Selling Poinciana One Property at a Time.: Why Should The Buyer Sign A Buyer Broker Agreement?

Why Should The Buyer Sign A Buyer Broker Agreement?

tutas towne realty


Because it's to THEIR advantage to do so! We need to be able to explain this to them.Hopefully this will help.


I received this email from a potential buyer:


You are right Bryant, I should not work with 2 Realtors at the same time and got a bit excited after reading your blog. It occurred to me you are more than an average Realtor (broker/listed agent) and may get a few properties ahead of everyone else and sometimes yet to be listed in MLS. There are few foreclosure specialists in Chicago area that work on fee based service.


Please don't think otherwise but appreciate if you can clarify the following:   If you are like anyone else, what advantage does a buyer have in hiring you to acquire an REO? What is this retainer for? I can see some buyer advantage in short sales but for REOs I don't see any. Am I missing anything??END


MY RESPONSE


Hi there,   OK so I like the part about getting excited after reading my blog :)   A Buyer's Broker Agreement (BBA) creates a bilateral agreement between you and I. It obligates you to work exclusively with me in areas we define. For example, if you had a BBA with the agent in Celebration you would not have contacted me and we would not have had this issue come up. It would have helped to solidify a loyal and professional relationship. It lays out the framework for the entire relationship. It obligates the Broker to do his job.


Also, as we had discussed on the phone, it gives the broker a monetary incentive to work harder. Foreclosures are very inexpensive (in my area) and can also be much more frustrating as it may take offers on numerous properties in order to get one accepted. Good properties sell quickly and usually with multiple offers. Finding the right property takes time.

  

REALTORS(R) are usually paid by co-brokes (commissions) offered by the Seller's agent or Builder to bring a Buyer. These commission usually range from 1% to 5% of the purchase price with 3% being an average. This can create a conflict of interest. Suppose there are 5 properties that are perfect for what you are looking for. All offering different co-brokes within this range. Wouldn't I rather sell you the one where I make 5% as opposed to the one where I make 1%? Of course I would. It's human nature.


The BBA eliminates this conflict by setting a minimum AND a maximum fee upfront. In my case it's $2,500 or 3% whichever is greater.**** Anything above these amounts would be rebated or credited to you at time of closing.   In the price range you are looking at, $65,000, the co-broke could range from $650 (1%) to $3,250 (5%) but would probably be $1,950 (3%). If it were 1% you would have to contribute $1,850 to my compensation. If it were $3,250 you would actually receive a rebate of $375 (half of $750).


More than likely you will have to contribute $500 to $750 to a deal. Don't you think we could save at least that amount by being more aggressive with finding you a property? Of course we could.  This is why what is an advantage to me (guaranteed minimum pay) is actually more of an advantage to you. Make sense?


The retainer I charge, of $1,000, is nothing more than a fee to make sure I am only working with serious buyers. I get upward of 20 buyer inquiries a day and I am not able to work with them all so I have to pick and choose. I do this by asking for a retainer and requesting a signed BBA. The retainer is applied towards any commission differences. For example, if you bought a property where you needed to contribute $750 towards my compensation you would actually get $250 back because you had already paid me $1,000. The retainer is included in the $2,500 or 3%. It's just paid in advance. If you break our BBA it is mine to keep.


The advantage of working with me is that I am very good at what I do which is evident by all that you have read and learned from me in the last couple of days of communicating. Of course the choice of whether or not to hire me is solely yours. I only have a couple of more Buyer openings left for this month but will be happy to place you on my waiting list if now is not a good time for you.


Investing in foreclosures is certainly the way to go right now. I hope we can come to an agreement to work together to get you some deals.   As always, let me know if you have questions.


****Commissions are ALWAYS negotiable. This post is NOT about commissions it is about BBAs. So get off my a**Sherman!!!  

 

 

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Comment balloon 37 commentsBryant Tutas • September 20 2012 07:30AM

Comments

they should sign it because it means were going steady and im committed to them and ill show them my pocket listings before ill show then to someone who cant committ

Posted by Gloria Commiso, Hermosa Beach (Keller Williams) over 6 years ago

Great post, and have had so many conversations similar with potential buyers.     Buyer's Agency is required in writing in Colorado, and if a buyer won't, and still wants agency versus transaction broker, they will have to find another agent.

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (House to Home, Inc. - Denver Real Estate - 720-231-6373) over 6 years ago

great post i came back to "suggest" it....

Posted by Gloria Commiso, Hermosa Beach (Keller Williams) over 6 years ago

Bryant I utilize a BA each and everytime..I also ask for a retainer too! We are both protected and can't see why another would debate not having it done!

Posted by Cheryl Thomson REALTOR Army Ret, Associate Broker in Northern Virginia ( United Real Estate (703.216.5635) cheryltee47@gmail.com) over 6 years ago

super post now I have some ammunition to hand off to my buyers to "get it"

Posted by Mark Loewenberg, KW 561-214-0370 (KW of the Palm Beaches) over 6 years ago

I have to jump on Joan's bandwagon, here.... since we are both brokers in Colorado, and deal with the same contractual and working relationships for the public.  Yet, I do limit my agency relationships with buyers.  We have the luxury of creating a relationship of agency or Transaction Broker when working with clients. Either is done, contractually.

Regardless, of which type of working relationship we agree to, the point is working with clients under an exclusive relationship, so we can focus on THEIR needs while not wasting each other's time!

Posted by Dan Hopper, Denver Realtor / Author / Advocate/Short Sale (Keller Williams Realty Downtown LLC) over 6 years ago

Same here Dan. In Florida we are presumed to be Transaction Brokers unless agreed differently. But Transaction Brokerage is a form of representation and can still be under a Buyer Broker Agreement. No different than taking a listing as a Transaction Broker. That is also a contractual agreement.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 6 years ago

Committment. Society has such problems with it. 

Many sellers agents are afraid to ask for it. 

Posted by Erv Fleishman, Luxury Prop Specialist Realty Associates (Realty Associates) over 6 years ago

You convinced me!  Now I have to try and convince these boneheads down here in the South.

Posted by Morris Massre, Real Estate Instructor Broward County Florida over 6 years ago

I do not find that most folks are resistant to a BBA. I find that agents are the one who are unable to ask for the commitment. Too many seem to believe it is only to the agent's benefit, which you have clearly shown that it is not. It is a win-win. Thanks Bryant.

Cal

Posted by Cal Yoder, Homes For Sale in Lancaster PA - 717.413.0744 (Keller Williams Elite) over 6 years ago

BB, I do so love your "waiting list"!!

Margaret

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) over 6 years ago

BB, I have a signed BBA and the client went behind my back and wrote an offer with a listing agent. The seller countered and my client ended up telling me. The buyer willing rejected the counter and apologized. I have since learned that a son instigated the whole thing. The son didn't realize I have the buyer under contract.

I am meeting with everyone tomorrow to iron this all out. I made my client understand that if he writes a contract behind my back with another agent, he will be responsible for my co-broke. I like your idea of a retainer though. That's one way of making sure things like this don't happen.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) over 6 years ago

Here, here, Bryant.  Buyers like being free spirits, but if they want our undivided attention there should be some reward in it for us as well.  It's hard to be loyal to someone who shows no loyalty to me. 

Posted by Mike Cooper, GRI, Your Neighborhood Real Estate Sales Pro (Cornerstone Business Group Inc) over 6 years ago

Here in the San Diego community it is not uncommon for buyers to be working with six agents at one time, and I have separated the serious buyers from those that want to date as many agents as possible with the BBA, unfortunately getting a retainer or any additional fee's other than what is being offer by the selling broker is not in fashion locally, and buyers bulk at having to cough up dollars and cents before they find a home.

Posted by Lorraine or Loretta Kratz, Certified Negotiation Consultants (Crescent Moon Realty, Inc. & Land N Sea Auctions.) over 6 years ago

I love your waiting list too! If that doesn't get them..... Totally agree on getting the Buyer Agreement. I havent done the retainer but some in our area are trying it our with success.  I will tell you there have been a few times lately that I wished I would have had one.

 

Posted by Tiffany Sniezek, Tiffany Sniezek 713-594-9639 RE/MAX Woodlands TX (RE/MAX The Woodlands & Spring, TX 713-594-9639 direct,) over 6 years ago

Bryant- We have been trying to get our buyer agents to understand this. When I worked with buyers I never had an issue with them signing the BBA with the retainer. 

I LOVE your waiting list!!!!!! 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 6 years ago

BB

The waiting list is a great idea...but I would expect nothing less from you.

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 6 years ago

All credit for the waiting list goes to Margaret Rome. Thanks Margaret. I learned this from you about 6 years ago.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 6 years ago

Great post Bryant. Well presented and good points. I am a firm believer in the buyer broker agreement and use it every single time. I never had an issue with a client.

Posted by Richard Bazinet /MBA, CRS, ABR, Phoenix Scottsdale. Sellers, Buyers & Relocations (WestUSA Realty) over 6 years ago

What a great way to explain this to a lay person.   I also love the waiting list (as well as Margaret Rome).

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) over 6 years ago

Congratulations Bryan on the blog response and what a great post you turned it into!

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) over 6 years ago

Interesting post Bryant.  I've never heard of the waiting list.  Thanks for sharing this with us.                                            

Posted by Amanda Christiansen, Christiansen Group Realty (Christiansen Group Realty (260)704-0843) over 6 years ago

Bryant, I almost want to quit Broward County and come up for an interview. You are awesome!

Posted by Terri Poehler, Coral Springs Real Estate Agent (Realtor) over 6 years ago

Bryant, many potential buyers will not remember they signed a BBA, but they will remember paying you a retainer fee. The only way to run a business.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 6 years ago

Some great info, keep up the good work and good luck with your business,great post.   E

Posted by Ed & Tracy Oliva, The Oliva Team Arizona Agents (West USA Realty - Arizona) over 6 years ago

Preach it BB

When they want the best. . they may have to wait. .

great lesson. .

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 6 years ago

Goodmorning! Interesting post, I neither have heard of the "waiting list" but I like it! Have a great weekend!

Posted by Bob Jakowinicz, Michigan Real Estate Agent-- MI RE Adventures (National Realty Centers Livonia--Bob Jakowinicz) over 6 years ago

Very interesting and informative blog. You make some really good points that I imagine all Realtors could use daily.

Betty

Posted by Team Honeycutt (Allen Tate) over 6 years ago

Bryant:

I like this post and I am going to print it for future reference.  I don't work with many buyers and those I work with are usually former clients.  If I do find a buyer your post will give me some good reasons for the buyer to sign the BBA.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) over 6 years ago

This is an excellent explanation of how the exclusive buyer's agreement works for you.  Nicely done.

Posted by Alan May, Helping you find your way home. (Coldwell Banker Residential) over 6 years ago

Great post!  I like your use of the retainer.  Seems like a great way to eliminate those that aren't serious about buying.  I'll have to look into that practice with my brokerage. 

Posted by Tom Esposito (Alpharetta Home Solutions) over 6 years ago

Turned down a cash buyer just the other day. I received the lead and called. The potential client wanted to see a listing and I agreed. During our discussion I told her the advantages of using a buyer's agent and she agreed and said she would sign with me. When she arrived her "boyfriend" stated she was not going to sign "sh*%". They were of the opinion that since they were going to be cash buyers they would not need an agent for themselves. I told them the agent on the sign is working for the seller but that did not phase them. At the end she actually asked me if I would show more homes to her? Of course I asked if she was going to sign and agreement she said no, and so did I.

This is definitely a subject that needs to get out to the public. Great post.

Posted by John Fauth, Turning your dreams into an address! (Coldwell Banker King Thompson) over 6 years ago

It's an excellent explanation of how the Buyers' Broker Agreement is handled.  I use retainer clauses as well in my BBA . . . and this is a bookmarked article to emails to potential clients "See, I'm not the only one."

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 6 years ago

Great post and congrats on the feature! Keep up the good work!

Posted by Adam Brett, The Adam and Eric Group, Fullerton's Finest (The Adam and Eric Group) over 6 years ago

Bryant - thanks for the info. Well and simply explained. I am looking to implement. It's in my "study in depth" file.

Posted by Larry O'Sullivan over 6 years ago

This is a great list BB. I will try to incorporate some of these points in my next conversation with a buyer!

Posted by Michael Collins, CDPE, SFR , Wisconsin Short Sale Specialist Realto (*ROCK REALTY|Broker|Realtor|Real Estate|WI Short Sale Agent*) over 6 years ago

I will bookmark this post and read it again and use some of these tips when I talk to buyer prospect.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 6 years ago

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