Center for REALTOR® Development 101: Explaining the Buyer Agreement and How to Use it Effectively with Brent Lancaster: Part 2
In Part 1 with Brent Lancaster, we started the conversation about the Buyer Agreement and it's a timely conversation. We recorded this before the proposed settlement from NAR was released. While the settlement is still proposed, and it's not final, one of the key points in it is the importance of a signed agreement with our buyers. There are details to be clarified but it seems this topic is even more relevant than before we recorded it.
This agreement with buyers to work together and get paid for the work you do is crucial for us. Brent owns a school and teaches CE classes in many states and is very familiar with the laws and agreements in many states. He's not a lawyer and he's not a pro on every single one but he does bring so much wisdom to the conversation. I'm thrilled to have him with me for this topic and I hope you join us for both episodes.
Let's join Brent and learn more about the sections that are in most Buyer Agreements. It's important to understand all those sections, and why they are important. Your documents will vary from state to state, as does your law. Please refer to your state law first, guidance from your state and local associations, and, very importantly, your broker for clarity on your specific state and situation.
[2:58] Brent Lancaster, welcome back with us! In the last episode, we talked about the Buyer Agreement, having the conversation with the buyer to sign it; why it's important to sign it, and what happens if something goes wrong. In this episode, we want to discuss the elements of the Buyer Agreement. It's becoming more important that they are accurate.
[3:49] Defining your Buyer Agreement and how you fill it out is the job of your broker and the lawyers in your state. It is not your job. We'll talk about some of the things we teach in the ABR® Accredited Buyer's Representative designation. Go to your broker and your state law for your policy; also check with your state and local associations.
[5:25] The commitment has a start date and an end date with a caveat for an automatic extension for a closing that is scheduled beyond the end date, similar to a listing agreement. The length may be negotiated. It may be for 180 days or no longer than a year to be enforceable.
[6:56] In a discussion with a broker, in arbitration, or with a judge, they will look at much more than the agreement as to whether it's enforceable. They'll look at how closely you worked together, who made a change, how much work you did, and more. How many calories did you burn?
[7:45] The Carryover Period extends the time of the agreement if the buyer buys a property after the agreement that you showed the buyer during the agreement. The buyer may still owe compensation. This clause protects you.
[8:40] The Duties of Each Party is in two paragraphs. Discuss this in your buyer consultation in terms of your responsibilities and the buyer's responsibilities. Try to have the same number of bullet points for each party. Brent gives some examples and priorities of the responsibilities of the agent.
[12:50] Brent discusses some responsibilities of the buyer. The first is to work exclusively with the agent. Explain why that's important. Discuss what happens if the buyer is approached by another agent, or walks through a model home. No one in a model home represents the buyer. They are working for the seller.
[14:05] The buyer consultation covers some of these situations, such as what properties they've looked at, if they have financing and more.
[15:51] One section deals with compensation. Explain how money flows in the transaction. The buyer gets a loan or cash. They hand that money to the seller. The seller pays off the mortgage, and fees, and keeps the net. The listing and buying agents get paid. Explain how much you get paid for your service.
[17:35] Tell your buyer what your fee is and that you will do your best to get it from the seller. If the seller refuses, the buyer decides if they want to look at that home. Before you show any property, explain to the buyer how much they will need to bring to the table. They can decide if they want to look at it.
[20:41] Monica notes that in Spain, an agent can be hired as a personal house shopper for the buyer. Monica also points out that buyers' agents could be considered to be consultants. Consultants get paid.
[22:18] There can be a section on a general description of the property type, a general area where you will look for it, and how much they will spend. If they materially change their mind, amend the agreement.
[29:37] Brent explains compensation earned vs. compensation paid. What if you take the buyer up to days before closing and they want to terminate the contract? Language stating when your compensation is earned needs to be in the contract. Termination fees need to be negotiated in the contract.
[31:36] You're going to do what's best for you. What we wanted to do in this episode is give you a general overview of some of the most important things that are in the Buyer Agreement.
[31:47] Buyers are just dying to buy! There are some pent-up buyer demands. Brent is excited about the rest of 2024, second quarter, third quarter; those agents that are ready, those agents that have planted those seeds, they're going to reap the rewards. Brent is excited for them.
[32:24] Brent's final word: "Thanks! I really appreciate the opportunity to do this, Monica! This has been so much fun. I really have enjoyed it and if anyone has any questions, just reach out to me. I'd be more than happy to help at least talk through it or have a conversation. This is my jam! I love talking about it!"
[33:10] Brent, thank you so much for all your wisdom, clarity, and the beautiful way that you've explained some of those things!
[33:49] Please continue to listen and learn from people who are creating solutions for you and your business in ways that produce growth and understanding for you and your client. 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 communicating that clearly to our prospects and the public.
[34:09] Go to Learning.REALTOR to get more information about quality training online or in your local area. Getting your Accredited Buyer's Representative (ABR®) designation is more important than ever. You might consider getting it again for a good refresher while considering your business options and plans. I have so enjoyed the personal engagement with agents in my classes on this topic.
[34:37] Change can be good if we lean into the growth opportunities that it provides! Thanks so much for joining us! I'm Monica Neubauer for the Center for REALTOR® Development.
Tweetables:
"If you don't tell your buyer what to do, then you're going to lose that buyer." — Brent Lancaster
"We wanted to give you an overview of some of the most important things that are in your agreement." — Brent Lancaster
"Buyers are just dying to buy! There are some pent-up buyer demands. I am excited about the rest of 2024; second quarter, third quarter; those agents that are ready, those agents that have planted those seeds, they're going to reap the rewards." — 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
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.