer broker agreements. This question comes up sometimes and some people are very confused by this. But yes, they can, because what if they were coming to your area and they wanted to hire a Realtor® to buy an investment property, but they also wanted to hire a Realtor®, buy a luxury house on the water.

Those might be two completely different Realtor® and sets of services that are offered. They might hire two different Realtors® as long as it's not conflicting. And that's where the different types of services come in. It's not subject to the other brokers agreement. OK, 16-6 says that, if the Realtor® is contacted by the client of another Realtor® regarding the creation.

So a buyer calls and says, hey, you know, I want to maybe talk to you about hiring you. And it is to provide the same type of service, right? As long as the second Realtor® has not initiated that, we're not out poaching other people's buyers, but they have the right to shop around, so they're shopping around. We can discuss the terms of entering into a future agreement with them without violating the code of ethics, because they've shopped around.

We're not out poaching other people's buyers, right? All right. 16 seven says just because we've had an exclusive representation agreement in the past doesn't mean we own them forever. They are free to go to whoever, whenever they want, even with an exclusive buyer broker agreement, there's options to cancel. So yeah, read through your agreements. So if they've entered into an exclusive agreement with a realtor, it doesn't preclude them or inhibit, any other realtor from entering into a similar agreement after the expiration of the current agreement.

Okay. And then, Realtors®, prior to entering into this agreement, have an affirmative obligation to make sure they're not subject to a current and valid exclusive agreement that might jeopardize them to have to pay multiple expenses. And we don't want to do that. Right. And most of these, as you can see, are under standard practice 16. So if you want to go back and review the code of ethics, read through article 16.

Right. And all the standards of practice. Now when we're acting as a buyer representative, we shall disclose that relationship to the seller or the representative at first contact, which means that maybe I'm calling and saying, hey, I'm a buyer's representative for my buyer. And I'd like to show your property at one, two, three Main Street. Are you offering buyer broker compensation?

Right. So that may be the conversation. Now I disclose that at first contact. And then I've got to provide written confirmation of that disclosure. No later than the execution of a purchase agreement or lease. Now, this is currently what the code of ethics sets. So basically that could be a text or an email, just as I would prefer email as a follow up to say you know, thanks for the showing.

Here's the buyer's offer, by the way. I am exclusively representing them. Something simple like that doesn't have to be anything formal. Now this 16-11 says the same thing as 16-10. However, it's for unlisted property, which means a for sale by owner. So it says the same thing. We're going to make that disclosure. We're going to follow that disclosure up in writing.

You know, first opportunity basically, but no later than the offer. And then it goes on to say Realtor® shall make any request for anticipated compensation from the seller at the first contact. So we're also going to ask the seller right up front if they will pay any of our compensation to offset the buyer, or also to pay for helping them through the sale as a for sale by owner. So you go back and discuss that with your, broker of what your fee structure is and how you work that with a for sale by owner. So 16-14 we're free to enter and contractual relationships with sellers, buyers and others, but we're not going to knowingly obligate them to pay more than one commission except with their informed consent.

So except when they're okay with that, why they be okay to that? But okay. And then the last one, this is where so many people get confused. We've touched on this so many times in webinars. But standard of practice 16-16, some Realtors® are still hung up on the fact that go, wait a minute, how can we put compensation in the contract?

How can we negotiate that? Well, we can, but we can't. And that's a confusing answer. Realtors®, we don't put ourselves first, right? It's always about that. So it's about the buyer. The buyer can instruct us to put in the contingency or to, you know, ask for the compensation agreement. Remember that's part of standard practice 113. To disclose to the buyer what any offsetting compensation is.

So we have to we have a duty to protect that which means request a compensation agreement. So now this is wait a minute. We can't use an offer to purchase to attempt to modify any offer of compensation. That's correct. Realtors® cannot. But the buyer can instruct us to. Right. So buyers and sellers can negotiate in my sales contracts because they're the parties to the sales contracts, and they can negotiate those terms between them.

Right. All right. So let's talk about a few different scenarios here okay. Let's say that we have an exclusive buyer broker agreement. And it has a certain amount in there that the, buyer is willing to pay for compensation for the services the buyer broker is offering. Okay. So let's say the buyer chooses to see the property and either the seller or the listing brokerage is offering the buyer broker compensation.

That's more than what the buyer is obligated to pay. And the exclusive buyer broker agreement. Now that comes in and it's it's equal. That's great. But that may not happen. Right. So what happens if it's more than what the buyer is obligated to pay in their exclusive buyer broker agreement? Now remember, maybe this buyer negotiated a great, you know, deal because they've already bought ten properties.

Or, you know, there's all kinds of scenarios for this. But either way, it's more now the settlement is very clear that we are not allowed to accept more than once in our agreement, our exclusive our agreement with the buyer. Right, which in this case, in my scenario is an exclusive buyer broker agreement. So here's the options. We can amend the EBBA, right?

If the buyer agrees to remember there's an amendment form in the amendment. Part of that is compensation. So if the buyer says you've done a great job, I want you to make that money, go back and amend it. Right. But they might not tell you that. So the next thing is you can rebate the buyer the extra money.

Right. But again, you've got to make sure from the lender that that's okay to give them the credit for the difference of what you're owed. As the buyer broker, you've already set out with the buyer. Here's what I'm going to do for you. And here's what I'm going to get paid period. That's what your fee is. So just because you go to Walmart and you go to check it out and you agree, you're going to buy a pack of paper for five bucks, the cashier doesn't look inside your wallet when you open it up to pay and go, Oh wait...

You have more money than that. You should pay some more, right? It doesn't work that way. The sticker price is what the sticker price is. So you've already negotiated that with the buyer on the buyer broker agreement. So anything extra, maybe you credit it back to the buyer. The other thing is the buyer can negotiate that back with the seller to lower the purchase price.

And basically when they're lowering the purchase price, they're kind of removing that overage for a lack of better terms. Hey, the seller maybe could buy down the buyer's interest rate and, you know, get them a cheaper rate with what is the difference of the money. And they could also negotiate other items in equivalence or exchange for that extra money.

Could be, appliances. It could be a home warranty. There's all kinds of things, right, that could be added on. Trust me, it's easy to spend the money. You'll find ways. Okay, this is the same way the bonuses are handled, right. So again what the settlement says quote, such a Realtor® or participant may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.

Period. You've put a sticker price on it. You can't bait and switch them on what the price is. So we need to be clear on that. Okay. So let's look at another scenario. Again. We've got an exclusive buyer broker agreement. Let's say and it's got a set amount in it, compensation. So the buyer chooses property to see.

Right. But the offering a buyer broker compensation is less than what is in your agreement. Right. So it's not enough to fully cover what are the buyer's choices. Well, the buyer could choose not to see the property. However that is the buyer's choice. And I want to be very, very clear. That is the buyer's choice always. I don't care one way or the other where my money comes from.

I've got an agreement that the buyer is going to pay me this or have it offset from somebody else, right? So I don't care. Either way, I'm getting paid. They could choose not to see the property because they don't want to come out of pocket for the money, or they don't have the money to come out of pocket.

Now consider this though. This is a choice. But could you still show them? Hey, let me try to negotiate it for you. Maybe you could negotiate it into the sale, right, and put it in the purchase offer. If the buyers willing to allow you to do that, just make sure the buyer doesn't get stuck on that property just in case the seller will not agree to that.

Right? Again, that's all part of the negotiations. Just like when a buyer needs closing costs or other credits, right? Now, the next option is bargain. Instruct their Realtor® to listing agent. This is in accordance with all the code of ethics standard practice 3-2 prior to the showing and ask for, change in compensation, either from the seller's broker or the seller directly.

Now they have the right to say no, but they have the right to say yes. And if they say yes, get it in writing. Right. So get a compensation agreement or a modification to the compensation agreement. All right. So the next thing the buyer can choose to see the property right. And make an offer. And we don't have to necessarily do this because we have these other forms now available.

But you're basically saying this is what we want not this okay. And so you're negotiating in the different various amounts for the buyer to have the overage covered. That's not enough okay. And so the purchase price might be negotiated as well when they go through this process. Okay. Now the buyer can also choose to pay the difference.

Right. So there's nothing wrong with the buyer saying, you know what, I'll pay the difference. So you'll receive some money from the seller on the closing statement and some money from the buyer on the closing statement. And I want to point out that is acceptable as long as both of those together do not exceed what you have in your agreement for your exclusive buyer broker agreement, okay? You're never going to go over that amount because we've all agreed to these rules. Now, as Realtor® members. And that just needs to be I just want to take that one step further. The code of ethics requires that that be fully disclosed, which it is, because all moneys are going to go in the closing statement.

So the buyer and seller are both going to see the compensation that has been paid. All parties are seeing it. All money is always fully disclosed. Nothing happens under the table ever. Okay. All right. So again as a reminder, we can go in and negotiate compensation in the contract on behalf of the buyer's request. So the buyer is saying, hey, this is what I want.

I want to make an offer, but I want them to pay all of your compensation that I owe. How can we negotiate that? And then that's where you get to shine. That's where the advising them of embrace comes in. You're giving them the options that we have available to do this. Right. And it's a wonderful thing. Okay. Okay.

So those are some of the various scenarios. Let's talk about a few other things that come into play when we think about the big picture. Right. The 10,000ft view I like to talk about this settlement does not change our brokerage relationship act. So I want to be clear. We are not an agency state. We are presumed transaction brokers.

And so the presumption of agency went away a long time ago. So what that means is, there's again, some confusion out there that when you enter into a buyer broker agreement, you must offer them an agency relationship, like single agency that is not true. Not in Florida. There are some states like that, but not in Florida. So in Florida, we're all presumed transaction brokers.

This is all outlined under chapter 475 .278. If you want some nightly reading to do, you can Google that. Florida Statutes, Chapter 475 .278 and you'll see our brokerage relationship act. And it clearly says we're all presumed transaction brokers unless we choose to do otherwise. And again, otherwise might be we provide, written documentation that we're, offering single agency, which means that the buyer would become our principal and we would become their fiduciary.

Now that that fiduciary relationship exists, it holds us to a bit of a higher standard. Right. We have full disclosure, full confidentiality, obedience, loyalty. It's a fiduciary relationship, just like an attorney client privilege. Okay, as a transaction broker, it's a limited form of representation. But I want to be clear, it is representation. So many people think that when you're a transaction broker, you represent the transaction.

That is not true. It states clearly in chapter 475 .278 as a transaction broker, you represent either a buyer, a seller, or both in the same transaction. But there isn't a fiduciary okay. So it's limited. It's a limited form of transaction. I'm sorry. Representation. And then the other option is just not to offer no brokerage, basically no brokerage relationship, which again is a form we have to give it to them in writing stating, hey, we still have to be honest with you.

We still have to disclose pertinent facts about the property, and we still have to account for the money and all of those, those are duties. So number one is we still have to be honest. And I really want you to remember that as we move forward and we're all working through transactions in the new world, right? The new world of real estate, honesty is key.

And that is honesty with everybody. Not just our buyers, not just our sellers. Honesty with each other. So again, did the seller complete something in the listing agreement that says if they're offering compensation or not? That is the answer, basically of what we want to share or whatever that is. Right. Again, we don't have to share buyer broker agreements, but again, discussing, you know, if we're going in a negotiation with that, you know GG, no, I'm sorry, FF, standard, requires compensation amounts to be put in it.

So those are all things, you know, again, we just want to have some honesty as we move forward because not only is it article one, it's chapter 475. Right. All right. A few more things. As I mentioned, buyers can't finance the brokerage compensation. So this is a great talking point to put in play with with your sellers right.

As a seller. And the seller says, well, why should I offer compensation? Well, according to NAR’s FAQ, it could be considered a marketing expense, right, to attract as many buyers as possible, because there might be some buyers that say, I just don't want to come out of pocket with it. I'm too scared. I fall in love with the house.

I don't want to see it. Okay, that is a possibility that you get reduced showings, maybe. And so in that case, you know, we want to explain to them that since the current regulations in place, do not allow financing of the buyer broker compensation, it has to come from somewhere. So either the buyer is going to pay it or they're going to ask you to pay it.

And because we can't finance it, that's more money. They have to come out of pocket with. And I always say to sellers, let's talk about when you bought this property, were you prepared to come out of pocket with that extra money, or would it have been helpful to have it already worked in with the seller? And so I really want them to put themselves in the buyer's shoes.

Right. And that's where they may need the sellers to pay it for them. Now one more thing I want to mention is the lender's perspective, the lender's perspective. This has been working really well for me and, since the rule changes, because most of my practices I haven't really had to change much, except now we have this compensation agreement in exchange for MLS disclosures of compensation.

So basically, the lender's perspective is I'll ask the lender to put my buyer broker compensation right on the loan estimate. So they put it right on there as a buyer expense. So they see here's how much you owe me. And I'm telling the lender asking the lender to do that. Then the lender can update the loan estimate once we let's say we have a property we're under contract with and they'll put on there the offsetting amount coming from the seller or the seller's broker.

So if there's compensation being offered to offset or reduce what they owe me, they show it as a line item the buyer owes, but then they show it as a credit that they're receiving so that the buyer can clearly see. This is, again, transparency. This is what you owe. Let me go negotiate for you and get it off set.

Right. That's really again, showing your value and helping them, advising them through the transaction of that so much that this has happened, that some lenders are coming back and now making this a, a policy within their book or their, lending. So that's something you may consider as well, discussing again, just for full transparency with, the buyer, the lender, with everybody of what the fees are.

Hey, so let me just recap with you again. Embrace right. Earn their trust, sit down and take the time to go through a buyer meeting. If you don't know what to do, what to say, what that is in a buyer meeting, I'm going to give you, something here in a moment. If you're if you're interested, just some ideas to share.

But when it comes to, earning their trust, take the time to really craft a buyer meeting to explain and ask yourself if I'm a buyer and I'm buying a house in today's world, what would I want to know? What would I need to know? Right? And then go and answer all those questions in a buyer meeting. Right answer everything for that, right?

Money. Right? Be transparent about the money. Make sure you explain it. Make sure you explain the the option that you can go negotiate for them, and ask, you know, as part of the contract if they instruct you right to have that covered from outside sources, then ask to be hired in the buyer brokerage agreement. Right.

Make them a ready, willing, and able buyer with financing or with cash and make sure you get all that done. Advise them through the process and assist them and educate them, which is going to build confidence. And then we want to use our ethics through the entire process of doing that. Okay. All right. So let me end. If you are completely lost at what do I do in a buyer meeting?

And you have no idea because you've never thought about this before. This is just a very simple list of ideas. So a whole bunch of different ideas that you can decide you like or hate, to include. But if you do not know what to do, you're welcome to go download this buyer meeting checklist. Again, just some ideas that are put forth and put out there for you.

If you find value and it it's it's free, just go download it whenever you have the opportunity. So I'm going to wrap up and say thank you. Thank you for your time today. Thank you for being committed to our industry. We are going to come out stronger. We are going to come out better, and we are still going to be the center of the transaction because buyers need representation.

They don't know how to go through this process. They there's just it's a complicated process, right? Our contracts are not getting simpler. They're getting more, you know, they're getting longer and they're getting more complex because the process is not a simple process. So we want to make sure that they gain that rep representation that they deserve and that we help them through that process, by doing that.

So thank you so much for your time today and for being here. Have a great day and go get some buyer agreements signed.