Latest / Military Real Estate Rookie Show / Part 2 Buyer Broker Agreement Basics

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Part 2 Buyer Broker Agreement Basics · Military Real Estate Rookie Show

• 0:00
  SPEAKER_00: Hello everyone.
• 0:01
  SPEAKER_00: Welcome back to the Military Real Estate Ricky Show.
• 0:04
  SPEAKER_00: I'm your host, Rina.
• 0:06
  SPEAKER_00: Today's topic is before you sign the buyer broker agreement, listen to this episode.
• 0:15
  SPEAKER_00: Okay.
• 0:16
  SPEAKER_00: I had a client that was very curious and they wanted to ask a lot of questions about this buyer broker agreement.
• 0:24
  SPEAKER_00: And I thought this would be a very good topic for you guys to understand before you sign what exactly is a buyer broker agreement.
• 0:35
  SPEAKER_00: So, hey everybody, welcome back to the Military Real Estate Rookie Show.
• 0:39
  SPEAKER_00: I'm your host, Rena, the podcast where you talk about real estate, home ownership, investing, and building wealth.
• 0:48
  SPEAKER_00: I am again your host, Rena.
• 0:50
  SPEAKER_00: And today we're talking about something that every home buyer should understand before they start seriously working with a realtor.
• 0:58
  SPEAKER_00: It is the buyer broker agreement.
• 1:02
  SPEAKER_00: Now, that doesn't sound very exciting.
• 1:05
  SPEAKER_00: I get it, right?
• 1:06
  SPEAKER_00: But the rules and laws have changed different states.
• 1:10
  SPEAKER_00: Okay.
• 1:11
  SPEAKER_00: So I thought this would be a very good topic.
• 1:14
  SPEAKER_00: And before you engage with a realtor and they ask you to sign that buyer broker agreement.
• 1:20
  SPEAKER_00: So I am going to go through the whole thing.
• 1:24
  SPEAKER_00: Okay.
• 1:25
  SPEAKER_00: So a buyer broker agreement is not something you should just click and sign.
• 1:30
  SPEAKER_00: Okay.
• 1:32
  SPEAKER_00: Where is the house?
• 1:34
  SPEAKER_00: This is where you get the first step in engaging in a realtor, right?
• 1:39
  SPEAKER_00: So you need to understand what you're agreeing to.
• 1:42
  SPEAKER_00: So today I'm going to break it down in plain English.
• 1:46
  SPEAKER_00: Let's get started.
• 1:48
  SPEAKER_00: So, what is a buyer's broker agreement?
• 1:51
  SPEAKER_00: I know you hear this all the time.
• 1:52
  SPEAKER_00: Hey, the realtor wants you to sign his contract, but you have no idea what exactly what it is.
• 2:00
  SPEAKER_00: A buyer broker agreement, essentially a written agreement between you and your real estate brokerage, right?
• 2:07
  SPEAKER_00: That established the relationship for representing you as the buyer.
• 2:14
  SPEAKER_00: So when they're engaging with the listing agent, the seller, or whoever, they're representing you and you are giving them permission to engage on your behalf, essentially, right?
• 2:27
  SPEAKER_00: So think about it this way: you're telling the realtor, I want you to represent me.
• 2:33
  SPEAKER_00: I trust you in my real estate purchase, and you represent me on having conversations with a listing agent, et cetera, and whoever, right?
• 2:45
  SPEAKER_00: And agreement explained the terms of that relationship.
• 2:49
  SPEAKER_00: So it can address things such as how long the relationship lasts, what properties or geographic areas are covered, and what services the realtor will provide.
• 3:02
  SPEAKER_00: Okay, so how the realtor will be compensated is very important.
• 3:07
  SPEAKER_00: That needs to be explained.
• 3:09
  SPEAKER_00: What happened if the transaction doesn't close?
• 3:13
  SPEAKER_00: Agency relationship, termination provisions, and other responsibilities of the buyer and the brokerage.
• 3:21
  SPEAKER_00: The Zach terms vary by broker and agreements.
• 3:26
  SPEAKER_00: And that's why you should actually read it, right?
• 3:30
  SPEAKER_00: Don't just sign a send it on dot loop or some other electronic method, and you just like click.
• 3:37
  SPEAKER_00: Nope.
• 3:38
  SPEAKER_00: There's a lot that goes on involved with that broker agreement.
• 3:43
  SPEAKER_00: So let's talk about compensation.
• 3:45
  SPEAKER_00: This is probably one of the biggest questions buyers have, right?
• 3:49
  SPEAKER_00: How much is my realtor getting paid?
• 3:52
  SPEAKER_00: Okay, for her services or his or her services?
• 3:55
  SPEAKER_00: And that's a fair question.
• 3:57
  SPEAKER_00: And here's what I tell my buyers ask.
• 4:00
  SPEAKER_00: Okay, don't be embarrassed to ask.
• 4:03
  SPEAKER_00: Ask because this is a business relationship, okay?
• 4:06
  SPEAKER_00: And this is coming from you.
• 4:08
  SPEAKER_00: Don't be embarrassed.
• 4:09
  SPEAKER_00: What is your compensation?
• 4:11
  SPEAKER_00: It's a fair question.
• 4:12
  SPEAKER_00: How is how are you getting paid to work so hard for me?
• 4:16
  SPEAKER_00: Is the seller offering any compensation?
• 4:21
  SPEAKER_00: And what's happening if the seller doesn't offer enough to cover the agreed compensation?
• 4:27
  SPEAKER_00: That's a big one.
• 4:28
  SPEAKER_00: So, and most importantly, could I be responsible for any amount personally?
• 4:35
  SPEAKER_00: And you want to understand that before you make an offer, not after you fall in love with the house, and then there's all this paperwork and all the outside money that you have to pay.
• 4:46
  SPEAKER_00: So you want to make very clear what are your plan your realtors?
• 4:50
  SPEAKER_00: Are you comfortable with it, etc.?
• 4:52
  SPEAKER_00: Don't assume that the seller would pay everything.
• 4:56
  SPEAKER_00: Guys, the laws have changed.
• 4:58
  SPEAKER_00: You, the realtor have to negotiate what their percentage of the purchase price they want to be compensated for.
• 5:05
  SPEAKER_00: So this is something buyers need to understand.
• 5:08
  SPEAKER_00: Everything is negotiable.
• 5:09
  SPEAKER_00: You shouldn't simply say the seller pays my realtor fee, so you don't have to worry about it.
• 5:15
  SPEAKER_00: No, the compensation agreement is established through the written agreement and transaction negotiations.
• 5:23
  SPEAKER_00: There may be circumstances where the seller or the seller's broker offer compensation.
• 5:30
  SPEAKER_00: There may also be circumstances where the amount offered doesn't match the compensation and the buyer-broker agreement.
• 5:39
  SPEAKER_00: So all of that just needs to be explained.
• 5:44
  SPEAKER_00: And no one should be surprised.
• 5:46
  SPEAKER_00: So ask your realtor what happens if the seller contributes less than you agreed?
• 5:52
  SPEAKER_00: You get the answer, understand it, and make sure you know what it is.
• 5:56
  SPEAKER_00: And if anything, you could be responsible for at the end of the day.
• 6:00
  SPEAKER_00: And how long does the agreement last?
• 6:02
  SPEAKER_00: Another important question: how long am I agreeing to work with you?
• 6:06
  SPEAKER_00: Maybe the agreement is 30 days, maybe even longer.
• 6:09
  SPEAKER_00: That's something that you really need to make sure that you answer.
• 6:14
  SPEAKER_00: Maybe it covers a specific property, maybe it covers a broader search area.
• 6:19
  SPEAKER_00: There is no reason for a buyer to be afraid to ask when this agreement expires.
• 6:25
  SPEAKER_00: Can I terminate early?
• 6:27
  SPEAKER_00: You know, if I terminate, are there any fees or obligations?
• 6:31
  SPEAKER_00: Don't assume.
• 6:33
  SPEAKER_00: Read the agreement.
• 6:34
  SPEAKER_00: Understand it because this person works for you.
• 6:38
  SPEAKER_00: And what is a protective period?
• 6:40
  SPEAKER_00: Because that is also on a buyer's broker agreement.
• 6:43
  SPEAKER_00: Some buyer broker agreements contain what's commonly called a protection period or protected period.
• 6:50
  SPEAKER_00: That means that there may be circumstances where the brokerage could still be entitled to compensation.
• 6:56
  SPEAKER_00: Yeah.
• 6:57
  SPEAKER_00: After the agreement ends, if the buyer purchased a property covered by the agreement, you know, the exact language matters.
• 7:05
  SPEAKER_00: So if you see something like 90-day protective period, ask.
• 7:10
  SPEAKER_00: Don't panic.
• 7:12
  SPEAKER_00: Just say, you know, what does that mean?
• 7:14
  SPEAKER_00: You know, but don't ignore it because at the end of the day, you are responsible for this realtor's compensation or the seller.
• 7:22
  SPEAKER_00: So ask the question: what property does this apply for?
• 7:26
  SPEAKER_00: You know, to what circumstances would trigger this 90-day protective period?
• 7:30
  SPEAKER_00: You want your realtor to explain the actual language in your agreement.
• 7:36
  SPEAKER_00: Okay.
• 7:37
  SPEAKER_00: And another thing is, can I terminate the agreement?
• 7:40
  SPEAKER_00: Yeah.
• 7:40
  SPEAKER_00: Here's another important question.
• 7:43
  SPEAKER_00: Because at the end of the day, ask your realtor like, what happens if this relationship isn't working?
• 7:49
  SPEAKER_00: We don't see eye to eye on certain things.
• 7:51
  SPEAKER_00: Sometimes a buyer and a realtor are simply not a good fit.
• 7:54
  SPEAKER_00: It happens, it's life.
• 7:56
  SPEAKER_00: And that's okay.
• 7:57
  SPEAKER_00: Real estate is a real estate is a relationship business, right?
• 8:02
  SPEAKER_00: You want someone who communicates the way you need to understand it, your goals, and provide the level of service you expect.
• 8:11
  SPEAKER_00: It shouldn't be a struggle to with this relationship with your realtor.
• 8:16
  SPEAKER_00: And that is on another episode that I may, may, may give you guys because I feel like you know, real estate is a relationship-built business.
• 8:26
  SPEAKER_00: So more to follow on that.
• 8:28
  SPEAKER_00: But anyway, the agreement should explain the termination provisions.
• 8:32
  SPEAKER_00: So before you before you sign, know how you can get out of the agreement.
• 8:39
  SPEAKER_00: Okay.
• 8:40
  SPEAKER_00: So let's make sure that you know that you can walk away clean without owing any monies or any fees or anything like that.
• 8:48
  SPEAKER_00: Okay.
• 8:49
  SPEAKER_00: So what about agency?
• 8:51
  SPEAKER_00: Let's talk about the agency because this can confuse buyers.
• 8:56
  SPEAKER_00: You may hear terms like buyer agency, seller agency, dual agency, designated agency.
• 9:05
  SPEAKER_00: These are not just fancy real estate words, they describe different brokerages' relationships and responsibilities.
• 9:13
  SPEAKER_00: And here's my advice to you: if you don't understand the agency relationship, ask your realtor to explain it.
• 9:20
  SPEAKER_00: That is their job to make sure that they explain all the things that's going on with this contract.
• 9:28
  SPEAKER_00: You should understand who your realtor represents, who does the broker represent, what information is confidential?
• 9:36
  SPEAKER_00: Could the brokerage represent the other party in a transaction?
• 9:40
  SPEAKER_00: And what happens if another agent in the same brokerage represents the seller?
• 9:46
  SPEAKER_00: Don't sign something you don't understand.
• 9:48
  SPEAKER_00: This is very important.
• 9:49
  SPEAKER_00: And I want to make sure that you know that I'm here to educate you whether or not you choose me as a realtor or not.
• 9:58
  SPEAKER_00: But I want to make sure that you guys are educated.
• 10:00
  SPEAKER_00: So, what services should your realtor provide?
• 10:04
  SPEAKER_00: Here's another great buyer don't ask enough.
• 10:07
  SPEAKER_00: They don't ask these questions enough.
• 10:09
  SPEAKER_00: What exactly are you doing for me?
• 10:12
  SPEAKER_00: Your realtor may help you with things such as finding properties, scheduling showings, market information, offering preparation, negotiation, contract deadlines, due diligency, inspections, appraisal, communication, closing coordination, HOA.
• 10:31
  SPEAKER_00: I mean, I could go on.
• 10:32
  SPEAKER_00: These are some things that I just do anyway, which is not outside, but I do it because I care about the client.
• 10:39
  SPEAKER_00: And the the main thing is depends on agreement and brokerage, right?
• 10:45
  SPEAKER_00: But remember, you're not just hiring someone to open doors, you're hiring a professional to help you navigate through this transaction.
• 10:54
  SPEAKER_00: It is a business.
• 10:55
  SPEAKER_00: So I'm asking you today to send this episode to someone that is currently thinking about buying a property or may just, you know, be inquisitive about you know what the buyer broker agreement is, and they may be involved with a buyer broker agreement.
• 11:14
  SPEAKER_00: Help me help them.
• 11:16
  SPEAKER_00: Okay.
• 11:17
  SPEAKER_00: So I hope this episode helped you guys on the buyer broker agreement.
• 11:25
  SPEAKER_00: And follow me on Rena Baron Real Estate at on Instagram.
• 11:31
  SPEAKER_00: And you can also email me at rena barren realestate at gmail.com.
• 11:37
  SPEAKER_00: Now, also please, please, please, download my episodes, Military Real Estate Rookie, because I want to help individuals to build wealth.
• 11:52
  SPEAKER_00: And I also want to help my military community, you know, because I was a part of the military community as well.
• 12:00
  SPEAKER_00: But I also want to help you, that person that's saying, you know, I don't even know what a buyer broker agreement is.
• 12:07
  SPEAKER_00: So listen to all my episodes, and I'll see you guys on the next episode of the Military Real Estate Rookie Show.
• 12:15
  SPEAKER_00: I am your host, Rena, and I hope that this episode enlightened you guys on the buyer broker agreement of real estate.
• 12:24
  SPEAKER_00: All right, I'll see you guys on the next episode.
• 12:26
  SPEAKER_00: Peace.