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How to get paid working with Buyers.

By Bryant Tutas

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

July 28, 2009 11:09 AM

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Hi folks. In this current market, understanding how we get paid and who pays us has never been more important. Everyday we have to deal with REOs offering low co-brokes and Short Sales where co-brokes can be changed at the last minute. But in spite of these things we want to be able to do a good job for our Buyers AND we want to get paid.

Now since this post will be about commissions, please let's not use specific percentages, we don't want to upset Sherman and his anti-trust crew. I'm going to be talking about principles anyway so amounts are not important.

First, I want to clear up a major misconception in our industry "I do NOT have to show your listing if the co-broke is less than I'm willing to work for." It is neither unethical or illegal for me to pass on showing your listing.

Do you believe that? Well, whether you believe it or not, it's true. BUT......and here's the qualifier.....you have to disclose this to the Buyer.

As primarily a listing Broker I also have to make sure my Sellers understand this. In this more competitive market my Sellers must offer a competitive co-broke, for selling their property, or it will not get shown. That's a fact and they need to understand it. It's my job as their Broker to make sure they do. The co-broke is a market condition and we have to base it on what's happening in the market today.

Buyers are far and few between, in most markets, right now. If I have a good qualified Buyer I want to make sure that I get paid fairly for my services. Heck I can go sell them a new home and get z% plus a huge bonus. Why would I show them your listing only offering me x%?

"Broker Bryant how do we do this without harming our Buyer? If the property is just right for my Buyer then shouldn't I show it to him no matter what the co-broke is?" Well that's a good question. The answer is YES. Your job as a Buyer agent/broker is to find your Buyer a home that meets their needs. The commission should NOT come into play.

Do I have you confused yet? First I tell you, "you don't have to show them" then I tell you, "you must show them". What's up with that?

What's up with that is the good ole' Buyer Broker Agreement(BBA). Folks, you really only have two choices. You can show your buyer EVERY listing that meets their parameters, whether they offer x%, y%, z% or 100 bucks. You cannot eliminate any of them. OR you can discuss with your Buyer up front how you get paid and what your minimum fee is. Then put it in writing and have him sign it(BBA).

I know what quite a few of you will say, "I already show my Buyer every property regardless of the co-broke." Do you really? Do you show them FSBOs? Do show them a listing offering you $500? Are you really willing to work for that or are you kidding yourself?

Folks, in order to do the best job for your customer/client, the commission needs to be removed from the equation. The only way to do that is to discuss commission before you go to work and have the Buyer agree in writing on what you are willing to work for. Then, when you see a listing with a less than adequate co-broke, just ask the Buyer if he wants to see it. That's it. It's not that difficult and it holds you out as a true professional.

One more issue to clarify. As a REALTOR® it is against our Code Of Ethics to use a purchase contract to negotiate a higher co-broke. You can't do it.

Again you have two choices. First, you can negotiate a higher co-broke PRIOR to showing the property. Make the call. You never know.

Secondly, if you have a signed BBA, the Buyer can ask the Seller to contribute towards your agreed upon commission. Or he can just ask the Seller for a closing costs contribution. The difference between your agreed commission and the co-broke is a Buyer closing cost and the Seller can contribute towards it as part of the purchase agreement. Very simple.

So that's it, Broker Bryant's crash course on co-brokes. What do think? Will this help you to up your game?

Below are a few of posts on BBAs and how to get them signed. Hope this helps. You knew I wouldn't leave you hanging didn't you?

Everything you need to know about BBAs and then some.

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://www.brokerbryant.com/

***The content of this blog is solely my opinion***

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"The Lovely Wife" The One And Only TLW.

President-Tutas Towne Realty, Inc. - Kissimmee, FL

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Jul 28, 2009 11:09 AM

Borino - The Real Estate Coach

Borino Productions - Falls Church, VA

Great advice, as always, BB. Very helpful.

In my personal experience, working with buyers just wasn't worth it. Too much time, too many headaches, too many variables, too much useless driving around. The only exceptions were my sellers moving up. The rest got reffered to another buyer's agent.

But I'm sure there are agents who make a great living as Buyers' Agents. And who know how to get paid well for their work.

Borino

www.ExpiredPlus.com

Jul 28, 2009 11:16 AM

Christine Donovan

Donovan Blatt Realty - Costa Mesa, CA

Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I think this is a great crash course in co-broker and broker buyer agreements.

Jul 28, 2009 11:36 AM

Dorie Dillard Austin TX

Coldwell Banker Realty ~ 512.750.6899 - Austin, TX

NW Austin ~ Canyon Creek and Spicewood/Balcones

Bryant,

You have made some valid points. I agree you do not have to show homes offering lower commissions as long as you discuss it with your buyer. I discuss my commission and explain this is my full time job and I work hard for my commission. My buyers usually respect my time and expertise and tell me they feel I earn my commission. Setting expectations from the begining is the best policy.

Jul 28, 2009 11:36 AM

Bill Ladewig

LoanOfficerSchool.com - Escondido, CA

Experience Is Your Advantage

Broker Byrant, really good information on your blog and your video clearly illustrates that looks count in this business.

Jul 28, 2009 11:42 AM

Katerina Gasset

The Gasset Group & Get It Done For Me Virtual Services - Provo, UT

Amplify Your Real Estate & Life Dreams!

I found the perfect solution to this and all questions regarding buyers- I am a listing agent:) I refuse to drive anywhere in this heat:) Katerina

Jul 28, 2009 11:55 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Bryant - I had to quote Standard of Practice 16-16 just today in a counteroffer, where the agent tried to change the published co-broke in his offer.... ouch.

Jul 28, 2009 12:16 PM

Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417

HomeSmart Stars - Addison, TX

Real Service. Real Results. Real Estate

Bravo! I haven't seen the issue discussed so clearly and so effectively in a while.

Jul 28, 2009 12:41 PM

Kenneth Young

Uni International LLC - Virginia Beach, VA

I have so many Buyers coming to me to find them the "perfect" business for them. I refuse to run around town talking to Owners to see if their looking to sell for a "Buyer".... been there, done that.

So now I find out quickly whether they are serious or just tire kickers. Hence, a Buyer Broker Agreement. I have them give me all the information that they are looking for in a business, even the price, etc. then I charge them $5000, with the stipulation that;

1. I find them exactly what they asked for, they purchase the business and they are refunded the $5000.

2. If I find them exactly what they asked for, and they do not purchase the business, I keep the $5000 for my time.

3. If I can not find exactly what they asked for, then I refund the $5000.

It's fair for all parties, and I find out who is serious and who was going to try to waste my time. And as they say "time is money, so don't waste any".

Jul 28, 2009 02:15 PM

Lisa Hill

Florida Property Experts - Daytona Beach, FL

Daytona Beach Real Estate

Broker Bryant's a big showoff! =P I don't want to read happy posts today. My day sucked. It's not fair >=I

Jul 28, 2009 04:21 PM

Gabe Sanders

Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL

Stuart Florida Real Estate

Hi Bryant, thanks for the education. Some of us needed that. Of course some of us will probably ignore it also! :-)

Jul 28, 2009 11:48 PM

John Slocum

Premiere Property Group, LLC - Vancouver Washington - Vancouver, WA

Broker, SFR - Vancouver WA Real Estate

BB - you bet I'm in for upping my game. Better scripts are always welcome and once again I enjoy your pitch. John btw - I was not aware that great looks were so important with this business!

Jul 29, 2009 08:38 AM

Leslie Stewart

Oregon Licensed Broker with Berkshire Hathaway HomeServices Real Estate Professionals - Stayton, OR

Realtor, ABR, CRS, Oregon Licensed Broker

Great points and thanks for my giggle for the day, you good looking guy you!

Jul 29, 2009 05:46 PM

Jeff Dowler, CRS

eXp Realty of California, Inc. - Carlsbad, CA

The Southern California Relocation Dude

Excellent info as always, BB. I missed this because I took an unprecedented 3 days away from reading and wirting on AR for a short trip, but now that I'm back, I find this gem. Great stuff. These days most agents adn their sellers seem to realize the value of the co-broke. Even some of the unrepresented sellers I have met.

Jeff

Jul 30, 2009 11:44 AM

Susan Neal

RE/MAX Gold, Fair Oaks - Fair Oaks, CA

Fair Oaks CA & Sacramento Area Real Estate Broker

Hi BB - When I write a listing, I discuss this at length with my clients if they even think of cutting the commssion offered. Although we are supposed to ignore the commission amount when selecting homes to show our buyers, how can you prove that someone is skipping your low-commission listing? You really can't, so it stands to reason that a higher commission offered to the selling agent will bring more agents with their clients.

Jul 30, 2009 12:42 PM

Susan Neal

RE/MAX Gold, Fair Oaks - Fair Oaks, CA

Fair Oaks CA & Sacramento Area Real Estate Broker

P.S. I just went back and watched your video. Great tip! I guess that means some agents I know simply won't be as successful as you. ;-)

Jul 30, 2009 12:44 PM