Center for REALTOR® Development 100: Explaining the Buyer Agreement and How to Use it Effectively with Brent Lancaster: Part 1
Please Note: Effective August 17, 2024, all MLS Participants working with a buyer are required to obtain a written buyer agreement before touring a home. For details about this and other practice changes, please visit facts.realtor.
This is our 100th episode — 100 great episodes with so many amazing people who volunteered their time to help you be the best agent you can be! So many helpful topics for your business! Who has been with me on the whole journey, even if you missed a few? If you see me out on the road at Midyear, Annual, or in a class, greet me and tell me what your favorite episode was! I'd love to hear it!
Today, my guest, Brent Lancaster, and I talk about the often legally required, Buyer Representation Agreement. We recorded this before the proposed settlement from the NAR was released. While that settlement is still proposed, and not final, one of the key points in it is the importance of a signed agreement with our buyers. There certainly are many details to be clarified, but it seems this topic is even more relevant than when we recorded it last month, and we knew it was relevant then. This agreement with buyers to work together and get paid for the work you do is crucial to our work.
Brent owns a school and teaches CE classes in many states. He's very familiar with the laws and agreements in many states. He brings so much wisdom to the conversation. I am thrilled to have him with me on this important topic! I hope you can join me for both episodes!
[3:47] Brent Lancaster is our guest for our 100th episode! Brent says he's got fireworks and confetti! Brent is super excited and congratulates Monica on the 100th episode!
[4:36] The laws and agency status in each state are not the same. As we talk about this, we need you, the listener, to recognize there are nuances and local practices. Always confirm questions with your broker.
[5:11] We're going to talk about buyer agency commitments. Not every state practices buyer agency and agreements differ by state. Some states are changing their laws. Watch for changes in your state. We're recording this in March of 2024.
[6:24] First, know what your state's default agency position is. Regarding clients and customers, you owe your clients a lot more than you do your customers. We need to be honest and truthful to everyone.
[7:20] You don't owe your customers a fiduciary duty. You owe your clients a higher level of service: loyalty, obedience, confidentiality, and in some states, fiduciary duty. You also have the Code of Ethics, over and above the law.
[8:41] March's episodes with Lynn Madison are about all the things agents do for buyers. The structure is changing and there's no longer an MLS amount a buyer's agent will get paid. You'll need an agreement,
[10:22] Buyer's agents have just been accepting the Offer of Compensation. You show different properties, do the same thing, and are offered three different levels of compensation. That's going away. Now, you, the buyer's agents are in charge of your level of compensation.
[11:27] Now you get to put your value on paper. A lot of agents haven't done it. Change is hard even if you want to change. We're at the point where it's potentially obligated. Get on board, early!
[12:12] Brent says a conversation needs to happen before a contract. Brent sits with a seller or a buyer and explains his value and services. The Listing Agreement or the Buyer Representation Agreement is a summation of those conversations.
[15:35] Tell your buyer that to perform services for them to help them buy the house they want, you need to be in a client relationship with them. That's what the Buyer Representation Agreement does. You must know what your value is. Do you struggle with your value? Go to Competition.REALTOR (now facts.realtor) for ideas!
[17:11] When do you have the buyer sign the Buyer Representation Agreement? What do your broker and state law say? Brent says to have the buyer sign before the first showing. Showing is part of your value.
[18:10] The first face-to-face contact when you present the Agency Disclosure, if your state has that, is a good time to present the Buyer Representation Agreement. A buyer consultation could be a good time.
[21:22] If the buyer already has an agreement with another real estate agent but wants to work with you, find out if the buyer has gone on showings and what work the other agent has performed. Buyers need to be educated. A buyer can't work with two agents. An agreement can be terminated with written notice.
[23:13] REALTORS® have an affirmative obligation to determine if a buyer has a Buyer Representation Agreement. If an agent takes your client, ask if they asked the client if they had a signed agreement.
[24:51] If a buyer doesn't want to sign an agreement, you make a business decision. Is it a buyer you want to work with? Is it a buyer? What's going to happen if you don't get paid? It's no fun to be burned.
[26:40] What about unrepresented and unqualified buyers going into open-house homes? The NAR says 89% of buyers are represented by a real estate professional. Explain your value to the buyer!
[29:35] What if the buyer's agent doesn't get paid? Brent notes some scenarios. Agency Representation and compensation are separate things. Legal representation doesn't guarantee compensation.
[31:15] A Buyer Representation Agreement is a contract. The buyer says the agent will do work for the buyer and the buyer will pay the agent for the work. No reasonable person expects agents not to get paid.
[31:55] The more the agent explains to the buyer how money flows in the transaction, the better off the agent will be. Brent covers negotiating cooperative compensation between the buyer and seller's agents.
[34:48] Brent believes that the buyers' agents who are strong enough to have the conversations about compensation are the ones who are going to get the deals.
[35:16] Monica encourages buyers' agents not to be afraid to negotiate with the seller about compensation. The seller may not have chosen to make an offer but may agree to negotiate for a sale.
[36:05] Brent's final words: "Get used to having the conversation! … Those who get used to having it sooner are the ones who are going to win! We're entering into an awesome market! Buyers are going to be more plentiful. If you can have the conversation, you're going to convert faster than anybody else!"
[36:33] Thanks so much to Brent Lancaster for sharing so much wisdom! I hope this conversation expanded your thinking about the benefit of having a signed agreement with your buyers. It is common for us to have agreements with service providers. We should have one too, with our clients.
[36:58] Please join us for the second episode, where we will discuss the individual components of the agreement and why they are important. We will also discuss some of the considerations regarding even more clarification for the agreement, moving forward.
[37:13] In these days, please listen to people who are creating solutions for you and your business in healthy ways. Your ABR® instructors are working very hard all over the country to help us all be more focused on the quality service we bring to our clients and to help us communicate that clearly.
[37:35] Go to Learning. REALTOR to get more information about quality training online or in your local area. Getting your Accredited Buyer's Representative designation is more important than ever. If you got it more than five years ago, you might consider getting it again. It's been updated and is so helpful! [38:08] Change can be good if we lean into the growth opportunities that it provides! Thanks for joining us! I'm Monica Neubauer for the Center for REALTOR® Development.
[39:17] When your clients ask you questions, have great conversations with them so you can go out there and help them buy those properties!
Tweetables:
"A lot of buyer's agents have been staring at the Offer of Compensation and have just been accepting of what it is. Conceivably, I could show three different properties, do the exact same thing and essentially be offered three different levels of compensation." — Brent Lancaster
"The sticking point is it's different. A lot of agents haven't done it before. It's different and hard. Change is hard even if we want to do it. Now, we're at the point where this agreement is something that's potentially going to be necessary." — Brent Lancaster
"[A Buyer Representation Agreement] is a contract where the buyer is saying 'You're going to do work for me and I'm going to pay you for that work.' I don't think that there's anyone … that's reasonable that expects agents not to get paid for what they do." — Brent Lancaster
"That's the market that we're headed to and those buyer's agents that are strong enough to have those conversations [about compensation], I think those are the ones that are going to win the deals." — Brent Lancaster
Guest Links: LancasterInstitute.comBobBrooks.com
LinkedIn: Brent Lancaster
NAR Resource Links ABR® Accredited Buyer's Representative
Additional Links:
Microcourses found at Learning.REALTOR. Use the coupon code PODCAST to obtain 15% off the price of any microcourse!
Learning.REALTOR — for NAR Online Education
Training4RE.com — List of Classroom Courses from NAR and its affiliates
CRD.REALTOR — List of all courses offered
facts.realtor
Host Information:
Monica Neubauer
Speaker/Podcaster/REALTOR®
Monica's Facebook Page: Facebook.com/Monica.Neubauer
Instagram: Instagram.com/MonicaNeubauerSpeaks
Guest Bio
Brent Lancaster
Brent Lancaster combines his love of the business of real estate with his passion for education. As president/CEO of one of the nation's oldest real estate schools, he offers a variety of solutions to the challenges agents face in today's real estate environment.
In 2003, Brent developed his first online course and has spent every year since searching for innovative ways to bring quality and consistency to every agent using multiple delivery formats. Today, he continues to teach classroom instruction but has transformed the traditional brick-and-mortar classroom into a multimedia educational experience called On-Live™.
Brent is also the broker/owner of his own real estate firm, Brent Lancaster & Associates.