Buyer Representation, What you Need to Know
With Patti Ketchum
TRT: 1h 22n 55s
Video Transcription

 

Host speaks first, off camera:    With all of that information, I would love to pass it over to the wonderful, the amazing, the fantastic. We're so happy to have her here. Patti Ketchum. Patti, when you're ready, you can take it away.

Patti Ketchum speaks to camera:  Thank you so much, Niki. Welcome, everyone. we're going to have a meeting with several hundred of our closest friends. Let me tell you what we're going to talk about for the next hour and a half. We're going to talk about open houses. We're going to talk about showing agreements. We're going to talk about buyers that don't want to sign anything because they just met you.

And now all of a sudden, you're acting like you're engaged to be married. We're going to talk about who's enforcing what. We're going to talk about how we got here. We're going to talk about, can we have buyers tell us to only show them houses where we're compensated through the listing office of the seller? We're going to talk about agency.

We're going to talk about those cute little things y'all are posting in the mastermind groups. The latest one I saw was the little key. And the little tab on it has a number written, a percentage written there. We're going to talk about those. But most importantly, we're going to talk about transparency. And we're going to talk about moving forward in our new world.

And I want to start with some words of encouragement, guys. I've been doing this a really long time since prior to the turn of the century. And when I first got started in real estate, Barnett Bank, which was a fabulous bank that were so good. Barnett Bank had 14% fixed interest rates. It was the end of the world.

Nobody's ever going to buy a house again. Then we came up with home inspections prior to the turn of the century. Guys, people didn't do home inspections, and we started doing home inspections. Oh my gosh. Nobody's going to buy a house again because they're going to do home inspections. Then we had Chinese drywall. Then we had the period of great sadness between 2007 and 2013, which was longer and deeper than anyone anticipated.

And now we find ourselves with another time to pivot. And I want you all to first of all, I want you to take notes. I want and get you out a piece of paper right now. And I'm going to tell y'all what to be write down, because here's some stuff I want you to capture moving forward for the rest of your professional career.

And the first thing I want you to write down, and I am quoting my husband, Clay, people like to sleep indoors no matter what. Guys. People like to sleep indoors. Never forget that. And that's what we do. That's what we do, is we help people sleep in doors. All right. So we're going to be okay. It's going to be different, but we're going to be okay.

Let me touch on a couple of concerns about that people have had about why have we gotten these documents sooner. You know, we're just now getting this stuff. Somebody should have trained us earlier. All right. Take a big, deep breath. Do y'all remember when. Well, when I was growing up, the only kind of service animal was a German Shepherd dog.

And it was a seeing eye dog, and they got to come in to restaurants. That was it. That was it. That was it. So the pendulum was way, way, way, way over here. That was the only kind of service animal. And we realized that was too restrictive. That was too tight. So the pendulum started swinging like this, and it passed reasonable.

And it got wackadoo when you had, support animals, support snakes at Disneyworld, support chickens in Disney World, it got crazy and Florida Realtors® during that whole time kept having meetings about property management. What do I do if their emotional support animals, a pit bull, and I can't get insurance for my apartment complex? I mean, Florida Realtors® was there for us during that crazy pendulum.

And you had peacocks on airplanes. And I mean, we did a slight overcorrection. So we're doing the same thing. Guys, right now, this is the pendulum, and we're going to have to swing up over here to eventually get back to a normal way of doing business. And so right now, my theory is we're over here. We're over here, and we're probably going to have to do some overcorrection.

And there's going to be unintended consequences no matter what we do, no matter how smart, no matter how many meetings and attorneys get together with Realtors® and try to figure this out, we're going to there's going to be unintended consequences. So now more than ever, it's important for you to stay plugged in to know what are the latest forms, what what are the latest frequently asked questions.

Brokers. It's on us. It's on us. We have got to love on our people. We have got to let them know what's going on. And as much as we're going to be prepared today, something’s gonna change and it may go a little wackadoo a little more crazy, or we may start coming down to normal. The other thing I want to give you all is encouragement is my understanding.

There's approximately 17 states, in the United States that have had written buyer agreements forever, and they are just having a big old time with this. Because the rest of us are having a friggin meltdown. So somehow in 17 other states that they've been able to do business and sell houses. So we're pulling from the best of those forms and trying to figure out the best way to do this.

So I'm going to go over some actual forms today. And and also we're going to talk about the compensation agreements. We're going to talk about touch on the listing agreement. And I hope most of you had an opportunity to plug in to Juana's call yesterday. And by the way, sad note here. Sad note here. Anything I tell you, if you hear differently from Juana Watkins or the Legal Hotline, believe them over me.

Believe them over me. They are the source of the source. So we are going to go through the listing agreement. Juana, touched on it yesterday. I'm going to touch on it today. We're going to talk about the existing buyer broker agreement. We're going to talk about the property pre touring agreement. And we're going to talk about the showing agreement.

But let me first tell you what you don't need to be worried about. If you sell commercial real estate. If you sell vacant land if you do property management, those three types of properties are not included in this NAR settlement. This is strictly for residential property. So let me repeat that again. Maybe you want to write this down.

If you're doing a commercial transaction, if you're doing vacant land, if you were doing property management, this written by or agreement does not kick in. The NAR settlement strictly was about residential real estate. Now in Florida, the definition of residential real estate under 475 is four units or less, ten acres or less. But pull that ten acres and shove it to the side because this is strictly for residential property.

All right. So people have also asked about agency. Let's touch on agency here. In Florida, or when you read the settlement agreement and it those of y'all that have taken the ABR courses in the past, those of y'all that have been around a while, you hear frequently the term dual agency. In Florida, we're taught that dual agency is the spawn of Satan.

They cover in on our our pre-licensing exams. Oh my gosh. No you can't do dual agency. All right Patti Ketchum talking here. Dual agency is like our transaction broker. For those of us that are out doing this every day. It's like being a transaction broker. And keep in mind as a transaction broker, you can represent the buyer or you can represent the seller, or you can represent both parties in a transaction.

So you'll notice when you look through these forms, when you go to Form Simplicity or Dot Loop or Transaction Desk, whichever your passage way is to get to these forms, you will notice or I want you to notice and make sure you pull the one that's correct for you. So most of us are assumed to be transaction brokers in the state of Florida.

So that's the ones I'm using today is transaction broker. There is no discussion. I am currently a member of the Real Estate Commission, and it as of 15 minutes ago, there was no discussion on the real estate commission about us re-looking at our agency or brokerage laws in the state of Florida. So right now doesn’t mean it isn't going to happen.

But right now y'all quit worrying about that. Quit worrying about it. Just you've got a form that's the written buyer agreement. You've gotten what you have wanted. Florida Realtors® has provided for us. If you're a single agent, if you are no brokerage relationship, if you're a transaction broker or you're one of the other two, and now you need to transition to transaction broker.

Florida Realtors® has got you covered with that. So you're going to be okay on those. You're going to be okay. So let's start out we've talked about agency. Let's start out and talk about what these rules are and what we're dealing with. Part of the settlement agreement... and and let me pause just a minute. Y'all, there are no I'm going to use the word rules, but there are no new law.

There is no new law yet. We have a settlement agreement. And part of those were things that we had to agree to. Now, please listen to me. Please listen to me. I watch these mastermind groups, guys, I see some y'all are losing your friggin mind and coming up with, like, well, I'm going to put three cookies on the kitchen counter or I'm going to have three pillows sitting on the bed, or I'm going to have 500 bananas stacked up, in a, in a photo, or I'm going to have my compensation agreement in the seller's property disclosure.

Stop it, stop it, stop it, stop it, stop it. Because here's what's going to happen. The Department of Justice is going to come after you, and then you're going to have a lawsuit, which I'll be teaching about along with my fellow instructors at Florida Realtors®. That's the Department of Justice versus your last name and the name of your real estate company.

And then we'll have a new law, because when you get sued for doing something that is against the settlement agreement, then that law will set precedent, and then we'll have the rule from then on. And the GRI will be talking about the rule, because it'll be department of Justice versus your last name. Probably not going to go well.

So here's what I would highly recommend. All these mastermind groups, all this stuff like that. Guys, take a break. Back off, back off. So let me tell you what you can't do and what you can do. You can have a sign in the yard that says listing office will pay 500 bananas to buyer’s rep. You could have a sign in the yard that says seller will pay 1000 bananas to whomever brings the buyer, as long as their licensed, their licensing laws still count.

You can have forms on the kitchen table. You can announce it on your website. You can get a billboard that announces what the compensation is. One, two, three Easy street, 500 bananas to office that brings the buyer. You can have any of that stuff. Part of the settlement agreement was to encourage total transparency on what we do and how we're compensated for doing that as people that represent buyers.

So we don't have to be sneaky snake. You can use that. The cutest thing I saw lightly was the key with the little tab on it. Use it. That's fine. It's absolutely fine. I've heard people saying, well, I'm going to have it inside the super box. Why put it in the super box? Tape it to the door, guys.

Transparency is the key word. Here's where it's no longer transparent. You cannot use MLS, your IDX feed, which is Internet Data Exchange that feeds your MLS. You cannot have any of that, information about compensation coming through your MLS period. And that's a hard period. So and and when you read the settlement agreement, it says you can't have any reference directly or indirectly.

So let me answer some of the questions that y'all may have had. In the agent, agent, agent to agent remarks in the confidential remarks. Can I say, here's the link to Ketchum Realty Group's website for further information. No no no no, don't do it. Do not do it. I've heard of people saying, well, I'm gonna hide the compensation agreement in the pages in the seller's property disclosure so everybody will know that's where I put them.

No, no, unless you want to get to the GRI books. I mean, great, if you want to be the person that’s in our GRI books in the future, go right ahead. Make sure you run it by your broker first, though. So all this stuff where we're manipulating ways to get that message across, Guys, it can be 100% transparent. It can be completely public.

What it can't be is pulled through MLS, hard period. So what you'll see most MLSs are doing. And keep in mind there's several MLSs that serve the state of Florida. So you've got several different MLSs that are setting up their own rules and their own enforcement. The enforcement of this part of the settlement is going to fall on the MLS that you use.

So you need to contact your board, contact your local board or association. They're always your first stop after your broker. But reach out to them but find out what is the rules. What are the new guidelines from your MLS provider? Some of them have come up with some pretty hefty fines. I mean, they are they're not playing. They are not playing on this.

Most of the MLSs that I'm aware of, have removed the data fields completely that show compensation. Now that means if they have done that, if they've removed those data fields, that blanket that, that removed the data fields fell on commercial, vacant land, and any rentals. So keep in mind, you know, I can only speak to my MLS, the one I use, but I'm thinking, if not earlier, come the morning of August 17th, you're going to go look for compensation.

It's not going to be there. It's not going to be there. That's part of the settlement agreement. So even though the settlement agreement, as far as the written by your representation and the compensation did not affect commercial, vacant land or rentals. My gut is for most MLSs those data fields have been removed for all types of property.

Okay. Well what about Showing Time? Nope! Can't have it on Showing TIme. What about Zillow? Nope nope, nope, nope, nope, nope. So how do we how do we tell? Tell each other? How do we tell each other? And I'm quoting Juana Watkins here we are clever, smart people. Or y'all are. We're going to figure this out.

But what you can't do is figure it out. Sneaky snake. You cannot be Slim Shady and think you've come up with something. And maybe you have. And if you have, that's wonderful. But you run to buy that Legal Hotline first. Please run it by the Legal Hotline first. So one other thing is I want to, I'm making myself notes for remember to tell y'all stuff.

And I've just written down the word E&O because we're going to talk about that when we come to enforcement also. So I just want y'all to realize total transparency on the compensation we're offering each other as a listing broker to a selling broker in my listing agreement with the seller, there is still compensation, and I'm going to have that discussion with my seller.

It's always been negotiable. It is going to be negotiable when we have that compensation conversation, I'm going to make sure that I never say these words. Write this down, guys. Right this down on do not say these words. No one will show your house if you don't offer compensation. Do not let those words come out of your mouth.

Do not do that. They are looking for that. So you're going to have a conversation with the seller and maybe it's going to go something like this. We have found through many, many years of doing real estate that the highest number of buyers worked with fellow Realtors®. So we want to encourage as many buyers to come through your property as we possibly can, and we want to encourage those Realtors® that have been looking for buyers to come through your property, and I am happy to do you a seller’s

Net proceed, because I can do it on a napkin and to show you, if you offer compensation to buyers representations, this is what we could net based on the offer you got. So sellers will make decisions on if they want to offer buyers compensation through the listing office, which is what most of us have done all along.

So that part of the listing agreement's going to stay the same. Also, you may have a seller that says, you know what, my house is so fine, my house is seven. I don't have to pay a buyer's representative. I'm not going to do that. I'm not paying a buyer's representative. So what they're going to do and that's their choice.

Guys, it's always been negotiable. So let's assume that they're successful in selling it that way. It is what it is. But what if four months from now and guys in many parts of Florida that I've had the opportunity to talk with y'all, y'all are already switching to a buyer's market. You're already switching to a buyer's market. And just between us girls, it's about time.

It's about time. The buyers need a break out there. So we're we're seeing a shift in many markets towards a buyer's market. So that house is now not sitting out there four hours, or four days, is sitting out there four months. And by the way, according to NAR, a balanced market, a healthy market is between 4 and 6 months of supply.

So from the time you put your house on the market till it sells in a healthy market is between 4 to 6 months. So I think we're going to see more of that. So three months from now, four months from now, the sellers and y'all, we get these conversations all the time. Please go out my listing agent and reach out to fellow Realtors® and tell them to bring us any and all offers.

Tell them really encourage offers. And at that point, even a seller that has said in the listing agreement, I'm not offering compensation. Always, always remember where to bring them any and all offers unless told in writing not to, by the seller where to bring them any and all offers. So I would encourage you at the listing appointment to say I want your permission, Mr. / Ms. Seller, to bring you every offer, even the ones that have compensation tied to it for the buyer's rep.

They will do a seller's net proceeds and let's see if it gets us where we are. So let's take a minute and let's look at these compensation agreements. So how do we protect ourselves in that listing part of this. All right. You have your listing agreement and the normal listing agreement. And Juana Watkins yesterday went over some of the changes.

And I want to make sure I'm making myself a note on section three of this. I want to revisit that on the listing agreement. But let's look at this, compensation agreement. This is, pulling this from, Form Simplicity, from the seller's broker to the buyer's broker in this situation, I love this. First of all, thank you. Whichever committee had this with a big font and lots of whitespace.

Thank you, thank you, thank you. All right. You've got your seller's broker. This is the listing agent. You've got the buyer's broker. This is the person that's representing the buyer. Or they're doing it on behalf of their broker. Remember the listings and the buyers typically belong to the broker. So you're going to have to have those of us that are brokers are going to have to have discussions with our sales associates and our broker associates on how much flexibility we want them to have, as your best practices on signing on your behalf on these things. So you've got a property address. One, two, three Easy Street. We've just listed 123 Easy Street. I've got the buyer's name. You could leave this blank. You could leave this blank. The compensation would take effect once there is a fully executed contract. So once we have a fully executed contract, when we go to closing, there is it lasts for a period of time.

It's totally flexible on how what period of time works best in your situation. Once again, if you go under contract just as in our listing agreements. This will carry through past a termination date. If you were under contract, it's going to be important that we read these things. Here is the compensation that as a listing office, I will pay to you.

I'm being paid by the seller. And then in turn, I am paying you and I will pay you one of several ways. We could have a flat fee. We could have a percentage of the purchase price. Plus, what if you have a transaction fee? Some brokerage firms have that. What if. What if there's a selling bonus? We have a thousand bananas selling bonus.

You could absolutely add that under other terms. And I want you all to realize the power of this here. You could make copies of this based on your listing agreement between the broker and the seller. What we've always had that promise of compensation. Here's your promise of cooperation. And you have that on your website. You have that copied.

And sitting at the house because it's very I want you to notice it is house specific. So it's going to be for this particular property. Could be any buyer could be any buyer. It's this particular property. So there is the compensation agreement from the listing office the seller's broker to the buyer's broker. Now follow me along here because I want you to go all the way down to the bottom.

And I want you to look at this. That's in a different font. The parties acknowledge this form should not be used to share offers of compensation to buyer’s brokers or other buyer’s representatives, via any field. That means you can't hide it in there either guys, in the MLS. So here's our reminder. As transparent as we want to be, we can no longer use the MLS as a vehicle of transparency.

Take it off the table. So no you can't take this form and bury it somewhere. It talks about arbitration and mediation. There are some, other miscellaneous clauses, but I want you to also look at this thing. Brokers commissions are not set by law and have always been fully negotiable. Now in no event. And we're going to come back to this because I know this worries some of y'all. In no event, will, the buyer’s brokers compensation exceed the amount of compensation in the buyer broker separate written agreement with the buyer.

A lot of words there a lot of words. So let me say this part in plain English. Since we're on this form right now, let's assume that you're dealing with a buyer. You have done a showing agreement with them to show one, two, three easy street. Or maybe you, Mac daddied it all the way out and you have a written buyer's agreement with them that covers everything you're going to show them.

Or perhaps you've got a pre tour touring agreement. Any of those three forms, you're gonna have to pick one of those. You're going to have to pick one of those come August 17th. So whatever the whichever form you use, it's going to have a, area in there for compensation. So let's assume in compensation you put that you expect to get 5000 bananas.

And let's assume here that there are offering, six thousand bananas right up here. They said, what are your six sales of bananas. You're going to need to go modify your agreement. And guys, listen to this. This is magic. It's always negotiable. It you can always modify it. You would go modify whatever written agreement you have with your buyers and say, you know what it says here... I know that I told you I expect to be paid six bananas, 6000 bananas, but, I’m being offered 5000 here. And you know what? I'm fine with that. So let's mark it through and modify it on our original agreement. What if on your agreement, you didn't even think about that..., a, now the mind is totally gone for, like, you didn't even think about that.

Bonus. The bonus. And they're given a thousand bananas bonus to this. And oh my gosh, you didn't even think about that in your agreement, that written agreement with your buyer. So you would come back and you would modify that written agreement so that the buyer is aware of how much you're being paid and that they're okay with this and the what there's modification forms.

Or you can clearly just mark through it and modify it. So keep in mind all of this. One of the hugest lessons to bring through here is this has always been negotiable. Always. So let's relook at what this form is for. This is where you have a listing agreement signed with your seller as the listing broker, and the seller has agreed to pay a certain percentage or a certain number amount to anybody that brings a buyer or any licensee or any Realtor® that brings the buyer.

Here's how you let that be known. Here's how you let that be known. And we will love you for that. We will love you for that. All right. What if they didn't do that? What if they said, I'm not going to do that? We got a form for that too. Thank you. Florida Realtors®. This is our sellers to the buying broker.

So at the time of the listing agreement the seller said perhaps I'm not going to put in compensation for the buyer's, Realtor® not going to do it. And now for a variety of reasons, maybe they want to relook at that. They may get an offer that has compensation, may have this attached to it, compensation from the seller, not through the listing office, but from the seller directly to the buyer's broker.

This is the form you would use for that. So in that case, once again you've got the buyer's broker. You've got the seller, you've got the property address who its listed by, how long this is good for. Keeping in mind that if you go under contract it will extend until that contract closes. Here's the compensation agreement, just as we discussed before.

Here's your warning that this is not used to share offers of compensation through MLS because we do not do that any more. Period. The hard deadline on that is August 17th. Many MLSs have already begun enforcing that currently. And you have all parties sign.

All right. So I hope that helps y'all to understand that part of the compensation agreement. There are, when you go to Form Simplicity you will find modifications to these. I just didn't bring them up today. So now we have our promises to each other. As a listing broker to my fellow Realtors®, as a seller, to whoever brings the buyer.
If I didn't take care of it within the listing agreement. So now let's talk about what happens in the listing agreement. I think I've got it right up here. Wow, this is brand new guys. Just hot off the presses. And thank you, Florida Realtors®, for having a seminar on this yesterday. A webinar on this yesterday. Not going to spend time going through this.

Because that was done yesterday. But I do want to get y'all to section three. So if you're taking notes, write down section three. Section three. Remember this is the listing agreement we are using with our sellers. Property, property is offered for sale on the following terms. Cash, conventional, FHA, VA. Will they hold seller financing? Is there, an assumable mortgage out there.

But what I want you to pay attention to is line the 39. Seller will pay mortgage discount, other closing cost or concessions not to exceed. And I want y'all to know there's a dollar sign there, not a percentage.

And then the rest of the sentence is, and any other expenses seller agrees to pay in connection with the transaction. All right. So that's our listing agreement. And it's really important that you see there's a dollar sign there because this was done purposefully to make us think about what we're doing. So let's go to real world. And I have a brokerage firm guys we do this this what we do.

You fill out an offer to purchase and in there the buyer is asking for the seller to pay $1,000 towards closing, $5,000 towards closing, $10,000 towards closing, concessions, contributions towards the buyer's closing cost. It is okay for us to still do that. It is okay for us to still do that. But here's the part in the settlement agreement I want y' all to understand.

Seller's concessions can not be limited to or conditioned on buyer's compensation. So if we promise to give, the seller promises to give $5,000 towards buyer's closing cost and some of those closing cost include paying for the appraisal fee, which is done up front, but say they want to be reimbursed for it. What if it's paying their buyer's rep as fine tooth compensation to the buyer's representative?

What if it helps set up some of the pre-paid? There are certain things that are going to be cost to the buyer, and if the seller is contributing a hard number towards that, that's perfectly okay. The thought process on not putting a percentage in there is they did not want us to at all be construed as making this conditioned on the buyer's compensation.

So dollar amount. And quite frankly guys every contract I’ve ever received it's a dollar amount anyway. And once again all of this is negotiable. So let's, so let's answer the question, is it okay to put a request for compensation for the buyer? Let's assume it's not covered in the listing agreement. In the listing agreement, the seller did not promise to pay.

If they did, you would have used one of those forms and you would share that as the listing agent. You would share that with. whoever brings the buyer is the buying agent. I'm going to call you and say, I want to show one, two, three list... Easy Street. Do you have compensation for me? Set aside side note here guys.

The commercial world has been doing this for years. Years. Okay, this is how they do business. So we're going to look at them and model ourselves after them. So I want to show one, two three easy street I'll call the listing agent. Have you set compensation aside for your listing agreement for 123 easy street. Yes I have as a matter of fact, the sellers agreed to pay you 5 thousand bananas.

And I'm going to send you this form from the listing office to the selling office. That confirms that, and you can rely on it. Or here's a note. Go look at our website. We have a list of every listing we have and what the promised compensation is. Remember, it cannot be through the IDX feed, cannot be through the MLS feed.

00:37:58:04 - 00:38:30:11
Speaker 2
It's got to be separate from that. Go look at our Facebook page. We've got every listing we have and what the compensation is. Cannot go through MLS or the IDX feed. There's your there's your guidelines there. So we can confirm between ourselves the promise of compensation from the listing office to whoever brings the buyer. So I want you to understand that hasn't changed.

If you have a seller that's not willing to pay compensation, guys... for sale by owner, we've we've had those forever. So how did you deal with the for sale by owner. You have buyers. The buyers were not intending to pay you any compensation at all. So you talked to them and you said if you happen to fall in love with the for sale by owner, will you please give me a chance to show it to you first?

Because one of the things we want to do is never put up a barrier or never filter what our buyers see on their opportunities to obtain home ownership. That's not what we're about. So I would absolutely on a for sale by owner, or one where the seller doesn't have any compensation. I would ask the listing agent or the seller if you're dealing with directly with them, do you mind if I showed the property?

Because I always feel like if I could get in there particularly if I can meet the seller, we probably work this out. So now is your time to shine. If you're good, you're good with that kind of stuff. This you're going to shine. So now the buyers of course, fall in love with that house, don't they always. So that's the one they fall in love with.

Then you on your offer to purchase. You can certainly feel free to ask for sellers concessions. Or you could a dollar amount, or you could even say that, buyers rep will be paid through seller. Now, cautionary tale here. Cautionary tale. That list we were all raised. You don't do that. So this feels really awkward to us. We were always raised that we're not a party to that contract, and we don't negotiate our fees on that contract.

So this is this is a paradigm shift for most of us that do residential. In that offer to purchase. And you could put in that compensation agreement. Perhaps you also include the agreement that I covered just before this where its seller to buyers rep. And in that agreement, you say you're going to pay me 5000 bananas, you're going to pay me 2000 bananas while you're paying the other broker, you're paying them 10,000 bananas, and you'd negotiate that through on the on the sales contract using that compensation agreement, which can be modified.

Keep that in mind, can be modified. Here's what I want you to realize. This is the cautionary tale on this. We are not parties to that contract. And at any point, an hour before closing, two days before closing, perhaps you haven't been communicating with your buyer and seller. Perhaps you're not returning phone calls. Perhaps you've abandoned your buyer and seller.

Or perhaps they're just jerks. And so they get together and that the seller and the buyer do an addendum to the contract that says they're pulling us out. There's no concessions anymore. There's no compensation anymore. They pull it out of the contract. They could do that. But keep in mind you have other documentation that covers you for this, that here was the promised that was made. Just as we have a listing agreement, when we're dealing directly with sellers, you'll have a compensation agreement between the buyer’s rep and the seller.

And you'll also have a buyer’s representation agreement between the buyer's rep and the potential buyer. So you'll be covered in that in that. All right. So we've talked about compensation. I want to go now to open houses.

All right. NAR gave us real good clarity on this. And by the way, NAR has great resources. There's a frequently asked questions that has almost everything any of us ever worried about is there. So let's talk about open houses. Open houses, and you have to follow me here whether you have the listing, somebody else in your office has the listing.

You're holding it for a builder. You're holding it for another brokerage firm. but you're hosting an open house as a realtor. You are in effect, at that point in time, working for the seller. It's real clear to anybody that comes in the door, you're there to represent the seller. So you would be a great host or hostess.

You would show them to the house. You do not have to have any kind of written agreement to do that. Let me say this again. Write this down at an open house for you to host on behalf of a seller, an open house, you do not have to have a written agreement with any buyers that come through.

But every single buyer that comes in that door, and y’ all we should have been doing this anyway. We need to be clarifying and ask them if they have a written agreement with another Realtor®. Now, it always drove me crazy at open houses where people go... We need to ask them if they're working with another Realtor®. It sounded like a big ‘ole spider monkeys jumping on people. Couldn't stand that stuff. So one of the things that y'all could steal every idea I give you steal it. I got them from other people smarter than me. When you are doing something like this at an open house, I'm a little more soft touch. And so one of the things I like to say is, please let me, ...welcome to the open house...  please let me know what Realtor® you're working with. And I'm happy to send the information. If you want further information on the open house, I just assume people have Realtors® and are represented by them. Now, let's assume that they tell you they hang around the open house. They come up to you later and say, you know, we really don't have a Realtor®, we'd like more information on this house or we would like a house just like this, but without a pool. And so you need to go deep. And this is often called the buyer's counseling session. And that buyer's counseling session needs to be pretty in-depth as that relationship builds. And I want to take a moment here and talk about fair housing.

One of the the benefits to this is it protects us also. So when you are, working with a buyer or seller, keep in mind you, what you do for one, you do for all. And keep in mind, as a member of NAR, we not only having to have the federally protected classes, we have sexual identity and sexual orientation or two additional classes.

But y’ all, no where is creep or liar, a protected class. So guard your heart, guys. Use this to guard your heart. because we know what other profession in the world advertises on social media. I'll be out in East Egypt on Sunday from 2 to 4. Follow the balloons and I have snacks. Nobody else does that.

So use this as a tool to protect yourself also. So as far as Realtor® safety and we could do hours on Realtor® safety, but use this and say I'm if you have a written agreement with another Realtor®, I need you to contact them to get further information on this house or any other houses you need to see. And they say, well,

I don't have a written agreement. Then maybe what you want to do. And I like this form showing agreement because we just met. We just met. I ain't ready to get engaged yet. Let's just do this house only. It's between the consumer and they use the word consumer. Now that's your buyer. It's between the consumer and the broker. There is a termination date.

And y'all, that tracks Florida law. Our listing agreements under 475 have to have a termination date. There's a termination date on this also. So I just want you to keep in mind there is a date to terminate. Also, keep in mind any of these forms allow us to break up with them and allows them to break up with us, just as we have on our listing agreements.

So we just met. Let me show you more about. And you've told me, Mr. Miss Buyer, that you do not have a written agreement with a fellow Realtor®. Let's let's go look at this house or tomorrow, I'd love to make an appointment with the house like this. Or a house that you told me you're looking for that has a pool.

Doesn't have a pool. Higher price, lower price. Let's go look at 2 or 3 houses, tomorrow. You write those down here. All this is guys is a showing agreement. This is not, we’re engaged. This is we’re checking each other out. We're just starting to date. So we have promises that we make to them. And one of the promises, and I want you all to pay attention to this, your promising to be professional and your promising to have a skill set.

And the only way you can be professional and have a skill set is to become competent in our contracts and then and and in our code of ethics. And that competence is going to build confidence. So you're promising them you're going to take care of them. You're also promising them that you're going to be the source of the source, not the source.

So it talks about third party vendors there. It also talks about fair housing. It also says that the let me see if I can find it, that if they fall in love with this property, that we are going to cooperate with whoever has it listed. So this is our promise to them. Here's their promise back to us.

They're going to contact us if they decide they like this house or these houses. And I would use this for just a few houses, guys, because after a few houses, you know, and they know if this is a love match and if you want to move forward. So on this you're ask and go over this with them. Say, if you have any interest in this house, you're going to contact me and I'm going to represent you in the negotiations on this.

You are going to cooperate with, with whatever service providers, including a lender, that is going to work to get us to a closed transaction. Okay, here's a little trick, guys, and I love this part. If you look right here, where is it? Okay. Consumer authorizes broker to run a credit check to verify consumer's credit information. Uh-ah. Patty Ketchum isn’t running a credit check so nobody know how I'm using this as a talking point, because keep in mind, this is an agreement between a broker or whoever they're representing, you know, the sales associate or broker or associates and a buyer.

And I'm going to use this as the talking point about financing and I'm going to mark through that and say, Mr. and Ms. Buyer ain’t no way I'm pulling a credit check on you here. Now y'all you if you want to you can do it. You do you you do your best practices. Uh-ah, Ain't pullin’ a credit check.

So I'm going to mark through this and this is going to trigger me to say to them. One thing I can tell you from, selling real estate for, for years, there could be a house on the market for six months and nobody's looked at it. Not one soul has looked at it. And the minute I have a buyer that wants to see that property and shows an interest in it, 2 or 3 more buyers are going to come out of the woodwork.

So we could very well find ourself in a multiple offer situation. So in order to have the strongest presence possible for you in an offer situation, we're going to want and I'm going to have y'all take notes here. So get get your pen out I want a note from a lender. And I'm going to give you three names.

Three, three names, of lenders I know and trust three names. And I want you to give them a call. And what we want is a letter that says here's where I want you to write notes that they have reviewed your credit. So they've pulled your credit report and also that they've verified your income. Now, the important thing for you to know, Mr..

Miss Buyer, as soon as they pull your credit, it's going to ding your credit report. It's going to ding it. But in the next several days, and I believe it's 30 days, at least 30 days could be longer. Check with your lenders. Any other lender that pulls your credit is all going to fall under that same ding. So if you don't like lender number one, go to lender number two.

So I really want you to make sure you're solid. And knowing that any house we look at that we can promise the seller that your income has been verified and your credit has been reviewed by a lender. I'm not going to do it. They're going to do it. So use that as a talking point. If that works for you.

It talks about our compensation and it has right here what our compensation is expected to be very similar to what we looked at on the other forms. You can charge a retainer. Y'all do your best practices here. Whatever. Get with your broker and brokers. We need to address this. If you're going to charge a retainer, what does that look like?

As a member of the real estate commission, I have a story for you. 2 or 3 months ago, we had a poor or orphaned or poor author, orphaned Realtor®. There. She did not know her broker's name. Y'all. I'm not kidding. I asked. She did know. And she had a buyer write her a check made out to her for a retainer.

Made out to her. Okay. Big problem. This has to be made out to the broker. Has to be made out to the broker. Things did not go well for her, needless to say. So if you are gonna do a retainer fee brokers, y'all need to have a discussion on what this looks like, what this looks like. Patty, Ketchum ain’t gonna do it so mark it through that and have it an initial that too.

But that's me. Additional terms. Here's one more call and I'll look at the, see the frequently asked questions. And thank you, all those of y'all that are sending me text and emails, please, please, please be real clear here. And you can not, if you notice, this does not allow for a range. This does not allow for between six bananas and eight bananas.

You cannot do that. No range is allowed. Those of you that took ABR courses in the past, we were taught you could put in a range. Take that off the table. Based on the settlement. No more ranges. It has to be very specific. But, but and I hope this is worth you signing on for. Please listen and take notes.

And I'm going to say this 2 or 3 times. It is okay. But you have to listen guys, to everything I'm telling you here, not just the part you want to hear. All right. It is okay for you perhaps here or somewhere else on the document. Keep in mind this document can be modified between the parties. But maybe here is where you want to put something like this.

Buyer instructs Realtor® to only show properties where broker or buyers representatives compensation is paid through listing office or seller. I'm going to say this again. Buyer instructs Realtor® to only show properties where buyers representatives compensation is paid through the listing office or the seller. Now why would we do this? Here's the reality. There are first time homebuyers. There are people using FHA.

There are veteran buyers, there are people that, as much as they love you and want to compensate you, and you have earned their trust and loyalty quite frankly, it is not going to happen. They can't do it. They're going to do an a gift letter through FHA for mom and dad to help do the down payment. They're using S.H.I.Ps bonds for part of the closing costs.

It is not an option for them in this situation. It's going to make it really clear. So let's do this again. Buyer instructs Realtor® to only show properties where buyers rep compensation is paid through listing office or seller. Now you please listen hard to what I'm going to tell you here, because this is the part where you're going to get sideways. When they instruct us

with that, our obligation over and above those written instructions or to show them any properties that fall within what they they've told us, their what the needs are. So you need to have a conversation with those buyers, and you need to have it real clear where they will testify on your behalf. If it comes to it that you're going to say to them, what do you want me to do?

If I see something in MLS that has no compensation for me? I've called the listing agent. They've said the seller is not going to offer compensation. I would love your permission, Mr. Miss Buyer, to still show you that property, anyway. Pass on that information to you. Because guys, here's what I want us to realize. We never know what call anybody

got a buyer or seller the night before. That has totally changed what their plans are going forward. So as listing agents, we can have sellers that say to us, and how many times is this happened all day long? By gosh, I'll never sell a house for less than this. And something happens. This is always negotiable. Do this like this.

Encourage your buyers to see any properties that at all qualify under what they are looking for, and that you make sure that if there is no compensation for you, that perhaps you try. Perhaps you make an offer with that compensation agreement between the seller and the buyer's broker, you would use that compensation agreement. And if you all cannot negotiate this out, then you lovingly back out.

You lovingly back out. Put those buyers on your prayer list. No one has said that we have to work for free. Please understand that no one has ever said we have to work for free. I'm going to go over those were those words again. Buyer instructs Realtor® to only show properties where buyers representative compensation is paid to the listing office or the seller.

Hopefully for many of y'all, you went.  This is okay, I can do this. All right. That's under your additional terms. Also, perhaps if you find out remember this is our showing agreement. You're showing three different properties. And one of them you find out has a bonus. You could add the bonus right here. Keep in mind this could be modified. It's an agreement between the broker at their instructions and the buyer.

This agreement can be modified as long as you do it legally. It's okay to modify this stuff. So we talked about the retainer talked about additional terms dispute resolution okay. This threw me until I listened to Juana do it for the second time. First time it didn't sink in. Second time it did. The way this default is, we're going to say that, it in our big agreement, it's mediation.

But this also says that if we choose arbitration, each party will need to initial. If you choose arbitration, this is not acknowledging that you're going to arbitration. This is if you choose arbitration you can choose mediation. You can choose arbitration or you can choose to go to court. So keep in mind here this arbitration is if you're going to choose arbitration, you'll want to initial that.

Brokerage commissions. You will see this as a continuing theme through all of these... are not set by law, are fully negotiable. Broker may not receive compensation from any source that exceeds the amount or rate agreed to with consumer. Okay. Pay attention to those of you that sometimes have the opportunity to double dip you, representing the seller and you're representing the buyer, which you can do as a transaction broker.

All right. Here's your however, however, consumer agrees that broker may receive separate compensation from the owner of the property because perhaps you have it listed vendor to owner by broker for services rendered to owner by broker for which consumer will not be responsible. So it's your listing. You get a call on it, you get a call, you meet it in order to serve your seller.

You absolutely meet them there. You asked them if they're represented by a Realtor®. Perhaps you ask that on the phone at the very beginning. If you'll let me know which Realtor® is representing you, I'm happy to send them information and make arrangements for them to show the property. Let's work together, guys. Let's work together. Instead of pitting against each other all the time, there's enough for everybody.

So let's work together on this. Turns out they don't have a Realtor®. They don't have one. So you agree to meet them there. You agreed to meet them at the property. If they are asking any questions beyond what you would just have as an open house, any questions that go just that hair deeper, you're going to want to have them sign this showing agreement for your listing for your listing.

If you are providing any level of services that you would provide to a buyer, you're going to need to have a written agreement. Showing agreement, pre touring agreement. It's another choice. We're going to go through that or a written buyer agreement. You're going to have to have something and people go well what if they don't? What if they refuse to sign?

You can't show it. You cannot show it without a written agreement. And that blanket went all over every single Realtor®. We cannot show properties, residential properties without some form of written agreement. So there's your showing agreement. I love that one. This is where we're getting to know each other. This is where we're kind of figuring out if we want to work together.

They go, you know what? You could be my Realtor®. I want to I want to work with you. Then you would go to your exclusive buyer brokerage agreement. This is the mac daddy. This is one type of property. Residential location. Guys, make sure you can provide service. Maybe it's by zip code, maybe it's by county. Maybe it's that areas.

Maybe it's, you know, you where you have geographic competency is where you are promising to use your professional knowledge and skills. So you use this, wherever you are geographically competent, there is a beginning date and an end date. There are obligations from us to them. There are obligations from them back to us. There's the thing about the, credit report.

I'm check. I'm using that is, I'm, I'm using that to talk about getting them to get pre-approved or make sure that they have a proof of funds letter. Here's the we are the source of the source. That's right above five. We're going to be the source of the source. We're going to ask you to under five (f), consult professionals in other fields that we are not skilled in.

Here's what we expect. Here's your retainer fee. Once again brokers, you all are going to need to have this discussion with your broker associates and your sales associate. Here's your compensation. Here's your additional fees. Here's your protection period. Here's how we can break up with each other. Here's your dispute resolution. Once again, this is going to default to mediation when you read this.

If you also want it to be an agreement to go straight to arbitration, if mediation doesn't work, then all parties need to sign. And here's your transaction brokerage notice. This is where I would probably put that statement about show me properties where you're compensated through the listing office or the seller directly. But I would also have a strong conversation with them asking permission to show them any properties they're interested in and see if I could perhaps work out this compensation once we are there.

Here is your transparency that is so important. Under the settlement, brokerage commissions are not set by law, are fully negotiable. Your broker may not receive compensation from any source that exceeds the amount or rate agreed to with consumer. So with that rate changes if it goes up or if it goes down, modify it on one of your agreements.

Modify it on the agreement. All right. Somebody asked, so do we get to see each other's agreements? No. no, no. You know, now we don't see each other's listing agreements. But keep in mind your board or association can always ask for your agreement and brokers. And this was brought up, from a meeting that Sharon Hoydich attended and,

Whoa! Perhaps we need to, as brokers, get in touch with our, E&O carriers and say, are you going to want me to keep copies of our written buyer agreements with any potential buyers? Because I'm telling you all they're gunning for us. They are gunning. They're gunning for us to have the law, precedent setting lawsuit. So you want to make sure you have that written buyer agreement.

So maybe reach out to your E&O carrier and then you've got the strength to go to your broker associates and your sales associates and say, guys, this is not let's make a deal. We've got to have this for our E&O. I think that's something we all need to think about. All right. So there's your exclusive buyer agreement.

All right Patti Ketchum talking here. This there's a lot of words a lot of words here. So let me show you my new favorite form that is still fairly new came out at the end of July. Oh my gosh I love this one. One page. It's not me. Not a lot of real big words. I love this form.

So what is probably going to be best practices for me? Because y'all, you got to do what feels right for you or you go be all stumbling on this thing is, I like something simple. I like something straightforward. I'm a real estate licensee with insert the name of the, firm. These are the buyers. you're going to use my services now that I've showed you 2 or 3 properties.

Now that I've showed you four, five properties, we've decided we want to work together. So you're going to use my services to view properties for the next 30 days. Two weeks, 60 days, whatever works for, this is where you've had to have a discussion with the buyers and know what their needs are. Here's what you need to know.

Mr.. Miss buyer compensations or commissions are not set by law. They're fully negotiable. You do not owe me anything at this time. I think that is such a calming sentence. If I was a buyer, if you wish to work with me on properties, I'll show you, then, this is how I expect to be compensated. And here's what you need to know.

A seller or a listing broker may agree to pay some or all of the above compensation. Did you said you this what I expect to be paid if a selling or listing broker agrees to pay me for these services, then I will reduce that amount that you owe. So if I say somebody that I want to be paid 5000 bananas and they're paying me 4000, then I may look to you for that additional thousand bananas, or I may go here and modify that agreement and say, I'm fine with 4000 bananas.

You've got to decide what works well in your market and with your best practices. If you choose a property already listed by the broker, please realize the seller may be paying us for those listing services which are separate from the services we're providing you as the buyer. Brokers compensation from any source will not exceed the amount of compensation in a written agreement with you.

So we're not getting any side deals couldn’t do that anyway. Guys, that's mortgage fraud. So this is my favorite form. I love this one. I love this one. And I'm going to figure out a way to put it in there somewhere in here. I gotta figure out a way to add that other part about buyer instructs Realtor®, that part.

All right. So I want to look at I've got lots of little notes here to make sure that I cover things with y'all. We've talked about open houses. I feel like we've talked about agency. You're okay. Nothing's changed. You're good to go. You're good to go at this point in time. So how is this going to be enforced?

How is this going to be enforced? It is going to fall on the MLS. That is your MLS to enforce, many of chunks, parts of this agreement, how each and individual MLS chooses to enforce that. We're going to find out. We're sure going to find out. But if you're getting things from your MLS, now is not the time to ignore them.

You want to make sure you are plugged in, to see what is their enforcement mechanism. How they are double checking those data fields because from myvisits and talks around the state, some of these fines are going to get your attention big time, big time. So brokers some of these fines include them cutting off our fee feed our MLS feed.

If our, feral children are misbehaving. So brokers we gotta we got to be watching this and we gotta make sure that our, broker associates and our sales associates know exactly what's going on. So a lot of the enforcement is going to be through MLS, and we'll see what that looks like as we go through this. All right.

So let's see.

Can you put it on a key ring. Can you put a sign in the yard. Can you put a rider in the yard. Can you put it on your website. Can you have a form that, anybody can call your office and say, can you send me the promised compensation on all your listings? And you do that? All of that is perfectly fine.

Can you do it through MLS? Absolutely not. What are you going to do if the buyer doesn't sign? You can't show it to them guys. So, maybe this is. There's an old saying. You want to be somebodies first love, second wife, third Realtor®. Know maybe in this case, when every Realtor® they come to says, I can't show you property without

a written buyer agreement and guys think of it almost as a disclosure. I think maybe it's more palatable if we think of it as a disclosure. Other states have done this for years. Years. There has to be a disclosure between the Realtor® and the buyer before they can show property. And we've showed you three different methods of doing that.

You've got a showing agreement that would be very specific to 1 or 2 properties. You have to have a pre touring agreement. Patti's property pre touring agreement. Patti's favorite because it's one page and it's kind. And then you've got the Mac daddy written buyer agreement that covers I mean it it it goes deep and long and is three pages long.

So depending on the nature of your business model and the nature of the buyer, you're going to have to use one of these three forms. If they don't sign. please, please don't end up at the Department of Justice versus your last name, plus your brokerage firm’s name as the people that set precedent for the lawsuit that proves this.

Let me see if there's we talked about the MLS rules. We talked about the forms. Once again, please make sure we gotta work together on this, guys and the people that are going to thrive in this new, this new business, the new way of doing things. Are those of us that communicate any way and talk to each other any way, we're going to need just as they've been doing for, in... in commercial real estate all along, we're going to need to reach out to each other.

I want to show your listing. Is there compensation? Yes, of course there is. I am sending you the compensation agreement. Our office as a listing office is promising to pay it. You would send them that compensation agreement? No, we don't have compensation set aside for you in the listing. But I have spoken with the seller, and they encourage them to look at any and all offers.

So if you want to present an offer that has compensation in there, we are happy to look at that. Even though the seller might not be happy. But would you please send along the compensation agreement that's from the seller to you, the broker that's representing the buyer. So that's how that will be clear and enforced. So we talked about what if the sign, if the buyer won't sign.

We talked about the timing of the forms we talked about how this is going to be enforced.

Our commissions have always been negotiable. Y'all know that. Y'all know that, transparency. Transparency, transparency, transparency. We just cannot use MLS for that transparency. Agency. You're good to go. You're good to go right now. Y'all don't borrow tomorrow's troubles. You're good to go. Brokers reach out to your E&O carriers, see if there's any documentation they are going to want from you.

In reference to these new way of doing business beginning August 17th, many of you already under a, deadline, many of the MLS and, moved up that deadline some to the first of the month, some to all. I think August 7th. I'm hearing lots of different deadlines, but the drop dead deadline for everybody is August 17th on this.

I feel like we hit every little note I've got out here. I am happy to share with y'all my contact information. you can write this down. It's easiest to get me by text. You're certainly welcome to email me, but text is often easier. My phone number is (850)545-5314, (850) 545-5314. Guys, we got this.

You're going to be okay. Think of this as a disclosure to the buyer. Oh, also never say, I work for free unless you truly are working for free. Make sure you never say that. So, Mr. Miss Buyer, this is how I am paid. This is what I expect to be paid. I will always look to the listing office first.

The selling office, the listing office first, the seller second and you last. I also encourage y’ all at conviction to get there early. Cynthia DeLuca is going to teach, the three hour, written buyer agreement course through Florida Realtors®. Get there early. There's limited seating for that. And listen to other voices stay off of those mastermind groups, guys.

They’re losing their friggin minds right now. If you do come up with some great idea, please take a moment and call the Legal Hotline and run it by them so that you don't end up in the GRI books, right? That said, we got this, guys, we're going to be okay. Always negotiable, 100% transparency. And Nicole, at this point in time, I'm sorry, Niki, at this point in time, I'm going to lob it back to you.

Thank you guys. I'll see you all at convention.