2025 Mandatory – Navigating the NEW NORMAL
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LREC 2025 Mandatory CE
A Louisiana Real Estate Commission Publication
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Buyer Rep Agreement
Agency Duties
Seller Consultation
Buy- Side Concerns
Offer & Negotiating
Valuation Issues
Resources
Current Legal Issues
Antitrust Statement
No discussion in this class is intended to fix, control, recommend or suggest the compensation or fees charged for real estate brokerage services.
The Louisiana Real Estate Commission as well as the State and Local Associations and MLS’s do not recommend or suggest any compensation amounts.
Any discussion in class that contains specific percentages or dollar amounts will be immediately stopped.
Any participant who continues to violate the antitrust policy will be asked to leave the session.
Managing Broker – Office Policy Considerations
Listing side and buy side
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Thoughts – Ideas – Value Proposition – Questions for Brokerage
Write it down – talk to your Managing Broker – Brainstorm with others – Role-play your client conversations
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Current Legal Issues
Agency Duties – The License Law
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Seller Consultation / Listing Presentation
Top 3 Buy-Side Concerns
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Offer and Negotiating Phase
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Appraisal-Valuation Issues
Analyze the most up to date information we have on a constantly changing landscape of how the compensation – and whether it is paid or not paid by the sellers – will affect the CMA and appraisal process by looking at information from appraisers and FNMA.
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Fundamental change in approach that causes old ways of thinking and doing things to become irrelevant.
Current Legal Issues
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The NAR Settlement
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DOJ filed a lawsuit that was the precursor to the change in the Code of Ethics
Standard of Practice 12-1
REALTORS® must not represent that their brokerage services to a client or customer are free or available at no cost to their clients, unless REALTOR® will receive no financial compensation from any source for those services.
(Amended 1/22)
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DOJ continuing to comment on pending lawsuits and the settlement
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NAR Settlement - Boots on the Ground Issues
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NAR SETTLEMENT: COMPENSATION MOVED OFF THE MLS
No offers of compensation in the MLS
Can still offer compensation – sellers decide
Sellers can offer “concessions” to Buyers in the MLS
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WRITTEN BUYER AGREEMENTS
Requires MLS participants working with buyers to enter into written agreements with their buyers
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Buyer Rep Agreement
It’s a CONTRACT
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Agency Duties – The License Law
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12/27/2024
License Law
Duties when representing clients
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License Law
No violation when
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License Law
Ministerial Acts
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License Law
Buyer Agreements
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License Law
Buyer Agreements
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License Law
Buyer Agreements – Definitions
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License Law
Buyer Broker Compensation
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The Seller Consultation
Be aware of what the media is saying
Need to offset this with the truth.
Will have to show sellers what we do – not just an issue on the buy side.
Most of them don’t have it right!
A Couple Thoughts
When we have a market like we saw during the pandemic with escalating prices, elevated numbers of transactions, and multiple offers, the market makes us look better than we are. This can lead to complacency, and our ego can tell us that we have everything figured out.
But in the current market environment, with increasing days on market, fewer transactions, and difficulty getting transactions closed, the market can make us look worse than we are. This should lead us to refocus on our skills.
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The Seller Consultation
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What’s Important to Them?��Ask Open-Ended Questions
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Manage Expectations
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Plan your Presentation
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What makes you stand out? Why are you unique?
Your Value Proposition
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Marketing Plan – Get to Know Your Listing
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Marketing Plan – Choose Your Strategies
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Marketing Plan – Choose Your Strategies
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Create Marketing Calendar
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Measure Your Marketing Performance
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Listing Book Features Package Flyers
Option:
Put everything in a bound book – in sheet protectors with a QR Code on the cover to allow buyers to download it.
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Keep Seller Informed of Changes
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Brochure at facts.realtor
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Sellers’ Pledge of Performance
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The Seller Compensation Conversation
Listing Compensation
Buyer Brokerage Compensation
Total
Compensation
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Options for the Seller
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Seller Offers Compensation�
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So, lets talk about what we’re going to offer to the buyer brokerage.
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They want to pay nothing – or very little
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The prices of the sold properties vary, and in many cases it is because the sellers did – or did not – pay the compensation. The properties here (show them the actual comps) sold without buy-side compensation paid by sellers – these sellers did pay it – and their sales price reflects that.
Not offering buyer brokerage compensation does not give you extra money in your pocket – that money has always been set aside for the brokerage who brings in the buyer.
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The Co-op Side
Listing agent gets permission from seller to disclose compensation when asked
Prepare seller for buyers’ options if seller chooses a non-competitive amount
If amount offered does not cover amount in buyer rep agreement – buyer can – and probably will – use the sales contract to ask the seller to pay the difference
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Difference between adding it and including it
Lender will not allow adding it
Buyers purchase property for $100,000
Down payment of $10,000
Mortgage - $90,000
Want to mortgage $93,000 to pay brokerage $3,000
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Lender will allow including it
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Seller is prepared to pay buy-side brokerage – but not offer it proactively
There is no longer any offer of compensation in the MLS, but that does not mean that the buyers will be paying their brokerage out of their pocket. Most buyers do not have the extra funds after they have paid their down payment and closing costs to pay their brokerage themselves. What we will see will be the buyers putting into the purchase/sales contract the amount of compensation they will be asking you to pay since, beside the fact that most buyers do not have it, that is the way it has been done for years – it incorporates the buyers’ fees into their mortgage.
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Buyer agent compensation will vary from agent to agent, and company to company. You do not have to, in advance of an offer from the buyer, advertise what you are willing to pay in buyer agent compensation or concessions, knowing that every buyer's financial situation is different, and what they agreed to pay their buyer's agent might be different as well. If you offer a specific amount, we are telling a buyer what you are willing to give up to make a deal come together in advance of an offer.
The best approach may be for you to be prepared to pay the buy-side compensation and if I am contacted by the buyer agent prior to showing and they ask about the compensation, I can simply tell them: "Seller is willing to entertain any and all requests, please put it in your offer".
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That way, we let the buyer make the first and you can then use your response and strategy to put the deal together. It's a negotiation... let them make the first move!
For example, if you were offering a compensation of X% and the buyer agent has Y% in their buyer brokerage agreement (presuming Y is 1% less than X) and we advertise we are offering X, the buyer agent cannot ask for or keep anything more than what is in their buyer rep agreement – however, we have now told the buyer you are willing to sell your property for 1% less – that gives them negotiating room and a strategy we might not want to give away.
What if the buyer asks for more than what you planned? - you always have the ability to counter to the buyer at the price you need to make the transaction work for you.
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Stop offering bonuses
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Buyers Buying Without Representation?
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As The Buyer Agent
Real estate transactions are full of land mines — the listing agent is there to represent the seller – so if you run into difficulties, it will not come down in your favor. Our goal is to prepare offers so they represent your goals, negotiate the best terms on your behalf, prepare all the necessary documents, as well as help with home inspection and appraisal issues if something goes wrong.
If you think you will get all we offer by going to the listing agent, you are mistaken. The listing agent is legally and contractually bound to the seller and must do everything in that seller’s best interest – not yours!
Buying a home is the largest single investment most people make in their lives – with a lot of liability. If for some reason something goes wrong and you need to go to court, would you and the seller use the same attorney?
Overcoming Objections:
Buyer says they’re going directly to listing agent
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I can certainly show you my listing, here is the Notice of No Agency form that I legally have to give you. Please understand that I do not work for you – I work for the seller and everything I do and say will be to the benefit of them. If you are OK with that, I’ll need you to sign this form acknowledging that and caution you to not tell me anything that you do not want me to disclose to the seller.
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You are the listing agent and buyers approach you to see your listing and do not want representation:
Unrepresented Buyer. If Buyer is not represented by a Buyer’s Broker, then Listing Brokerage assumes additional liability and paperwork responsibilities when showing and selling your property. Listing Brokerage will not represent the Buyer but will facilitate the completion of necessary forms and contracts. In this situation, the Listing Brokerage Compensation shall be .
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Compensation to Buyer’s Brokerage: The buyer’s brokerage compensation required under this section will be paid at closing. The compensation agreed upon herein will not be offered or disclosed on a multiple listing service.
Seller does does not authorize Listing Brokerage to offer or disclose the compensation in the marketing of the property.
(choose one)
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Note on Brokerage-to-Brokerage Format
DOJ still having issues with this
DOJ has no problem with seller paying buyer brokerage
Many brokerages have phased out this format
There will be no brokerage-to-brokerage agreement
Buyers will still put it in the contract no matter what the format – to ensure their obligation for compensation has been satisfied
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Sample Notice of No Agency Form - When Buyer Requests No-Agency
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Top Three Concerns
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Buyers don’t want to sign agreements�
Attitude Influences Behavior
Lack of Confidence:
If you believe that buyers won't sign a buyer rep agreement, this belief can inadvertently influence your behavior and create a self-fulfilling prophecy.
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Why Would They Hesitate?
Lack of understanding
Commitment Concerns
(c) Madison Seminars * All rights reserved
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Why Would They Hesitate?
Trust Issues
Fear of Costs
Negative Past Experiences
(c) Madison Seminars * All rights reserved
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Why Would They Hesitate?
Perceived Lack of Value
Market Conditions
Advice from Others
Not Ready Yet
(c) Madison Seminars * All rights reserved
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Mindset Shifts – Skill Development – Strategic Actions
Mindset Shift:
Believe in Your Value:
Focus on the Positive:
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Mindset Shifts – Skill Development – Strategic Actions
Skill Development
Peer Support & Mentorship
Strategic Action
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I feel like I’m just bragging when I talk about my value proposition
Feature Selling
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Benefit Selling
When you "sell a benefit," you are describing service–but you tie it to some way that it improves the customer's situation.
"By my monitoring the hotsheet every morning I will keep an eye on new listings that come on the market in the MLS before they ever hit most websites."
While "selling benefits" is more effective than "selling features," it isn't always clear to the customer why that benefit is important
They may know that you finding the listings every day is a generally good thing to do, it won’t make a lot of difference to them unless you give examples of buyers who have lost houses because they procrastinated or had a previous agent who didn’t proactively monitor the market.
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Go from Feature to Benefit Selling ��
People buy because they have needs.
If you can relate the service you provide specifically to those needs, then there is a high probability of success.
Statements that show how the buyer’s needs can be met by the services you provide are the benefits.
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Value Selling
Start with buyers’ goals – tie that value to a specific benefit.
Value is not the price – it’s the financial impact of your services compared against the purchase cost – or possible no purchase without your services
This is it – the key to feature – benefit – value selling
The value has to be unique to what you do and large enough to make it a priority for your buyer
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What we do
How we do it
Why?
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Contents of Buyer Counseling Session
What buyer needs and wants
Buyer qualification: financial and motivation
What you do to find the property
How you assist them in getting best price and terms
What it takes to get to closing
How you get paid for all this!
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Benefits of Signing Buyer Rep Agreement
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Creating Your Unique Value Proposition
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What agents in general do
What you personally do
What your company brings
Why are you unique?
Why should they choose you?
What you do to help them get
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facts.realtor
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Elements of a Value Proposition
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Elements of a Value Proposition
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Buyer Counseling
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Use Buyer Qualification Worksheet
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Buyer Qualification Worksheet
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Buyer Qualifying Questions
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Buyer Qualifying Questions
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Have them talk with your lender
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Do Overview of Process – Expenses –
What-How-Why - Pledge of Performance
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(c) Madison Seminars * All rights reserved
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List of possible expenses
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Everything we do depends on whether it is a buyer or sellers’ market. Currently we are in a sellers’ market in our area. Let me share with you some information from our MLS that shows us what is currently happening in *Blissville*.
Use your MLS Analytics
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“I typically track market time, months supply of inventory, new listings and closed sales. Is there anything else on this matrix that you would like me to track for you?�
Often their choice!
Each home is unique
Location, condition, improvements, updates change the price
Rewards poor builders – penalizes good builders
Can be used to show trends and generalizations
Should not be used to determine purchase price
Sample Contract & Inspection Report
I have also prepared a sample of our sales contract for you as well as a sample home inspection report to prepare you for what we will be using during the purchase process. I have highlighted the paragraphs in the contract that you should look over before we get ready to write your offer so you can ask any questions and let me help you fully understand what will be happening.
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Show them copies – give to them after they sign
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Contract
Go over appropriate paragraphs
(c) Madison Seminars * All rights reserved
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Copy of Home Inspection Report
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Resources
The Buyer Compensation Conversation
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Buyer Rep Agreement Basics
No requirement for specific length of agreement
Your company policy may have guidelines for type of agreement – which agreement they want you to use and the length of the agreement
Be careful of giving the perception of unequal treatment
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What Are The Options?
If you have options for buyers – apply those options equally
And – don’t rush things – stop trying to build rapport, establish your value proposition and get a commitment from a buyer at the front door of the property in a 5-minute conversation!
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Comparison of LRA Agreements
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Comparison of LRA Agreements
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Most buyer rep agreements say something like this
COMPENSATION
If, during the term of this contract or the protection period, Buyer enters into a contract to acquire real estate and such contract results in a closed transaction, Buyer agrees to pay Brokerage firm a Brokerage Fee of % of the purchase price.
Prior to showing any property, the Agent will make best efforts to determine the compensation being offered by the seller or Listing Brokerage and communicate that to the buyer as soon as practical.
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LRA Agreement
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The compensation our brokerage receives for representing you throughout your entire transaction is for all the services I have outlined. My fee for representation is .
You are in total control of how compensation is paid and you will not have to pay it directly unless you choose to and you have options.
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Buyers have choices
Choose to not look at the property
Pay their brokerage at closing
Ask seller to pay as part of sales contract
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The *90* hours spent getting a license is not what prepares me to represent you. I have spent over *100* hours learning about buyer representation and years becoming a market expert to assist you in the largest single investment you will probably make in your life and one that shapes your family for years to come.
Although the Internet is a tool for you – and me for that matter – to use – real estate is a human relationship that cannot be managed through algorithms, formulas and apps.
What I bring to you is not just the hours – and they are numerous – that I put in to finding you the right property, at the best price and terms and making sure that we get to the closing table – it is the years of experience and the constant effort that I put in to stay on top of an ever-changing marketplace
They question your value – or
say they can find houses themselves . . .
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Buyer Has Choices
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Because that’s the way we’ve always done it
Let go of the past – move forward – this is all going to be OK
Just move forward – buyer uses contract to ask seller to pay it
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The compensation paid to the buyer brokerage has historically been paid by the seller at the closing – out of the proceeds they have available based on how much the buyer is paying for the property. The compensation, then, has always been paid by the buyer – it’s just a bit more transparent now.
We have a couple ways we can proceed.
I could call each listing broker prior to showing you the property and ask whether the seller is offering compensation and how much. This would be time consuming and unfortunately would depend on how quickly the other agents return our requests if you insist on knowing what the seller is offering.
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You could choose to look at all properties that fit your needs regardless of whether – or how much – the seller is paying. You have the ability to use the ‘Seller Agreement to Compensate Buyer Brokerage’ addendum (or paragraph in sales contract) to ask the seller to pay the Brokerage Fee at the closing. This would be the easiest and fastest way to accommodate your schedule and facilitate the showings and make sure you don’t miss seeing a property that may be ‘the one’!�
When you think about it – it really doesn’t make any difference to us what they are offering – you have the ability to negotiate with the seller to pay what you agree to regardless of what they are offering.
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Buyer says they only want to see properties where the seller is compensating the buyer brokerage at the level that is in the Buyer Rep agreement�� �
I will certainly do whatever you want me to, but I must recommend that this may not be the best plan.
There is no reason why you should possibly miss out on what could be the best property for you because of a hasty decision on the part of the seller – or even worse – a listing agent who did not know how to properly market their sellers’ property.
You always have the right to ask the seller to pay it, whether they are offering anything or not and I am much more comfortable making available to you all properties that meet your needs and having you decide whether you want to see them – not me deciding for you.
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I will certainly do whatever you want me to, but I must recommend that this may not be the best plan.
There is no reason why you should possibly miss out on what could be the best property for you because of a hasty decision on the part of the seller – or even worse – a listing agent who did not know how to properly market their sellers’ property.
You always have the right to ask the seller to pay it, whether they are offering anything or not and I am much more comfortable making available to you all properties that meet your needs and having you decide whether you want to see them – not me deciding for you.
We cannot refuse to show – nor make property unavailable to our buyer clients – because of the offer – or lack of an offer of compensation.
Recommend you get something in writing – an email will suffice – if the buyer chooses to NOT look at a property because of the offer of compensation.
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��Think About It�
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��Think About It�
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“After our discussion today, and based on what I’ve committed to do for you, do you feel comfortable and confident that I am the agent to represent you?
Great, let’s get the agreement signed so I can begin to work for you..”
If they disagree and do not want to sign:
“OK. I can respect that. It means we will not be able to work together, but I wish you all the best. If, at some point, you change your mind, please feel free to come back – I would love the opportunity to work with you.”
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In the event they do not want to sign, leave the door open for them to return.
Signing a buyer rep agreement may be new to them.
The next agent they talk to is going to ask them to sign an agreement as well, causing them to rethink the process and potentially come back to you.
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Listing Side
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Listing Side
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Buy�Side
Consult with lender to verify funds or financing of compensation
If asking seller to pay it – be sure it’s clearly stated in contract
If coming from listing brokerage rather than seller – need Brokerage to Brokerage Compensation Agreement
Buyer may still want it in contract – to show they are not paying it
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Compensation they ask seller to pay is what is in your buyer rep agreement
If seller counters by saying they won’t pay the compensation – have buyer counter back at a price that covers what they need
There is no time where listing agent should see your buyer rep agreement.
You may need to give it to lender or title company
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Fannie Mae, Freddie Mac, FHA
VA
Mortgage Industry Guidance
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Fannie Mae – Freddie Mac – FHA – VA
All allow compensation to be paid by either the buyer – seller – listing brokerage
Compensation is not part of the allowable interested party contributions – IPCs
This is why we suggest you DO NOT put your compensation in the ‘seller concession’ section.
Always talk with buyer’s lender
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If our compensation was a part of the IPCs – the buyer would not be able to ask for both – compensation for their brokerage and seller to pay closing costs – if it totaled more than the allowable IPC on that type of loan.
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Thank you for joining us!
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“Not only do the MLS rules and license law require a written agreement, I am committed to spending a significant amount of time and expertise to represent you as a real estate professional and help you achieve your real estate dreams. I cannot make that commitment to you unless I know that we have an exclusive mutual agreement to work together. Like all professionals — attorneys, accountants — even your auto mechanic — we require a signed agreement before we can begin.”
Why do I have to sign an exclusive agreement to work with just you?
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I want to work with another Realtor at the same time?
Whether you are hiring a contractor, going to a dentist or doctor or having work done on your car – you choose the best person you can – but only one.
A buyer agreement is now required — any other buyer’s agent you may want to work with is going to ask for an agreement as well.
And, as I mentioned earlier, you are better off working with one agent with whom you’ve signed an agreement than a bunch of agents who have a lesser obligation and commitment to finding you the right home, at the right price and committing the time and energy it takes in this market to get the job done right for you”
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I really don’t feel comfortable signing an agreement like this.
“I’ve discovered that if someone is uncertain about signing this agreement, it usually means either I haven’t answered their questions to their satisfaction or there is something they haven’t told me. Is there something that concerns you that I haven’t covered today?”
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I want out?
Option #2: “If at any time you are unhappy with the service I am providing, all I ask is that you give me 10 days to correct things to your satisfaction. If, after that time you are still not satisfied, I will immediately release you from the agreement, up until we have a signed purchase agreement with a seller.”
Option #1: If at any time you are unhappy with the service I am providing, you can feel free to discuss it with my Managing Broker and they will be happy to appoint a different agent to you who can meet your needs. I will say, however, that I have never had a buyer who was so dissatisfied with my services that my manager had to step in. I think you will be more than satisfied with my services.
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I do not want a lengthy contract?
We are happy to sign an agreement with you for a time frame that works for you, or we can do it for a specific number of properties
OR
Data shows us that in the current market, the time it is taking for most of the buyers to find the property they are looking for is longer because of the low inventory. This agreement is for the average length of time the buyers are taking. It’s in both our interests to feel comfortable that we are focusing on the end goal in a way that doesn’t put any pressure on either of us.
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Line 10 Caution on areas: you should not try to cover areas where you do not have access to the MLS or are not familiar with the area
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Line 14 Buyer confirms they are not in another excusive agreement
Line 25 Notes that the agency disclosure form or pamphlet must be given
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Line 178 Automatically extends agreement through the closing date once a Purchase Agreement has been signed
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