Navigating New Buyer Agency Agreements in Real Estate: Insights and Best Practices

Unlock the secrets behind the evolving landscape of buyer agency agreements in real estate with us, Jenny Lendle and Lauren Jones, as we tackle the big question: How do these new legal shifts impact you as a buyer or agent? Discover how recent changes require home buyers to shoulder realtor fees through written agreements, a departure from the traditional lump-sum listing fees. We delve into what this means for buyers relying on options like rural development and VA loans, who must now budget for additional expenses. With real-world examples and personal experiences, learn how these adjustments can be navigated smoothly with clear communication and a proactive approach.

Prepare to be informed and engaged as we share a compelling story from New Orleans about a client unknowingly tied into a touring guide agreement—highlighting the critical need for transparency in real estate transactions. Whether you're a cash buyer, fully financing, or somewhere in between, understanding and negotiating these agreements is key. We'll guide you through best practices for managing client expectations and ensuring everyone is on the same page, from property showings to open houses. Join us every Monday at 10 am for fresh insights and lively discussions, and share your thoughts so we can keep the conversation going in future episodes of the Move Worthy Podcast.

MOVE Worthy Podcast with Lauren Jones & Jenny Lendle. Together we have the experience to MOVE you forward!

Transcript

Understanding Buyer Agency Agreements

Jenny Lendle 0:01

Alright , we are here today with our very first episode of the Move Worthy podcast , with myself , Jenny and Lauren .

Jenny Lendle 0:13

We are going to bring new information and stories to you every Monday at 10am in the hopes to entertain and educate . So today we will be talking about buyer agency . As everyone knows it as buyer agency , what that means , why are we doing that , when did that start ? And some of our own stories that we've come across in the last couple of months . So what is buyer agency ? Why are we doing this ? What is a written buyer agreement ?

Jenny Lendle 1:00

Part of the settlement of the giant lawsuit against National Association of Realtors and other larger brokerages , part of the settlement was that we be required to have written agreements with our buyers and that our buyers , in a sense , are now responsible for paying our fee . We used to lump it all in with the listing fees , and now we are . We have a separate agreement with a seller and we have a separate agreement with our buyer clients . How's that going so far ? It's going . It's a hot topic for sure . Yeah , I would say so . It's going . It's a hot topic for sure . Yeah , I would say so . Um , it's , it's . I thought it was going to be really easy and I've come across a couple of things that made me think otherwise , but I'm not going to say that it's not easy or it's not something that's doable , it's just a change .

Jenny Lendle 2:03

It's a change and the way that I was going about it is different . So what is a written buyer agreement ? What does it do ? Written buyer agreement is an agreement between you and your realtor , your chosen realtor , and you should only have one , unless you want to cancel that agreement and that relationship and move on to another realtor . That is fine , but you should only have one . And that agreement is going to explain all the things your realtor is going to do for you and what that costs . And there is a cost involved .

Jenny Lendle 2:40

I mean , we provide a service Just like any other service , professional . That is what we do . Just the way that is being paid now looks a little different . You're being asked to sign these agreements because it's part of the settlement . It is now required nationwide , in every state . I don't think it's going away , I don't think it's going to change and I think at some point we'll get used to it . It's just different . Are these negotiable ? Absolutely Part of that being negotiable is , I think , deciding what you want to charge your buyer and your buyer also saying , hey , this is what I can afford , and at that point , you and your client if you're an agent , you and your client reach an agreement and if you're a buyer , you and your agent are going to reach an agreement to where everyone's happy and everyone is comfortable is comfortable with .

Lauren Jones 3:42

I think it's important you know when you are explaining , you know what it is and and what fees are going to be involved . It's important to explain what you're getting from that , explain what the alternative is for a buyer and a buyer's agent . This is this is so new , you know . I think they need to know things like okay , well , if we don't come to an agreement that you know you're you're you're comfortable with and if you're not willing to pay me as a buyer's agent , even though I've explained all the things that I can do for you , the alternative is go hire an attorney . I mean , do people really want to pay an attorney to do the types of things that that we do ? So I think that's a huge part of explaining the process is making sure they understand what it is that that we are doing for them , why it costs , what it does and what the alternative is correct , I think .

Jenny Lendle 4:41

I think too we are in an area . We have things like rural development . Yeah , we have things where VA is 100% financing can be and some buyers are walking into buying a home without money and not saying that that's a bad thing , but we are in an area where that's typical . It's normal .

Jenny Lendle 5:06

Yeah , a bad thing , but we are in an area where that's typical , it's normal , yeah , and I think in those situations a buyer may not have those additional funds to come to the closing . If a seller , you know , if it can't be negotiated out in a contract , I think that's where it gets . It feels kind of funny , you know , putting this out there asking for these fees and whatnot . But I would say as a buyer , you know , save some money and try to put some things away , because now there is additional expenses .

Lauren Jones 5:35

Right .

Jenny Lendle 5:36

And those are the . That's the conversation that we have with a buyer . When we meet with a buyer and we talk about the buying process and what our fees are . I really messed up on mine recently . I you know I figure we're only a couple months in and , of course , sellers three months ago they were paying whatever they were paying .

Lauren Jones 5:58

Right .

Jenny Lendle 6:00

You know , no way is a seller going to say no or even offer extremely low when we put something in a contract and sure enough it happened . Caught me by surprise for sure , but I was looking at it wrong and I explained it . I didn't explain it completely wrong , but I interjected a oh , what's the word I'm looking for ?

Jenny Lendle 6:31

I said that I was willing to accept whatever a seller was willing to give with the assumption that no way are they really going to push the brakes and some sellers have , although we heard at a CE or a meeting the other day in town that sellers have been giving . I guess it's going to be location Like is it good ?

Lauren Jones 6:55

Which is why it's going to be important to cover yourself from the beginning . Sell yourself , sell what it is that you're , you're offering that way if it doesn't fall like that , you're not .

Jenny Lendle 7:07

you're not settling for pennies and look and the you know , and my client , um , we started looking for houses before this happened , before this change went into play . Yeah , um , and I probably should have explained it wrong . I mean better . Sorry , I probably should have explained it better and not in the wrong way , but even still , I mean , for this buyer , I was totally fine with how it landed .

Lauren Jones 7:31

Although .

Jenny Lendle 7:32

I was very surprised in the end . But , um , moving forward , I think , like you said , going over this , explaining what we have to offer , explaining that this is our fee and we will do our best to help you offset this . But in a purchase agreement with the seller , could that look like increasing the sale price ? Maybe , Could that look like taking a little bit from actual closing cost and putting towards buyer agency fees ? Yes , but in the end it's all closing costs .

Lauren Jones 8:06

Yes , it's all now a cost to the buyer right so maybe , maybe your , your seller's credit won't be as as full as you would like it to be , um , but there are ways around negotiating that in and making making the numbers right . So I think it's important you know to explain that side of it . While you're not willing to just accept what the seller is willing to give , you will do everything you can to make the numbers work , you know , in their favor and and take those expenses from other places rather than right off the top . Right , but I mean , ultimately , at the end of the day , it's their cost .

Jenny Lendle 8:49

Yeah , At the end of the day it is the buyer cost it is . I mean it's part of their closing cost now it should be talked about before making an

Navigating Buyer Agency Agreements

Jenny Lendle 9:01

offer .

Jenny Lendle 9:01

This is the amount of money that you are gonna either want to try to offset or not offset right , I mean , we've heard stories of buyer agents saying their buyers don't want to put it in the contract because they'd rather get a lower sale price . Yeah , so there's that . I mean we're gonna have all sorts of buyers . Cash buyers may look different than finance buyers and buyers who are going 100% financing with little to no money saved . That could look different too , and I guess it all depends on it's going to be situational .

Jenny Lendle 9:33

It all depends on that buyer , it depends on what they're willing to pay , it depends on what we're willing to do , and all those things can be negotiable .

Lauren Jones 9:42

And when it comes to this agreement , when is this something that you're supposed to be presenting to your buyers ? Most people don't realize these need to be presented prior to going to a showing . You can do your due diligence , you can research properties , you can pull comps in the area , you can do your due diligence as far as that's concerned . But the second you meet with a buyer , these agreements have to be signed .

Lauren Jones 10:07

The second that you show the first property , um , before walking through the door , before walking through the door , before scheduling appointment yeah , I mean , and I don't think a lot , I don't think a lot of agents realize that too , but honestly I really I feel like if you do tackle that conversation before meeting them in person , it honestly is a softer blow .

Jenny Lendle 10:31

Yeah .

Lauren Jones 10:31

Because at the end of the day , that buyer wants to get to the house and see that property , you know . So if you have that conversation whether it be an informational package that you send your buyer or a phone call or whatever it may be it does soften the blow a little bit because they're keeping their eye on the prize . I had a client who was in the New Orleans area . A client I've been having for years was in the New Orleans area , wanted to see a property . That was where she was at that moment and there was an agent there and they went and took a look as soon as they walked actually they didn't even walk through the door . The agent stopped them at the door and had them sign a document and she had no idea what she signed . And this is going to become a big thing for buyers . Buyers need to be educated on this because they don't know what they're signing and you don't know if another agent is getting your client to sign one of these .

Jenny Lendle 11:34

And Zillow plays a part in this .

Lauren Jones 11:36

Oh my gosh , Because it wasn't even the listing agent . No , it wasn't even the listing agent . It was a Zillow lead . It was a lead .

Jenny Lendle 11:41

Yes , it wasn't even the listing agent .

Lauren Jones 11:42

No it wasn't even the listing agent . It was a Zillow lead . It was a lead .

Jenny Lendle 11:44

Yes , but good on that agent , the way she handled it was amazing , yeah , so the way she ended up handling it was awesome .

Lauren Jones 11:49

You know , kudos to her she . You know my client called me . She's like I think I messed up . I signed this form . I don't know what it is , I do . I'm like , well , you're gonna have to send it to me , let me read it . So I read it and actually I was quite impressed .

Lauren Jones 12:04

What the document ended up being was a touring guide , not a buyer agreement , and basically it broke it down to where , if you are one of those agents that does these types of leads and it's not an existing client or somebody you've been working with for a while , this could be really helpful . It's , um , it's basically an agreement for a certain amount of days or for a specific property , stating that you agree to be their touring agent , and if you decide that , if the buyer decides that they want to purchase this house , then you enter into a buyer agreement . It does discuss terms , so the buyer is acknowledging your terms . However , it is stating that you know , for this particular property or for this amount of days , you would be exclusive to that agent .

Lauren Jones 12:58

So I ended up contacting the agent and was like my client had no idea what they were signing . She was , she was the agent and it was like my client had no idea what they were signing . She was . She was super , super helpful . She was like , absolutely , we'll go ahead and get this canceled . I understand , you know so many people really don't even understand what these forms are about or what they . You know what they say , what they're really agreeing to , but the point of it , I mean , at the end of the day , the buyers want to see a property , right at the point of it , I mean , at the end of the day , the buyers wanna see a property .

Jenny Lendle 13:26

So you know they are doing what they have to do to get what they want , which is what most people do yes , what they've done in the past .

Lauren Jones 13:30

So I mean , I highly recommend agents that are working with buyers or have past buyer clients reach out to them now , even if they're not shopping , and just say , hey , this is the new thing , this is what we're what we're working with now . This is a new law . Let me tell you a little bit about it , that way they're not caught off guard .

Jenny Lendle 13:50

Yeah , Educating them now , especially our repeat our repeat clients , our investor clients , absolutely . If they haven't bought prior or post-August 17th . Have that conversation , make sure they understand . I'm going to look at some houses in Baton Rouge on Monday and she said should I call the agent there and would they show it to me ?

Lauren Jones 14:15

Or should I have ?

Jenny Lendle 14:16

you . I said no . I said if it's a model home because she's looking at some new construction . I said , absolutely walk into those model homes , that's okay , or an open house is fine , I said . But if you want to go see properties resale properties that are listed I was like , let's pick a day and you and I are going to go , because no in the past , yes , that , and that's kind of how we've lost clients in the past .

Jenny Lendle 14:36

So in a way , I think this law the new written buyer agreements of our agency is a good thing . It establishes that relationship on paper . Just as we would list a house , we're listing buyers . So I think , um , I think it's good .

Lauren Jones 14:52

It's gonna take some time and I think some agents don't really realize for things like that , like you know , the open houses and stuff like that , that is not a that is not a time that it's gonna be required for you to have a buyer sign of forms . Listing agents are not required to sign any type of form . You're not what's the word that ? It's not a due diligence it's a fiduciary , fiduciary response .

Jenny Lendle 15:24

Yeah , ministerial act .

Lauren Jones 15:25

That's what it is to be hosting an open house . So , um , just because you're a listing agent and you're you're hosting an open house , you should not be forcing or asking any buyers that walk through the door to sign these documents you're not doing anything wrong by not getting that sign um .

Jenny Lendle 15:43

Now , if you do end up running comps in the area , or they want to see the house down , or they want it yes , or they want to see the house down the street ?

Lauren Jones 15:51

yes , at that point you would want to get into a buyer agency agreement . Yes , and then another thing that agents don't know is that you know , can these be exited or change these agreements ? Absolutely , they can At any point in time now , it does have to be in writing that a form is being canceled or changed . But yes , you absolutely can . Just because you write 30 days or 60 days or 180 days on a buyer agency agreement does not mean that you cannot cancel or exit that agreement .

Jenny Lendle 16:30

Same as a listing agreement . Yeah , I mean , if a client is not happy with your services , they don't feel like they're getting what they need and they want to go somewhere else . They need to do it in writing , as if they were listing a property . They need to let you know . This is not .

Jenny Lendle 16:45

You can't have multiple agreements with multiple agents out there right but if you're not happy with the services and you want to work with someone new , you can absolutely cancel that agreement . Now , what if you ? What if you saw a house with that agent and that's the house you want to write an offer on , then that could pose a problem for sure , and I would recommend you really kind of have a heart-to-heart with your agent If you're really unhappy but you want to write an offer on that property . I mean , that's going to be a little tough conversation , but in the end , what did you offer to that agent if they decided to write on that house ? I mean , that's going to be a little tough conversation , yep , but in the end , what did you offer to that agent if they decided to write on that ?

Lauren Jones 17:22

house . So the agent that did sign a buyer agency agreement with my client . I did offer her a referral fee and just said look , you know , they really know what they were signing . I am happy to compensate you for your time . You know we'll work out a referral fee if they end up writing on this house . But at the end of the day , you , as a buyer agent or as the listing agent , y'all need to come up with an agreement in writing as to how you're going to handle that . Moving forward I think that's the most important thing is to have everything documented . Everybody needs to understand what is going on in all , all parties . I wonder .

Jenny Lendle 17:58

I don't even know if it's in the agreement . I mean , we're using the two page basic buyer agreement so I think it is in there . If , if an agreement or if a contract is written on a property that you showed that buyer after the termination of this agreement , or however it reads , there should be some sort of referral fee to that buyer agent who showed the property . And maybe that's a conversation that we have when our clients exit an agreement . That's a conversation we have when we're writing it . Hey , if you decide that you don't want to work with me anymore and you write an offer on 123 Main Street , just know that you or your agent is going to be responsible for sending a referral fee . I mean , it just has to be it . Just you know . In that sense , what are these agreements for if we can't use them for what they're meant for ?

Lauren Jones 18:53

Right right .

Jenny Lendle 18:54

And that's to establish by our agency , to establish what our , our fees are and then to essentially be paid in the end yeah yeah , and another thing that came up is how are the buyers paying ?

Jenny Lendle 19:07

if a buyer is either paying their own fee or if they are paying the difference from what a seller is offering , it's coming , it's gonna be in the amount that you bring to closing . Yeah , so whenever you go to be in the amount that you bring to closing , so whenever you go to close and the title company calls and says this is the amount of the check you need to bring for your closing costs , your down payment , the buyer fees are going to be included in there . It's not going to be a check on the side , it's not going to be anything like that .

Lauren Jones 19:32

Which can be useful for buyers that may be buying and selling on the same day . Buyers that plan to make a sum of money off of a sale . If you're closing it with the same title company , it still is not coming out of your bank account . It's going to be coming out of that profit on that sale , right ? So , yeah , I think it's important that buyers do know that .

Jenny Lendle 19:56

Do know that . Yeah , and even investors , it's a write-off . Yeah , your buyer fee , your listing fee yes , if you're an investor and this is a business for you .

Lauren Jones 20:03

Absolutely . It's a write-off .

Jenny Lendle 20:05

So I think that's something else to think about too , when you are either wanting to offset that fee in the contract , or if you're going to say you know what I'm going to pay it .

Lauren Jones 20:13

Right .

Jenny Lendle 20:13

And then I'm gonna write it off in my taxes absolutely later so then there's that it's a nice expense yeah , it could be . Depends on the sale price . All right , well , we are .

Navigating Real Estate Topics

Jenny Lendle 20:24

We are just at about 20 minutes here talking about buyer agency that was successful .

Lauren Jones 20:29

I think so hot topic for our first podcast hot topic and you know it's .

Jenny Lendle 20:35

It's new , it's new to us , it's new to buyers . I think we'll get through it fine . It'll take a little bit of time , and understanding how it works on both sides as an agent and as a client , as a buyer I think is important . This is episode one , so we will be back on Mondays at 10 am . We'll have a brand new topic . If we get some feedback on this one , we can do a continuation of buyer agency . If we get some feedback from agents or clients , buyers and even sellers .

Lauren Jones 21:12

It's not just about buyers , absolutely .

Jenny Lendle 21:14

It includes sellers too . So we can definitely do a continuation of this , but otherwise we'll have a new topic , fresh and ready to roll on the following Monday . So again , we are the Move Worthy Podcast with Jenny Lindley and .

Lauren Jones 21:30

Lauren Jones .

Jenny Lendle 21:32

And together we have the experience to move you forward .