Ep. 83 – Buyer Broker Agreements

Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, real estate broker with Signature Real Estate Finder in the state of Florida. I resided in Bo Raton, Florida, and I sell most of my properties in Palm Beach County and Broward County. But I do have agents, uh, statewide. So if you’re looking for, uh, real estate, uh, in the state of Florida, or if you are an agent looking to, uh, join a team, join a broker in the state of Florida, we’d love to have you. Uh, we have offices all over the state of Florida as far as south as Miami, as far north as Jacksonville, uh, east to west from Palm Beach County to Naples, uh, Tampa, Orlando. So, uh, yeah, we’d love to get into that, uh, northwest corner into that Jackson, uh, not Jacksonville into that Pensacola area. I don’t have an agent out in Pensacola.
So, uh, yeah, if you, um, you know, one of the things about me is, uh, I’m a real estate broker. Uh, that means I have real estate agents under me who, uh, who sell, and I like to, uh, coach and mentor them. So if you’re looking to become a real estate agent, uh, touch base with me and, uh, we will get you licensed and schooled up, schooled up. We will get you trained. You can join the Real Estate Finder team, and if you’re an agent with another brokerage, or if you’re moving an agent moving to Florida, uh, feel free to gimme a call, uh, 5 6 1 2 0 8 3 3 3 4, Matt at Real Estate Finder, uh, dot com. And, uh, we can get you, uh, up and running with the Signature Companies, which is the best real estate company in the state of Florida. Uh, we have training tools and techniques and everything we have to support you.
And one of the things that we have been doing, uh, at the signature real estate companies, and I, I think we are a pioneer, not just in the state, but in the country, is, uh, we train our agents to use buyer broker agreements. And, uh, I get resistance from the agents and I get resistance from other brokers. They, they say, we don’t do that here. When I, when I tell agents, colleagues of mine in other states, they respond, we don’t do that here. Well, there’s no rule that says you have to do what everyone else does. There’s no rule that says, uh, you can’t do something new. Um, that we don’t do that here attitude, or we’ve never done that before. Attitude is a loser attitude, uh, that people, uh, have because they’re afraid of change or they’re afraid of learning something new. Uh, so, uh, you can do that here.
Uh, you can incorporate these techniques and, and they work well. Uh, you know, we’ve had agents that, um, you know, the buyer broker agreement is, we’re gonna have to define it, right? It’s a contract between the real estate agent and the protect potential buyer. And even, you know, in knowing that I was gonna talk about it today, I didn’t know if I should be talking about it from the buyer’s perspective or from the real estate agent’s perspective. Uh, there’s rights and responsibilities, uh, for both. Um, so I am going to, um, talk about it from the real estate agent’s perspective for a moment. Um, as a real estate agent, why you should use a bio broker agreement. You’re always looking for ways to provide the best service to your clients, and you need to protect yourself and your business. And the buyer broker agreement is a tool that can do that.
It’s a contract between you as the agent and the buyer that outlines the terms of the relationship. And it can include things like the scope of the agent services, the duration, right? A six month agreement, a one year agreement. So just like the listing agreement, right? When I have a seller, we sign a listing agreement that outlines all the terms and has a duration. When I represent a buyer, we want to do the same thing, all right? It, it, it defines the relationship upfront. A lot of people, um, they think that real estate agents are somehow compensated, uh, by the hour or by the broker or some imaginary person. People can come into a real estate agent’s office, be shown a lot of properties be brought to lunch, and then never use that agent, or never see that agent again, right? If I spend a weekend, um, with a buyer and I find out a week later that the buyer is now spending a weekend with someone else, right?
I’m kind of hurt, but you know what? And not just hurt, hurt, hurt, hurt cuz I put my work, you know, I, I love what I do. I put my time, energy, blood into my work, but, uh, but also hurt, you know, financially, cuz they, if they buy from someone else, um, and a lot of agents will say that the buyer betrayed them, but the buyer didn’t betray them, betray them. If the buyer never knew that there was a relationship to betray, right? If, if the buyer, if the agent and the buyer never came to any kind of understanding, maybe they were just interviewing you, maybe they didn’t like you, right? So, so you have to have the discussion right? Before you can go exclusive, you have to have that discussion, and that’s always very important to remember. Um, let me, let me g give you a little story.
I was showing, uh, a lovely couple newlyweds. I was showing a couple houses. We worked with them for three months, uh, showed them multiple houses, and, uh, we identified the, the house that they wanted. We made several offers, we negotiated, and at the last minute, the one of the parties, their father said, why are you using a real estate agent? Why don’t you just use such and such? He’ll put the license, you know, put, put it in, put the offer in for you, and, uh, and then you can, you know, save 3% on the buyer side commission. And they came in at the last minute and they replaced me with, um, with such and such. And, um, I didn’t have a buyer broker agreement. I wasn’t prepared. So this person can just come in and steal my customer and steal my commission. And, and it was a betrayal.
It was a heavy betrayal. So, um, that’s why I instituted we were using bio broker agreements at the time, but that’s why, you know, I, I so hard and I train trained my agents. Now here, um, I wanna give advice on it, but I, I still wanna think, I wanna define it a little bit, right? Because there’s a risk that a buyer could be working with multiple agents at the same time, not know that they’re doing anything wrong. So the buyer broker is the way that you have the conversation with the buyer that they can use you, um, exclusively. All right? So, um, the very important thing is right now, the way the real estate market works is that the selling agent puts in an offer of compensation on the mls, on the multiple listing service. And traditionally, that was always 3%. Lately it’s been two and a half or, or even 2%, especially in that buyer’s market of 2021.
Um, but let’s say the offer of compensation’s a dollar, right? I show a buyer a property, and the seller’s offering me a dollar. You know, do I still show that property? I mean, yeah, right? I’m kind of entitled to kind of required to the, the buyer can see it online and all these different websites. Hey, I wanna see 1 23 Main Street, and I look at the, uh, the offer of compensation, the sellers offering me a dollar, right? That’s one of the things that we want to address in a buyer broker agreement before we even start seeing properties, right? So, to the extent that the offer of compensation in, in the MLS is, is, is, is satisfactory, the buyer wouldn’t know me anything, right? But we can outline in, in the buyer broker agreement that if the offer of compensation is less than X percentage, whatever we agreed to, or less, less than x number of dollars, whatever we agreed to, uh, that we could, um, that the buyer would have to compensate me.
And sometimes people think, well, why would the buyer do that? Well, what if I find an off market property? What if I find it for sale by owner? What if I, what if we find a foreclosure? What if I knock on someone’s door and convince them to sell? Right? I don’t have an agreement with the seller to pay me on, on any of those, and the buyer may wanna buy the property, or I may be doing my job and find the buyer, the property of their dreams. So the buyer broker agreement enables me, allows me to, um, to be able to get those properties for my buyer, get those unlisted properties for my buyer, and in a situation where, you know, we’re gonna see, we’re gonna see a house, but the offer of compensation is not satisfactory, I would let my buyers know in advance before we see the house, okay?
I just wanna let you know that they’re, that this is a for sale by owner. They’re not offering the buyer’s agent anything. So when we make our offer, we’re gonna factor into the price, my compensation, and that’s how I can get you the off market for sale by owner, foreclosure bank owned, r e o type listings and Co and be compensated for it. Um, and all of that then ends up, uh, making sense, um, that we’d have, uh, uh, an agreement, but without the buyer broker agreement, we can’t do any of those things. So it protects me as the agent, it protects the buyer, um, and it’s all around a good thing to have. Now, in the broader real estate industry, there’s lots of, uh, lawsuits challenging the existing, uh, brokerage model in the United States of America. Um, people, there’s accusations that, uh, it’s that the real, real association is colluding or somehow and requiring, uh, sellers to, um, to make these offers of compensation to buyers.
So there is a possibility in the future that the offers of compensation won’t come from the sellers anymore, depending on, on how some of these lawsuits go. Um, and there may be major changes in the industry, maybe not next year, but in the next 3, 5, 10 years on how real estate is done. And when that happens, these buyer broker agreements are gonna be much, much, much more important. Um, and, and, and, and what’s gonna happen is my agents, right? The agent’s signature real estate finder, uh, all the agents at Signature, the agents of the signature real estate companies, whether it’s Signature, international Signature, premier Properties, uh, all the different brands that we offer here at Signature, we’re gonna be trained and prepared. We’re gonna know how to use these documents. We’re gonna have five means 10, five years, 10 years, 20 years of, um, experience using these documents.
So when it becomes new to the rest of the industry, we’re gonna see a lot of agents drop out of the industry. When this model changes and when it becomes new and when it’s introduced and when these changes happen, uh, my agents and the agents of signature not only will be prepared, not only will be trained, not only will have experience using the buyer broker agreements, but they’ll also, I’m gonna repeat that last one. They’ll also have the experience, oh, the rest of the world. The rest of the industry is just learning this. We’ve been using this for five years, 10 years. So it’s, it’s vital, vitally, vitally important to use these tools that we offer at Signature. If you’re at another firm, if you’re not using them, give me a call, come to Signature, we will train you on these techniques. And, um, as a buyer, uh, you’re protected.
Also, you know, you have a real estate agent who’s gonna look out for you. Uh, so the buyer broker agreement lets the, uh, real estate agent be compensated for off market or insufficiently, uh, marketed properties and, um, encourages the real estate, uh, agent to find off market in other properties. So it’s, it’s all good things, and it’s always good to have a conversation and to, um, lay out the rights and responsibilities and expectations in advance, because agents who are constantly being taken advantage of and constantly feel that they’ve been cheated on, well, um, you haven’t been cheated on if never had the, uh, conversation with your customer about what to expect about forming an exclusive relationship. A lot of customers are just looking, and a lot of customers are, um, are, are gonna use whatever they can to, um, just accomplish their own goals, right?
So when they walk into an open house, uh, and the person in the open house says, are you represented by an agent? Or Have you signed up by a broker agreement with an agent? When that person comes in and says, yes, I have, uh, then they know, they know they’re protecting me and I know I’m being protected, and I know I can send them to open houses, right? You’d hate to, you’d be working with someone for two years, they go to an open house and then make an offer right then and there with, with the owner. And it people think that they’re getting a deal or they’re saving money when they go straight to the listing agent. They’re not, the listing agent is just receiving the buyer side compensation. So it’s important, uh, for them to understand that.
All right? So if you have any questions about the buyer broker agreement, uh, please gimme a call, come to real estate finder.com, email me matt real estate finder.com, call 5 6 1 2 0 8 3 3 3 4, and we can walk you through the process. Um, you can come and, you know, o obviously we don’t chain train outside agents, so, um, if you work for another company, you know, ask your broker. But if you work for Signature or if you work for me, if you work for Ben Sha, um, and you haven’t been to class recently, we teach buyer broker agreement class every month. Um, and it’s very important for you to learn them to be a good real estate agent.
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