Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
Insiders Insight: NAR Settlement with the Chairman of FREC
Navigating a challenging luxury condo market in Fort Lauderdale, Dania, and Hollywood? We analyze the current surplus of inventory that's turning the tides in favor of buyers and discuss the implications for sellers, especially those with older properties. Our discussion covers essential industry regulations, the evolving compensation structures, and the critical need for agents to stay ahead of the curve. We also touch on the significance of fair competition and the necessity for ongoing education and stricter licensing requirements to enhance industry standards.
Ever wondered about the complexities and legalities of buyer brokerage agreements? We delve into the critical sections, potential termination issues, and the importance of protecting both brokers and consumers. Learn how to manage multiple agreements, avoid legal pitfalls, and ensure clear communication and trust-building with your clients. Additionally, we discuss the nuances of practicing real estate within specific geographical boundaries and the evolving compensation models that could reshape the industry. This episode is packed with practical advice and expert insights you won't want to miss.
Real Estate Talk Podcast with Jesus Castanon - @retalkpodcast: The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Meet The Legends:
Jesus Castanon: Visionary CEO of Real Estate EMPIRE Group, transforming property transactions into success stories.
Josh Cadillac: Renowned real estate coach, national speaker, and author; revolutionizing the art of 'closing for life.'
Richard L. Barbara, Esq.: Florida's legal luminary, pioneering change and setting the gold standard in real estate advocacy.
okay, guys. Uh, well, first and foremost, congratulations for uh caring about your careers and and wanting to get better. Um, I think these are very interesting times, cadillac right? Is it fair to say that we are going to experience more change in the next I don't know two months, three months than we have in the last 100 years in this business?
Speaker 2:Yeah, no, I think it's going to really sort of shake Because of the national change. Typically, these changes happen on the state level. They have rule level, yeah, they change, they have rule changes and they change the documents, but now nationally, as a result of a lawsuit too, which I think the thing that we saw from colorado that was going around that now the state is pushing back on the settlement of a lawsuit I don't think that's going to be the only state doing that, you know I, I know I was listening to a conversation that was going to be the only state doing that.
Speaker 2:You know I, I know I was listening to a conversation that was going back and forth on it and the pushback that I have against the idea that that's just for clarity sake for everybody to know, the state of Colorado is pushing back against the need of buyers to sign a buyer brokerage because consumers don't like it. They don't want to have to do that commitment so early.
Speaker 1:And, um, well, it's like me going to, let's say I was a single man and uh, yes, I am assuming my own gender. Um, uh, let's say I was a single man. Let's say I was a single man and I was, um, you know, going to a bar, right, and, and going to meet young ladies. That's usually the way it happens, right, you go to a bar, you go to I don't know a public setting and, and, you know, instead of asking for a phone number, I have them sign a marriage agreement, you know, and when it comes to, well, the argument is should also be that, you know, unfortunately, in this business, there's a lot more unprofessional people than there are professional people.
Speaker 1:This business, there's a lot more unprofessional people than there are professional people. So now this consumer is going to have to, you know, tie up to a certain extent with somebody that they have no idea, if they are working professionally, if they are going to show up on time, if they're going to do what they have to do, if they're ready. So and here's my pushback, this is going to cause more. Yeah, I definitely want to hear the pushback. Here's my first fact.
Speaker 2:How is that different than a listing? Because it because my contention is this right, the process we have for the listing agreement should be something that we are duplicating on the buyer side. It is that the buyers have become used to this walk-in just grab any agent to show you a house and treating agents like a commodity. Yeah, and agent had allowed it to go on because, in order to stay competitive, they've had to. Because, while I want to take it from my business profession, which you and I both know what's the right way to work with a buyer, let's sit down. Let me explain to you what you're getting into. Let's talk about the market. Let's get you pre-qualified. Let's be part of fixing this. Let's go jump in the car, look at houses. We don't know what you can afford. We don't know who you are.
Speaker 1:I see that point there and, as you were talking, I was really thinking of an answer on how it's different in the listing agreement and I really just can't think of an actual reason. One way I mean it's different. I'm sure I'll think about it throughout these next couple of hours, but she definitely you definitely stumped me there and that's one of the things that when I gave the meeting the other day. So you know I'm I'm one of those guys that just likes to argue points I could argue. I have several arguments going that I'm arguing both sides. Of course you know what I mean.
Speaker 1:So so the other day I started my sales meeting. It was a sales meeting regarding this subject, regarding what's going to happen and how it's going to happen, and I started literally my first words in the meeting where I'm like raise your hand if you ever gotten a listing before. Everybody or a large majority, because there was an experienced group there raised their hand and I'm like, okay, did any of you get that listing agreement without that? Sorry. Did any of you get that listing agreement without that? Sorry. Did any of you get that listing without a listing agreement? Okay, and nobody raised their hand on that. I'm like, so, not one person in this room has ever gotten a listing without a listing agreement. Correct, none of them raised their hand. I'm like, well, now we're just having to get a listing agreement for the buyer.
Speaker 2:And I think that two things. One, I think as much as I love to hit the ground running, we've gotten some calls in there to introduce ourselves, so that's probably a place to start.
Speaker 1:Oh, you know, it's true, we were used to talking about each other, all right, so my name's well, I guess we got to start with. Well, we're not neither one of our guests here, but I guess I'll introduce you to you first, cadillac. Cadillac and I have been friends for a very long time. We've done a lot of business together. We have a podcast together, the Real Talk Podcast. And Cad you know I don't want to just say that because he's here, but because I go around saying it all the time he is absolutely by far the best instructor in the country. He's a gentleman who is a two-time award winner, you know instructor of the year. Right For the Florida Association of Realtors. Miami Association of Realtors. All right for the Florida Association of Realtors. Miami Association of Realtors All right, somebody who travels the country right Teaching.
Speaker 1:Leaving later today you go to Wichita, kansas, a lot, for some reason. One of my favorite states to mention? Yeah.
Speaker 2:I know Denver Iowa this next group is Denver National Association of Realtors. I cover their stuff.
Speaker 1:Right, they fly around everywhere. Different associations from different states fly you around everywhere um, this topic.
Speaker 2:Actually, I was just recently in conversation with miami's legal counsel talking about the pushback to some of the new forms that we have right that uh, actually are going to be in the breach of the settlement agreement. So there's, there's some stuff going on right behind the scenes that was so right in the middle of so is there anybody who has more courses approved to teach in the state of florida than you not? That I'm aware of. I don't believe, so that means no he's very humble.
Speaker 1:Yeah, yeah, there's nobody even close to the gentleman who writes the most courses in the state of florida and has gotten the most most courses approved is, by far, mr cadillac over here. So so you know somebody who's at the leading edge of everything that's going on. You know, it's awesome to have you know he is. In this particular case, he is basically the horse's mouth because he is you're in direct contact with the legal counsel. For who exactly? Miami?
Speaker 2:Realtors. For Miami Realtors. We were just on a pretty long conversation going through our pushback on some of the new forms that have been released and you know they were actually putting in their complaints to Florida Realtors on how these like the guidance that I've been getting is that some of these new forms. We are not going to Miami's going to give guidance to their agents not to use these forms at all because they're so bad.
Speaker 1:So, yeah, yeah, so, so a lot of so, cause I called you the other day and I asked you and I said, hey, kind of like, you know this is what I'm going to. You know, this is a class I'm going to teach now and this is the form that I'm going to talk about. And you're like, dude, don't do that, like this. So, and I had just gotten through a class, right that was given by the board, yep, and and, and you're telling you know, so again, it's, it's we, we. There's not many people that are going to have the information as updated as you have. And later on, around what time does Richard get here? Around what time does Richard get here? He's at 11. He's 11. So Richard should get here at 11. Richard is the current chairman of the Florida Real Estate Commission. So, guys, who am I? I guess I'm just a guy who knows both of them and I am also being humble now.
Speaker 1:I'm also president of Real Estate Empire Group. I've been in the business 25 years. I've done thousands and thousands of transactions. I have about 500 realtors right now, three different offices working on a fourth right now. So I've done commercial, residential, everything, any type of property that you can possibly imagine. But what I, what I enjoy doing, is teaching and and and and. That's that's really how you know a lot of the stuff that we do together. We've written some courses together. We're writing a book together now, kind of like that is the plan. Right, that is the plan. That is the plan. So that's cool.
Speaker 1:So, yeah, today, we, we gave the the reason for that. By the way, guys, I'm also I'm going to say it again I hate this side of it. Guys, believe it or not, I have a better side, but, for whatever reason, I'm on the wrong side today. I usually sit over there, but when I got here, the cameraman told me to sit on that side because we want to note again how upset I am at sitting on this side. Um, but uh, yeah, it's, we have the horse. Both horses mouths, right, did I pronounce that? I say that correctly as long as the mouth. And yes, here today. So, um, we're gonna cadillac's gonna go into his nitty-gritty pretty much right now. In a couple minutes he's gonna go into the nitty-gritty stuff. Um, on the stuff that he feels you guys need to know, we're kind of limited to about an hour ish, or an hour and a half-ish.
Speaker 2:I will do my level best to keep it as close to an hour as I can.
Speaker 1:And then I think that what I'm most excited about is going to be the question and answer stuff. So when Richard gets here we'll start with the question and answers, and I think that's the most interesting stuff. I actually even have a bunch of questions that people were asking me and I asked the girls to kind of write it down so we could kind of go through those Awesome.
Speaker 2:Did I miss anything? Cadillac? Not as far as I know. I know that they're having a little bit of sound issues right now that they're trying to sort through. Oh really, yeah, well, Did we fix the sound issues.
Speaker 1:I am doing my level best to increase the volume for you guys. People are saying that they can't hear us.
Speaker 2:It's better now, Matt. As long as you're okay, Matt, that's really all I care about. It's totally about Matt for me at this point, so I'm glad it's working for you. Now it's the caffeine is is working its way home too, so all right, all right, fantastic Good Cause.
Speaker 4:my blood pressure was rising real quick If we were going to have Mike issues right now we were going to turn the camera around. I'm fighting somebody.
Speaker 1:They're going to be carrying people out of the room.
Speaker 2:There's, there will be, there will be an issue today all right, so I'm gonna take and hit my screen share right now and share what we're gonna be talking about right now.
Speaker 2:Let me go ahead and yeah, that's it all right, let me get this uh all set up. Now. That's where everybody is. Let's get you guys where I can see you Fantastic, all right. So this is what we got. Everybody sees my screen. Okay, I hope so.
Speaker 2:I wanted to give you something different than what you're getting from legal, which is basically the attorneys telling us how, legally, we have to take and do what we do now going forward. Right, I wanted to give you more how we, as real estate agents, have to translate that into how we work with each other, how we get our forms signed and, frankly, how we have to talk to our customers. To get past the objections that we know are going to come Guys, they're going to be objections. To get past the objections that we know are going to come, guys, they're going to be objections. What do you think I mean? Can we anticipate a bunch of objections coming on this nonsense? Of course, right.
Speaker 2:So I guess, in way of introducing myself hey, sosa's already done it, but this is me a little bit I've got real estate designations for days. I've got a bunch of other licenses, been a top selling agent for a long time. Now I run a real estate investment fund, wrote the eight series of classes, which at this point is 44. We have a 45th one that just went into the state for approval. Wrote a couple of books one's called Close for Life on well fixing the problem we have in this business, which is that we do a good job of closing deals and a terrible job of maintaining those relationships. We only maintain 13% of the customers, we close 87%, we lose. And we're a book called Roadmap to the American Dream about how money and investing works. And yeah, these are all the classes.
Speaker 1:So can you talk a little bit about your mastermind program?
Speaker 2:Sure. So what I was getting constant calls for when I would teach is people wanting more of what we were doing, and so I wanted to make a way for folks to have access to the stuff that we already were teaching the classes. A lot of times, even in Miami, which is my home board, I'm here. Somebody will see one of my classes. They'll come to Ace Investor 4. Well, there's seven in the series. They're like when's one going to be again? And I'm like I don't know, it could be months from now, whatever. So it was a place for me to put it all together and also a place to have ongoing training on stuff that's happening right now, as well as a place for agents to come ask questions. We have a dedicated Slack channel so I'm in communication with those folks. I'm usually talking to folks on there almost every day to try to solve individual problems.
Speaker 1:It's a way for people to have access to you on a weekly basis.
Speaker 2:Sure, it's almost like having me on your team, sort of as far as like to give you ideas about how to fix. Well, you know, even here sometimes it's like oh, you got a weird deal, go get Josh, he'll help you out, and so I don't know why, but I get put in that position a lot Because you know how to fix weird deals, and so yeah, what does that cost a month and how does that work?
Speaker 1:Well?
Speaker 2:with the code that we have for you today, it's $19.99. It's $20 a month. $20 a month yeah, I mean, I'm not a person that's a fan of these programs. That are ridiculous amounts of money. I want to give stuff to somebody that-. So for $20 a month, I get access to you, to me, to the A-series of classes, to the financial calculator that I use for differential cash flow, both with cash and financing. So how many times a week do I see you? How does that work? I see them once a week on a Zoom that's recorded.
Speaker 1:And so I'll either and they get feedback on each other.
Speaker 2:Oh yeah, it's like an open forum we talk and then we have a dedicated Slack channel where those folks now can take and send me messages. I had somebody the other day was working his first seller finance deal and he sent me the terms to ask what was missing. It was an adjustable rate mortgage and there was no index, and especially now especially now, with all this stuff that's happening right now, the fact that you know, listen again you're, you're my friend and I, I know I have access to you whenever the hell I want.
Speaker 1:I mean, that's that's our, that's our our. You know, arrangement, friendship, whatever you want to call it, we could always reach each other, no matter what and when I, when I needed to call you the other day in the morning or before my class, I mean I felt pretty good to know hey, I could talk to Cadillac and I'm going to get the most updated information on the stuff and guys, I will tell you the people that are. You know the thing about starting in real estate. There's a book by Donald Rumsfeld and I always use this title, right. His book is called you Don't Know what you Don't know. Right, it is the best title in the world because real estate you know so little about real estate that you don't even know what you don't know Totally.
Speaker 1:It's so much information that you have no clue if you're starting in this business, what you don't know. So, but the unique thing about these next 90 days is that, man, these are probably the most important next 90 days in anybody's career. Sure, adjusting to these changes right, being at the leading edge, at the tip of the spear of these changes, right, I'm lucky, right that you know I have you and I have Richard as my friends, that I have on speed dial and we have a group chat together and everything like that, right. The fact that anybody could have that, you know, hey, there's a membership and I get to ask, write my questions down and every week, ask you what the hell's going on. Might be the difference between making it in the business and not today, in these next 90 days, in my opinion and I'm not just trying to sell out, I'm just being honest I mean, I don't have to pay the 20 bucks and I'm happy.
Speaker 2:No, I mean I. I think that there's figuring out how to get on the right side of what's coming is huge. I came in this business in 2008 and I made it in this business because I figured out where the market was, which was short sales, and I learned how to do them and I knew I had to do them better than anyone else. And more than anything, what I learned was how to take an approach to customer with it and to anticipate. And that's going to be guys. First word I want to give you to be on the right side of this business and where things are going to go is to anticipate. Great businesses always anticipate their customer. They are expecting what their customer is going to be like before they walk in the door and for some reason, in real estate, we're hesitant to do this because we think it's almost a fair housing violation or something you shouldn't anticipate customers.
Speaker 2:But the example that I give all the time people in here that know me may get sick of this, but if I own a restaurant, time people in here that know me may get sick of this, but if I own a restaurant and I did used to own restaurants I always anticipated that people that came in the door were going to be hungry. Now that just seems so basic. But I mean, here's the thing If people come in, they're hungry. There's a thing called being hangry. There's commercials about it, like with Snickers and stuff, but it's a real thing. If, when people come in, they can be nice people, but when they're hungry, man, they sprout horns and a tail, I mean they are grumpy and it's a problem and it causes problems in the business. So what we would do, and what most businesses, most restaurants do, is they put bread on the table. I'm trying to sell food and I'm putting free food on the table. How does the free food get there.
Speaker 2:I want you to understand, guys. When you see bread on the table, it is because you have been judged and found hungry, right, right. And I've never seen anybody on the restaurant flip the bread across the room and be like I am so offended. How dare you assume that I'm hungry? Yeah, so fair housing is an important thing and we're actually going to touch on fair housing for a second. Well, richard may touch on it, because I don't have the buyer brokerage agreement in this version of this class. The longer version does.
Speaker 2:But fair housing is a really good rule, meant for really good things. You should never pick on people. You should never take and treat people differently because of never Right For anything, right for anything. But if you're looking, if you're looking, uh to, I appreciate what you're saying, robin and han, this is the meat of it. If you want just taking the details of what's going to change, you're in the wrong place. If you want to know how to actually close customers, then you're in the right place. What did you say? Uh, they want to know we're getting to meet. This is the meat. This is where it's at. What's the guy's name If?
Speaker 1:you want to be positioned well.
Speaker 2:You have to close the customer. Your ability to close the customer is going to be based upon your ability to anticipate them.
Speaker 1:But if you're not realizing that this is the meat, this might not be the meat team for you.
Speaker 2:You might want to hang up. By all means, have another attorney tell you what the changes are going to be. That's going to make you good at sales. Can we hang him up? I don't know how to do that. Who cares? It doesn't matter.
Speaker 1:All right, but here's the thing though. So, you know, I had a buddy, my buddy Mark, which you know he has a saying that you know, a good attorney knows the law Right and a great attorney knows the judge right.
Speaker 1:So, you know, I was telling, talking to my agents, you know, just last week, in the sales meeting regarding this, and I'm like, look, you know, because the fact that we are, you know, and this is this is to you guys being in this meeting right now is going to give you the most updated information out there, which is going to almost ensure that you're going to be at the leading edge of this. You know what I mean. So I congratulate you guys for being here. And yeah, and that mastermind program to have access to Cadillac on a regular basis is key.
Speaker 2:So I mean, I think the basic thing is well, my point is this that the short sale market, every agent out there, could do them, but none of them bought up to learn how to do it. None of them learned how to go out there and make the actual pitch to the customer. What are you going to say to the buyer when they don't want to sign? That's the question that really has got to be answered. How do you create the environment to take in place the blame in the places that it really belongs, rather than you being the one that is now taking the hit because you're taking and trying to get documents on it? We have to position that well, and that's a critical part of understanding how this is going to work.
Speaker 2:And so I think that getting our head wrapped around what the genesis of this is, because as I learn more about the antitrust, what the actual rules were, I realized that we in real estate are dancing up against this all the stinking time. Right. And so the antitrust stuff originally came from the idea that they wanted to keep businesses from creating an unfair business environment. Right To get together and talk about stuff like hey, if we work for different companies, me saying to you hey look, let's agree to charge this. The example I like to give is this the conspiracy.
Speaker 2:Let's say Walmart, target and Publix all got together and said you know what, guys? We should charge this for toilet paper and nothing less. Well, it would make it very hard to get toilet paper at a cheaper price because they represent the vast majority of the market Right to get toilet paper at a cheaper price because they represent the vast majority of the market, right. So it's designed to keep us from fixing prices and make sure the consumer has a market that is competing. So one of the things I love to go on cruises right. I love the fact that Royal Caribbean and Norwegian go at it with each other constantly to take and make bigger boats and better shows and more restaurants, because I'm the winner in that environment and that's what the antitrust laws is designed to do. The beginnings of it not so great as far as why they came to be the Standard Oil and all that fun stuff. It was really their Standard Oil's competitors that brought it to be so.
Speaker 2:Colluding means, basically, where there's multiple competitors in the same room. There's certain things you can't do Now. This is an important distinction to make, because a lot of the stuff that we're going to talk about right now is stuff that I can't answer for you because it would be collusion, because I don't work for your company. These are conversations that need to be had with the broker. You, as the broker of Real Estate Empire Group, you can talk about all these policies with your agents. You can set policy and you can tell all of them how they need to do business. And that's not collusion because it's one company, right. But when it's multiple companies, like we have here, where we have multiple agents from different companies, we can't talk about specifics of what we're going to charge, how we're going to take it when they don't want to pay us, what we're going to do and we can't do that. That's got to be a business decision at the broker level. That being said, the individual agents in this room need to check with their brokers and see how much leeway their brokers are giving them in making those decisions.
Speaker 2:I know for me what I charge on my listing agreement. I have flexibility there. That's been granted to be by my broker, right. You need to find out what the policies are, what the hills the broker is going to die on and where they're going to leave you room to move in, right To take and try to close the business. So things you're not allowed to talk about for sure in a mixed room. Talk about fixing prices in any way. Prices, terms, products, anything like that. Our listing agreements, our buyer brokerage agreements are going to be for this much time In a mixed room. Can't say it In your brokerage office. Yes, that's the kind of place you'd do that. So one of the big things that you're never going to see in a mixed room, or even to the consumer, is the standard commission is. That implies that it's an agreement across the community.
Speaker 1:But that's a negative and could be a positive. Right, because now you could negotiate your commission Totally Right, and before you couldn't. If it said 2%, you couldn't go and ask for 4%, believe it or not, you could.
Speaker 2:I mean the association would tell us. But that's it Right, because it was an assumption by the association, which is that you did not have a buyer brokerage agreement signed.
Speaker 1:So if you have a buyer brokerage agreement signed, so even back then, if you had a buyer broker agreement that would supersede whatever, agreement.
Speaker 2:Here's what it is. The code of ethics says that you as an agent are not allowed to negotiate your compensation, especially in a contract where you're a third party. You're not a part of that contract between the buyer and seller. But when you have a signed buyer brokerage agreement, the person negotiating the compensation in the agreement is not you, the agent, it's the buyer, because the buyer has already committed to paying you the compensation. So the buyer is saying, hey, look, in order to buy this house, I need you to offer me the seller's credit to cover this commitment that I have to pay for my compensation. So that was always doable, but because it was Well the norm was for sure.
Speaker 1:The rule of thumb was absolutely, and they even specifically told us as a company, we could not do that. Yeah Right.
Speaker 1:So, now it is open to. But right now I don't know wherever you guys are from, but in Miami right now I asked, um, I asked the girls the other day my what percentage of these deals right now are 3%? And they said very, very little. I'm like, okay, well, what's the majority? They're like 2% 2.5%. I'm like, well, what percentage of deals now are 2% 2.5%? They're like 80%. So the majority of the deals right now, the large majority of the deals right now, and that has to do with the market that is still a little bit hot and that always fluctuates, right, sure, market gets slower, bigger commissions start coming right, but as of right now, it's 2% is the norm. So if you're doing, you're allowed now to say, well, I want to make three, right, and so when you submit that offer and you have a buyer broker agreement at three, then you submit that offering, you get an extra 1% than what they're offering, correct?
Speaker 2:Sure, Well, I mean, the cool thing is that and you're right the factor of compensation, having been slowly working its way down, especially in our market, has been a factor of the strong seller's market. That it's been Right, Because who has been the determiner of what? The compensation?
Speaker 3:you know, properties are starting to sit in.
Speaker 2:If you're talking about condo, condos are sitting, for I have three and four year supplies, luxury stuff. I just did an analysis yesterday for a friend of mine and a year I did luxury resales, so 2020 to 2024 in Fort Lauderdale, dania and hollywood, 27 and a half months supply in those buildings, that condos, that's condos, condo resales, luxury condo resales right, so there's no worse market to be in right now than a luxury condo no, there's no market worse to be in than condo the market that's heard even worse than that.
Speaker 1:Is your country to that?
Speaker 2:30, 40 year old condo buildings.
Speaker 1:Right, they're really those, if you have a 30 year old luxury, three million dollar condo on the beach you're, you're gonna sit there for a year.
Speaker 2:It's very likely that you're gonna have a hard time because there's a lot of options right, but you know what I was.
Speaker 1:You know I was talking about the other day too, like it, this whole transition that we're going to. There's no better market to be landing in than this right here.
Speaker 2:Sure, because it's shifting to the buyer side and so there's going to be a little bit more leverage there. So back to this idea of what we can't do. We can't talk about commissions, so like when we talk about I know we threw some numbers around right now, but we're supposed to use like X, we're supposed to not talk about specific numbers, all right, talk about withholding services. We're not allowed to do that. So sitting here and saying we're not going to show a property if they don't pay X in co-brokerage, you can't do that in a mixed room, all right. Can't draw turf lines. Can't say, hey, we'll work the inland side, you guys work the ocean. Can't do that as well? All right, that's not going to fly. Another big thing is you can't talk about limiting advertising. Hey, look, man, you got to stop running the ads about my company having the most agents found guilty of fraud and we'll stop doing the ads we have about all the junk fees that you've been tacking on for years and been getting away with. This is one of the big ones here. This is one of the agents are super guilty of talking about discouraging competitors in the market. So what that looks like is talking about discouraging competitors in the market. So what that looks like is well, there are way too many agents. We need to lobby the state to take and make the test harder to reduce the number of agents that are out there. All of these actually are things. Thank God they don't hit us hard on that one, because we are so guilty.
Speaker 2:Who says that? Who says that the test is not hard enough? Guys, is the most dangerous thing in the world a newly licensed real estate agent? Are they the most dangerous thing in the universe? They have been ordained by the state as being able to sell real estate. Were any of you equipped to actually sell real estate when you got your license? No. Are there a lot of bad agents out there? Yes. Are there a lot of agents that don't know nearly enough? Yes. So somebody's saying that man, the test needs to be harder. I've heard that all over the country. Guys so acting like it's not something we say. Agents say it all the time there's too many agents, the test needs to be harder. It's very common. If you've never heard it, you need to hang around a little longer. There's always enough food for all. I think, angela, there's going to be a little bit less food on the table. For some, that could be a thing.
Speaker 2:So what's an example where collusion is possible? It's possible in an environment like this. We have agents from different brokerages here. Possibly so, cindy, but I mean, even so, continuing education. You're talking about two years after the fact. Actually, more than that, right? Because they do the post-license, they're good for the next two years. Well, now, that's four years of the agent not knowing what the hell they're doing, right? I think it needs to be upfront a little bit more.
Speaker 2:So the issue with collusion the issue with collusion it creates an environment where, if a company has a bad policy, customers could be stuck with that bad policy because they're not going to have other companies competing trying to fix it. If you were one of those cruise people that didn't like having either the early time or the late time to eat, well, if all the cruises did it, you were stuck. But then again Norwegian comes along and they have their freestyle or whatever, and now you can eat anytime you want to. And now what happens after that? Well, the good folks over at Royal Caribbean copy it because it's so successful and it works right. This is the environment they're looking to take and do and to get people away from bad policies. So let's talk about what's changing.
Speaker 2:Some documents are going to be needed. This says a buyer brokerage agreement. I know that there's a form that's come out this pre-turing and there's another one that's come out. Frankly, the guidance I'm getting is those forms are garbage. They're in violation of the, the settlement agreement. The buyer brokerage is the one agreement that is is righteous that you'll always be on the right side of it If you're using it. It's possible, lisa, that if you have a good broker, you could be good. Good brokers are few and far between now. That is a part of it. The brokerage business has changed a lot and it's created an environment where brokers spend a lot more time recruiting than they do training. It's just kind of the nature of the business. So you're going to need a signed form that has your compensation agreed to and establishes your relationship with the customer. It's got to be done. It's got to be done. It's got to be done up front.
Speaker 2:All right, the MLS was always the place that secured our co-brokerage compensation. It not only listed it, and not only for a long time required in order to list the property, but it also guaranteed you would get it. On the back end, it also was the one that said hey look, they offered this. They have to pay you this. So that is the big difference maker. Right, we're not going to call it commission anymore, we're going to call it compensation. It's going to be called compensation because commission is once again saying it's like the standard compensation. The standard commission is can't do it anymore, can't say it because it implies that that's the way to get paid.
Speaker 2:The reality of it is there's multiple ways to get paid. We'll talk about it. We'll look at it. How you choose to get paid, though, guys, I'm not going to take and tell you what to do. I'm going to treat you like adults and tell you it's a business decision what you do. I'm going to tell you being prepared. I decision what you do. I'm going to tell you being prepared. I don't think that's an option. I think you have to be prepared, but I think it being a business decision is something that you're going to have to sort through, either you or with your broker to sort out.
Speaker 2:The other thing that changed is the bank account balances of some attorneys in Missouri. They got very, very rich from making the consumer's experience of working with a real estate agent harder, more arduous, and making it harder on us as agents and making it harder on the customer as well, who now has to, usually has an aversion to negotiating, doesn't want to, is hire an agent so they don't have to negotiate. Now they have to negotiate with an agent up front All right. The other thing that's changed is amateur hour is over. You no longer can just kind of hey, I got a driver's license and a real estate agent, let's get in the car and go see some houses. That nonsense probably isn't going to fly anymore. You're going to have to be better than that.
Speaker 2:So is there some misinformation out there I would put forth to you? There is a lot of misinformation out there. One of the big ones we're hearing is co-brokerage is not allowed. Co-brokerage is still allowed. Co-brokerage is not allowed. Co-brokerage is still allowed. Co-brokerage is still allowed big time. It is only not going to be in the MLS anymore. That is the big change. It's not going to be in the MLS anymore and you're going to have to agree to compensation beforehand. Sellers will still offer it.
Speaker 2:Any seller that's not offering co-brokerage is probably making a choice that is going to make it much harder to sell their house and reduce the number of buyers that can afford the house. That is not me discouraging them. That is an economic factor of not allowing buyers the ability to finance their cost of representation into the purchase price of the asset. We'll talk more about that as we go. We can't advertise co-brokerage commission anywhere. Also, not true. You can advertise it. The rule right now that they're going with is two clicks away. So you're going to be able to take and have your domain, your brokerage website, in the MLS and they can click on that and then it was going to require one more click to get to the compensation that will be allowed. So compensation can be found through the MLS, through people having their brokerage website there and having an additional click. So click to get on the website and then another click to get to the co-brokerage compensation. That is currently where they are Okay. So sellers will not be offering co-brokerage anymore. Sellers will. Guys. Sellers always have, even when they haven't needed to like on commercial deals where there's absolutely no requirement. Almost always on commercial deals, there is some sellers offering co-brokerage compensation because they know it nets a higher final sale price.
Speaker 2:So we're not going to talk to you guys about any of that you've been hearing. Right now we're just going to keep moving on with what's going on with the buyers. Well, for starters, we can't be lazy On the buyer side. We have been Buyers, has been the training grounds of real estate for a long time. Oh, you're brand new, you don't know what you're doing. Go work buyers In fact for a long time. Oh, you're brand new, you don't know what you're doing. Go work buyers In fact. Renee, I hear what you're saying. The DOJ says that, but they don't have any rulings to that. So, right now, co-brokerage compensation based upon the changes coming August 17th I was going to go into that. The DOJ may take and push back and change it at some point, but the DOJ has not gotten any court cases of that effect. We're going to talk about that. Jesus, there's actually a change they made in the buyer brokerage agreement to deal with that. We'll talk about that.
Speaker 2:The selling agent and the buyer agent. Why should the buyer's agent be responsible for verifying all the information in this thing? The agent should be responsible for this. If the seller is paying 0% to the buyer, how would you know the seller is paying 0% to the buyer if you haven't gone to their website to see what the co-brokerage compensation is. The co-brokerage compensation can't be on the MLS. It's going to have to be two clicks away. That's what we're talking about, not verifying the information in the MLS. So maybe I wasn't clear on that. I apologize if I wasn't.
Speaker 2:So the big thing is, guys, we cannot be lazy anymore. We have to take and know what we're talking about before we take them out, and we can't depend upon the listing side to maintain our co-brokerage compensation for us. It's not their responsibility anymore to maintain it. They should. They need to if they want to take and get top dollar for the seller. But we can't just rely on them. We actually have to know how to get our documentation signed because, let's be honest, as a listing agent, I walk in the room and I say, hey look, I need exclusivity, I need you to pay me and I need you to pay some other agent you haven't met and I get that document signed. All the time I don't say it like that, but that's basically the case that I'm making.
Speaker 2:The case that agents are freaking out about right now is going in and saying to the customer hey look, I'm going to work for you and I just need you to take and make sure that I get paid. I feel like that's a much easier case to make. Well, you're more than welcome to take and do that, lisa. Until the DOJ says differently, you can advertise it all sorts of other places If you think yard signs are really what people, what agents look at. Suggest dual variable commission is now to be disclosed.
Speaker 2:Ah guys, there are these things called phone calls, where you call the other agent. You guys do know that the compensation on commercial deals is often much more complex, much more convoluted than what we do in the residential deal. And we pick up the phone and we call the other agent. We say, hey, is it available? What kind of co-brokerage compensation are you offering? And based upon that we build the deal. The idea that somehow, without the MLS, co-brokerage, compensation is going to be this unfathomable thing to grasp at is just ludicrous. All right, it's. Not only is it going to be available by phone call, it's also many brokerages are going to take and have it in their website. So I don't understand why this is such a concern.
Speaker 2:In agreements of compensation. Do we have all listings re-signed? Realistically, corrine? No, there is an additional disclosure that they're adding to the listing agreement, and there's a doc that's come out recently that just adds that disclosure language in there. So you can basically have that supplemental disclosure signed by your customer and your listing agreement is signed.
Speaker 2:We're going to take and cover all that, linda. I'm going to cover that. I'm going to cover all that, both, mark, all right, so we've established credibility up front. Guys, we have to do it. The idea of let's just jump in the car and drive around and you'll eventually learn to like me isn't going to fly. So how are we going to do that? I want to give you guys the best path I can think of to do that.
Speaker 2:It's three things that we can take and talk to the customer about. Guys, and I'm going to put forth to you the way we've been taught to do this in this industry frankly sucks. We've been told go in, ask a bunch of questions, ask open-ended questions, get the customer talking, make them feel heard. Guys, that's standard rapport building tactics. And the problem with standard rapport building tactics is that's exactly what they train used car salesmen and timeshare people to do. Your customer thinks, when you walk in the door, that you're lazy, not very smart, overpaid and all about commission. That's what they think. That's what the studies show that customers think of real estate agents when they walk in the door. If you just go in there asking a bunch of salesy sounding, friend building type questions, you play right into that preconception. No wonder they're not going to want to send a document with you. Nice and easy.
Speaker 2:I gave you anticipate. Are there things that we can anticipate about the customer? Does the customer know the process better than us? Do they need to understand the process by showing them that we know the process? Doesn't that make the case that there is a knowledge differential between us and them that justifies why they need us, and not just how the process works, but the problems along the way in the normal process where other agents maybe make mistakes or their customers get hurt, and how you make sure in the way that you handle the process it's not going to be a problem for them. Do you think a customer would be interested in talking about that, especially when they're getting ready to invest hundreds of thousands of dollars, possibly millions of dollars, going to the real estate market with a real estate professional? Would they want somebody? Can I anticipate they might want somebody who knows what the hell they're doing, maybe.
Speaker 2:That might be fair. The next one is the market the ability to discuss, not just guys. I hear the market conversations from agents and it just kills me. I hear the market conversations from agents and it just kills me. How's the market? Oh, inventory's low, interest rates are high. Are we going to have hot dogs or hamburgers for lunch? Has anybody ever considered what the buyer is actually buying? When they buy real estate, the buyer is buying the future. Almost no one buys real estate at breakfast and sells it at lunch. People buy real estate and they hold it for a period of time. It's that type of asset which means what they're buying is actually the future.
Speaker 2:Now, I know we don't think about it much in real estate because all we think about is the closing. Once we get to the closing, we get our check and then we're good, because we're all about Tinder, real estate. Hook up with the customer, get what we want and never call them the next day Not what I'm a fan of, not what I'm a believer in. If the customer is buying the property, that closing is actually the beginning of their relationship with that property, which is going to typically extend for years. So when I'm explaining the market, I need to explain where the market is, how it got there and where it looks like it's going, because what's my customer buying? They're buying the. This is where it looks like it's going.
Speaker 2:Now I know my residential agents sometimes push back on that. How am I supposed to know where the market's going Now? I know my residential agents sometimes push back on that. How am I supposed to know where the market's going? Well, guys, there's this very expensive bill in real estate called paying attention, that most agents are unwilling to pay. When there's inflation. What happens to real estate prices? They go up. How do I know this? Because I picked up a freaking history book and I looked at every time there was inflation ever in the history of this country, what happened to the price of real estate. Duh, and so when it was coming, I was telling my customers this is the time to get in.
Speaker 2:There's also times when I tell my customers not to buy because the environment isn't good for it. I'm telling my customers in Southeast Florida to stay away from condo right now. It's not the environment to be buying. And I'm literally telling them please don't pay me a commission, don't do this. I don't want it on my record that you did this on my watch Because the environment is such that it's not going to look the near future for that doesn't look good. The longer term looks great, the near term not so good.
Speaker 2:Right, we have to make the case, guys, that before they met us we were doing a lot of work to be really worth the compensation that we're asking them to pay us. Just walking up and saying, hi, I'm friendly, pay me a bunch of money isn't really a compelling case. But if you could talk about the process and how you're going to look out for them within the process, if you could talk about the market where it is, where it's going, what it looks like, well, I think that you've gone a long way to showing them that maybe you're worthy of getting compensation. Because, guess what Most agents can't do, that Most agents won't do that? Most agents are too lazy or too busy advertising. Because, guys, once again, when you have a 13% customer retention rate, that means 87 out of 100 customers you've got to take an advertised replace, because after they work with you, they don't use you again. That is the national average for our industry, guys, it's pathetic bad.
Speaker 2:The last piece is the numbers, the investment we have to be able to talk about the investment. If we want to take and understand this well, we have to be able to have that conversation. Well, william realized they're not going to be marketing to consumers, they're going to be marketing to agents. So, frankly, I don't care what their two-click website is as an agent. Agents. So, frankly, I don't care what their two-click website is as an agent. It was the consumers. Yeah, I could see your point, william, but it's not going to consumers. I mean, if you think that little of real estate agents, then yeah, that's viable, totally a thing.
Speaker 2:So let's take and talk about the investment for a second. Let me share this with you. I'm going to change my screen share to this. Wait for this to load here. Fantastic, you guys see the gigantic calculator. If you don't, I don't know what to tell you.
Speaker 2:Let's go ahead and buy a property, guys. Let's go ahead and buy a property, guys. Let's go ahead and buy a property for $750,000. Okay, and let's assume that they're going to give us I don't know 80% loan to value. We're borrowing $600,000. That's $600,000. Let's say we're going to get a 7.5% interest rate on it. Eh, let's do 7.25%. 7.25% is nicer For 30 years, by the way, what I'm showing you is a $6 cell phone app.
Speaker 2:That's the fully amortized mortgage payment on the loan. That's the full amortization schedule for the loan that I can send to my customer from my cell phone. Here's the breakdown of principal and interest paid. Interest paid, principal paid total amount paid for the life of the loan. And oh, just in case you're having trouble getting your customer to commit to buy instead of stop renting and buy, here is their mortgage interest tax deduction for year one of that loan on a $6 cell phone app in your hand in front of them $43,000 in tax deductions that they are missing out on. But let's say they lived there for 10 years. They lived there for 10 years. They're going to owe the bank let's call it 518,000. At the end of 10 years of payments they owe the bank 518,000. We got the property, we bought it for 750,000 bucks.
Speaker 2:Let's say real estate appreciates at 5%. Why are we saying 5% and not three to three and a half, which was the traditional number that we used for decades? Well, two reasons. One, we're still in an inflationary market. I know that we had labor numbers that came in that's making it seem like we might be the tail end of this. Hopefully that's the case, but inflation tends to resurge. If you look at the history of inflation, it has gone down and come back up and gone down and come back up. It has been very traditionally very hard to get rid of once it manifests itself in an economy. So inflation makes real estate prices appreciate faster than they normally do.
Speaker 2:The other reason why is because, if we're talking about single family homes, builders have underproduced single family homes for since basically 2012. So we're about 12 years into them, building about 400,000 fewer homes than what the demand is every year. Last year, the demand for single family homes was 2.115 million homes. They built a little bit more than 1.6 million homes. Was 2.115 million homes. They built a little bit more than 1.6 million homes. So right now, the aggregate, the total shortfall of housing, is about 5 million homes. We have about 5 million homes fewer new construction than we should have.
Speaker 2:So I'm going to use 5% it's a little bit more aggressive and say if that home you bought it for $750,000, if it appreciates at 5% for the next 10 years, that's what you should be able to sell the home for. We owe the bank. What? What was it? $571,000? Something like that. Let's say it's $571,000. I remember what the number was. That's my sale proceeds and that's my profit on an investment. Of how much money? $150,000. Who here is okay with making 333% over a 10-year hold? See, I'm cool with it. But, as it turns out, when I talk to my customers, they're pretty cool with it too. They kind of like that stuff and they kind of like the fact that I know how to do it. And when I do it in front of the customers and show them what we're actually doing with their money, what we're actually trying to do, they're kind of excited. I don't know why that happens.
Speaker 2:So, yeah, that is the 10B2 Financial Calculator app, guys. $6 app. It's something I learned. Where did I learn that, guys? You saw those designations. I took every residential certification and designation that was offered all of them. None of them ever showed me how to get my head wrapped around what I was asking buyers to buy. None of them. It's not part of real estate. Part of real estate. Real estate is all about selling people, as opposed to showing people what you're actually. Guys, the real estate will sell itself if you show them what they're buying. We don't do it. We'd rather use sales techniques they're buying. We don't do it, we'd rather use sales techniques.
Speaker 2:$19.99 on the desktop, marie, kay, marie, how long have I had it? If you go in the app store on your phone, it will be $6. I just had about 140 people buy it yesterday. I'm promising you. So, guys, if you want the tutorial video on that, there's a free tutorial video, right, that QR code is for a free tutorial video that I do on how to do it as well, with my PDF cheat sheets on that. So, yeah, it's six bucks If you do it on the desktop and I'll tell you this, marie, on the desktop, the one that you saw that I just used right now that version of his desktop version of it. It is very nice. It does a couple of other little cool things, but the cell phone app does all of it as well, just sometimes not on the same screen, sometimes you have to switch from screen to screen to do it, but it's a really powerful tool and I have no problem.
Speaker 2:Guys, I will tell you that app has made me on residential customers. It's made me more than a million dollars in extra commissions I would never have gotten, just because I now have the ability to explain the investment that I'm asking them to make. Understand you're always asking the customer to reduce cash. When you're working with buyers, you're asking them to reduce cash to extend their position in real estate. That's the position we're in. If you can make the investment conversation and you haven't been do you realize how much leverage is on there to take and increase the buyer's desire for the real estate? Because the things that you're not talking about are really strong. They make the product look way better. So, in order to take and get these buyer brokerage agreements signed, what we have to do is do a much better value. The way they like to take and say it in real estate is to make your value proposition.
Speaker 2:The thing is, I heard that a million times and nobody ever told me how. What I'm showing you here, guys, is how to actually do it right Now. This is not the class where I actually teach the calculator. There's lots of other classes where I do that. I'm not looking to sell classes. If it's a business decision and that's all I want to do. Nobody ever showed it to me. I had to go learn it in CCIM. I'm showing it to you so you guys can take and make the business decision If you think you need more of that in your business or not. It's a one-time $6 fee. Yes, I'm glad you like it, cindy. I'm a big fan as well.
Speaker 2:Was the app for the cell phone and laptop, angela, because I teach I have to buy the desktop version for my laptop, which is $20. The one that's on my cell phone, which is the one that I use with customers, I don't use the one on my desktop with customers. The one on my cell phone is $20. The one that's on my cell phone, which is the one that I use with customers, I don't use the one on my desktop with customers. The one on my cell phone is $6. Okay, so we have to anticipate objections. We're going to have to do that.
Speaker 2:But here's the cool thing the biggest objection is off the table. What was the biggest objection, guys? The biggest objection always to signing a buyer brokerage agreement was very simple Nobody else is making me sign one. Why should I sign one with you? Well, now everybody's got to sign one, so that objection is gone. So, if that's the case, that objection was hard to get by. I mean, you could sit there and make the case, because I'm that much better and all you could do that and there were ways to get them signed and we got them signed plenty of times. It's not a big deal, but that objection was one of the tougher ones. It's now gone.
Speaker 2:The other thing, the reason why it is this way. So my customer comes to me why is it this way? I'm going to say, look, because some sleazy attorneys out in the middle of the country wanted to get really rich on the back of real estate. They saw NAR as a fat cow that they could milk. They went in there, got a bogus lawsuit, got it, got a settlement. They kicked our ass because they made the case that there's no way that buyer's agents would ever get compensated as much as they are, based upon how little they do. And a jury of our peers was eating it up with a spoon. Actually, it was also that sellers would never have paid the co-brokerage compensation had they realized that it was negotiable. That being said, isn't it amazing how people forget what they agreed to after the fact? When it's convenient, there's a possible settlement that they can get. So when the customer asks me why is it this way? Look, I have to make you sign this because some sleazy attorneys pulled this nonsense to take and make the process of buying a home for you that much more complicated and arduous. I'm sorry, it's got to be this way. This is just how the new world works. I am totally blaming attorneys, because guess what Customers already don't like them anyway, so they're going to buy right into that and have no problem with it.
Speaker 2:Seller's not offering co-brokerage. If the seller if there's a house you want to see and the seller is not offering co-brokerage, there's a few things that it could be. One, the seller just flat out does not care about what it costs you to buy. They have made that home in cash the cash requirement to buy that home significantly more expensive for you. So I want you to know that about this seller is one of three things it could really be.
Speaker 2:Or the seller wants you unrepresented. Why would a seller want you unrepresented? Only if they're looking to pull the wool over your eyes. They're looking to get away with something right. Or they have a lousy listing agent who didn't explain to them how important it is to offer co-brokerage compensation to allow you to be able to pay more for that house. All of those are things that I need to think through.
Speaker 2:Guys, I don't know that I would explain them specifically like that For me. Actually, I probably would explain them to my customer very much like that, but that's very much more my style and what my customers like and respect for me. They expect that from me. Right, figuring out. Those are the germs of the idea. I'm not giving you scripts here, guys. I'm just giving you the germ of the idea, the seed to plant to figure out how you're going to take and pitch that to your customer.
Speaker 2:Because I am totally okay with my customer being upset at the other side. They're not offering co-brokerage. I just don't want them mad at me for something that's not my fault that they're not offering co-brokerage. I just don't want them mad at me for something that's not my fault that they're not offering co-brokerage, right? That being said, just because they're not offering it doesn't mean we can't get it. We can talk about that.
Speaker 2:So why they should sign with me? Well, they're going to have to sign with somebody if they want to see houses. Anyone that doesn't make them sign is a sleazeball how can I say that Very technical term sleazeball? How can I say that? Because, guys, if you're a realtor and you don't have them sign, you're going to get fined if they catch it. You could lose your license and you're in contempt of court. For the settlement agreement you're not asking to sign. You're allowed to not ask him to sign, but you are behaving in a way the court has already deemed to be a breach, or at least the court was getting ready to rule that it was a breach of the antitrust law so that non-realtor could theoretically become part of that lawsuit as well.
Speaker 2:All right, it doesn't mean you're going to pay me a nickel Just because you take an agreed compensation. It doesn't mean that that's going to be a check you write for me. I am going to do everything I can to get that from the seller. It doesn't mean that if they all it does. What it does mean is if they offer up to the amount that we agreed to, I can get that compensation from them. So if I agree to X minus one and they offer X, I can't get X. If the co-brokerage commission is X and my agreement is for X minus one, I can only get what I agree to. The limit is what's in my buyer broker dream, or I can modify the agreement with mutual consent of the buyer.
Speaker 2:Here's the thing. The buyer asks where's that money going to come from the thing? The buyer asks where's that money going to come from? They know it's going to come from their pocket. So this agreement is going to allow me to represent you. It's also going to allow me to get paid and, more importantly and, guys, if you've done the work, I'm suggesting up front to have a really good, strong conversation, showing your value to them, how you know the process, the market and the investment.
Speaker 2:I can look them in the eyes and say and this is where it shows me that you're committed to me I'm going to take and go whole hog. I'm going to go in full bore and get this done for you. You want to get a house? Let's go get it. I'll get it done for you. But this is what shows me because, guys, I have lots of these conversations. I have customers that disappear and all this kind of stuff. This is what shows me you're for real. If I'm going to go full bore, I want to know that you're for real, because I think you can tell right now I don't play around. Some version of that is a conversation you can have with the customer. Guys, it's a lot. It's okay to say look, I want something to show me that you're in. I'm in, are you in?
Speaker 2:All right, there's lots of different ways to get paid. Were you guys aware you could get a commission, managed buyers getting a mortgage. And how commission now not being advertised affects their pre-approval ratios? It doesn't affect it at all, jennifer, because the co-brokerage compensation coming from the seller is not going to count against any credits. The idea that co-brokerage is going away, guys, is not real. I would be shocked if 98% of the listings are not still offering co-brokerage for the very reason that you're kind of alluding to, jennifer.
Speaker 2:Most people don't have the cash to pay for representation, so we're going to talk about that a little bit more as we go. We could charge a retainer fee. The agreement now has a retainer fee in there. We could agree to a flat amount, a fixed amount, no matter what happens. We could charge, like an attorney, for billable hours or per house that we show. We could have a cafeteria plan where they pick which services they're going to get. We could work for free and just accept their eternal gratitude. Yeah, you're going to have to run that by your broker because, understand, even if you work for free, you are totally on the hook for liability for the deal. So you're not really working for free, you're working at a deficit. You can do some mix of all the options of above.
Speaker 2:Now, guys, I want you to understand these are some of the ways to get paid. They're not all of them. I want you to understand these are some of the ways to get paid. They're not all of them. There's some ways to get paid. You don't have to offer all of them. You could pick one if your broker allows it, and have that be how you get paid. I'm sorry, our policy is. My policy is. This is how I work.
Speaker 2:As it turned out in the 1860s, slavery was outlawed in the United States of America. Out in the 1860s, slavery was outlawed in the United States of America, which means they can't make you work for them for terms different than terms you're okay with accepting. You can always tell them I'm sorry, mr and Mrs Buyer, go pound sand. You're allowed to do that. If the seller won't allow you to finance which, offering co-brokerage that's really what the seller is doing is allowing the buyer to finance into the purchase price their cost of representation. If they're not going to let you do that, then maybe your broker and some brokers have already looked into this will allow them to finance their cost of compensation. These are all viable. So what's not going to happen, mr and Mrs Buyer? One you're not going to have to pay me without knowing it right.
Speaker 2:We agree to this agreement. We go, I take and get a list of houses you want to see. I call them. All of them are offering some compensation, some offer, none whatever. I'm going to tell you up front which ones are offering, which ones aren't, what they're offering, everything. Then we are going to decide, mr and Mrs Buyer, which one we want to see. If we see one that isn't offering compensation, we can still place an offer on that house, even if you don't have the financial wherewithal to buy it, unless they pay the co-brokerage compensation.
Speaker 2:And we can take and negotiate the co-brokerage compensation on the contract, because understand the reason we couldn't do it before, guys, is because our code of ethics precluded us from doing so, and it did it because we were not parties to the contract. We, as agents, could not negotiate our compensation on the contract and we did not have signed agreements, typically on the buyer's side, stipulating our compensation on the contract, and we did not have signed agreements, typically on the buyer side, stipulating our compensation, and so you got to love it, man, you got to love it. When the contract goes in now and it's asking for co-brokerage compensation from the seller, who's the one negotiating it? It's not the agent, it's the buyer. Because the buyer has already agreed to this compensation with their agent. They're saying I will pay you this much for the house, but as a term of the agreement I need you to give me a credit back, because that never happens right. Sellers give credits back all the time, especially in a market that's not a ridiculously strong seller's market. And understand this, guys co-brokerage compensation has always been a seller's credit to buyer's closing costs. It just allows the buyer to wrap the cost up in, so they're never going to have to pay me without knowing it. Let's say the seller comes back and they say, no, I'm not going to pay that, or they're going to pay some reduced amount of co-brokerage compensation less than what they owe. The buyer has the opportunity then to say, well, I'm just not going to sign. No, we're walking away, we're done. Or they can agree to it, but they're never going to have to pay me anything without knowing it first.
Speaker 2:Signing the contract is what is the step that's going to lock in? Whether or not they have to pay me out of cash or we're going to get it from the seller. Now you'll have to pay me and you don't buy. I want them to understand look, when you sign this agreement, if you don't buy, they could have to pay you. If you have a retainer in there, they could pay you the retainer. The retainer is due immediately, but if they don't buy, they don't have to pay me. But the agreement's going to last until the end of time. The agreement's going to have a fixed end date. It must have a fixed end date, guys, and it cannot be auto-renewable, or it's an illegal agreement in this state that you're going to be stuck with me if I suck. Is there a conditional termination section in the buyer brokerage agreement? Absolutely there is. They can get out of it and then I won't move heaven and earth to make sure that seller pays every nickel of my compensation, so you don't have to come up with it in cash.
Speaker 2:These are all things that I will say to a buyer. All of these are things based upon how I plan to do business, and these are all the germs of the ideas that are objections that they could raise. Does that make sense that they could care about? You know how long the agreement's going to be for, and all of these are things that they could raise. Does that make sense that they could care about? You know how long the agreement's going to be for, and all of these are things that they could reasonably care about. I want to take sure I'm addressing them up front, before they even get a chance to raise them, and I'm not going to call it a contract.
Speaker 2:Typically, I call my buyer brokerage agreement and I call my listing agreement the same thing, lisa. The seller could say anything they wanted. The seller could say I want to be taller and better looking at the closing. It doesn't mean it's going to happen If they've agreed to it, which is why there is a buyer's broker to seller's broker co-brokerage compensation agreement and there's also a seller to buyer's broker co-brokerage compensation agreement form that exists now to lock that in. We're not going to take and make a handshake deal and say, gee, I really hope they do what they said they're going to do. We're going to lock it up in writing the way we do everything else as it turns out, guys, there is a form for that, as if we haven't heard that before.
Speaker 2:I call my buyer brokerage agreement and my listing agreement. I call them permission forms. This is the permission paperwork. Look, if anybody comes into my office wanting to know why am I working with this buyer, why am I working with you, I need to have this form in my folder that says look, this is where I have permission to work with them. They ask why the listing is on the MLS. Here's the form that gives me permission to put on the MLS. It's permission paperwork. It gives me permission to do the thing we want to do. So why?
Speaker 2:I don't think that shopping agents on price is a wise choice, guys, when it matters, do you shop on price Like if you needed a used car desperately to get to work and you could not afford to miss one more day or you would lose this job? Do you go to the used car lot and say what's the cheapest piece of crap you got? I don't think so. And so what I usually would say to customers as, like a quick and dirty line do you really want the spirit airlines of real estate agents agents? I think it's important to understand, guys, that idea If you were on trial for murder, would you say who's the cheapest attorney? They got? No. When it really matters, you want quality. So I think price when something really matters I think price is probably the last thing you should be looking at when it comes to choosing who is going to represent you, which is the reason why I tried to show you how to pre-negotiate that position by having a really strong conversation up front, showing them what differentiates you from the other agents, other agents.
Speaker 2:Can a realtor use a referral agreement with a listing agent and still work with the buyer? Robin, I don't know what you're saying there. If you're going to get compensation from the buyer's side period, you're going to get compensation from the buyer's side period. You need a buyer brokerage agreement, even if you are the listing agreement One of the lines that I like to use a lot. Guys, if you think it's expensive to hire a good agent, wait till you see how much it's going to cost you to hire a bad one, right? So let's talk about working with listings, the listing side. What this is going to look like, this is going to bring some different objections with it. There's going to be objections that come from sellers that are misinformed. Understand this, guys, to keep it clear in your own mind.
Speaker 2:Co-brokerage has always been a seller's contribution to buyer's closing costs. That's always been what it's been. It's been money the seller has basically given back to the buyer to pay their agent. It is a way for buyers to finance their cost of representation.
Speaker 2:One of the ways I like to take and put this is, as we look at this last one, has anybody ever gone to a furniture store? And when you go to the furniture store, do they make you pay cash? I like to go to Eldorado. Eldorado has beautiful furniture. I go into Eldorado. Do I have to pay cash for whatever I buy? No, they offer me the opportunity to finance. Why do you think a store would allow you the ability to not pay them now, but pay them later, on small amounts over time? That would be great for their cash flow, right? Why would they do it? Because they know Americans will pay more. Anyone will pay more if they can finance it. So if a furniture store does it because they know it allows buyers to pay more, doesn't it make sense for sellers to do it if it'll make buyers pay more for their house, in fact, more than what the cost of the seller's contribution actually is, because their seller's contribution reduces the amount of cash the buyer needs by whatever the loan-to-value ratio is in the house. In other words, if it was $25,000 in closing costs that they had and a $10,000 compensation they owed, that's $35,000 in cash if the seller is not allowing them to finance it. But if the seller, if the buyer is using, let's say, 80% loan-to-value and the buyer now offers $10,000 more in purchase price and the seller allows them, offers them the co-brokerage to cover the $10,000 gap, if their mortgage is at 80-20, that buyer's going to need $25,000 plus only 20% of that higher price. They're going to need $27,000 instead of $35,000.
Speaker 2:Angela, I'm finding a lot of sellers that have no idea what happened. They've heard a lot of sellers that have no idea what happened. They've heard a lot of stuff on social media and guys, we know that for finding out what's true and real in the world, social media is the bastion of all real truth. Right, they are totally misinformed? No, not at all, karen, because understand this the appraised value of these homes has already taken into account the idea. We're going to get to the appraiser in just a second, karen, but it's already been taken into account what the contribution that sellers have made when it comes to co-brokerage compensation. That's baked into the prices that we have right now. Baked into the prices that we have right now, karen, I want you to understand.
Speaker 2:We've been adding the $10,000 for co-brokerage compensation all this time. The retail prices on the market are reflective of the seller offering co-brokerage compensation back to the agents, because that's the vast majority of sales that's happening. Does that make sense? So the prices that we see? Well, christy, I hope you know like I am totally being sarcastic when I say that the internet is the bastion of all real truth. That was as much sarcasm as I could pack into a comment.
Speaker 2:Not needed for commercial, not needed for land and not needed for leasing. Except, john, here's the thing With commercial they're probably righteous With leasing. If your MLS has leasing commissions in there they already nailed them once on this I would imagine most boards are going to move away from having the compensation for leasing in the MLS and if they do, I think it creates the exact same situation. We're going to have to use the buyer brokerage agreement, which also has a place for leasing on it, to lock in our compensation. All right, without co-brokerage. This is what the seller has to understand. Fewer buyers can afford it. Yes, the buyer brokerage agreement, maria, has a section for leases in there. If the customer that you've signed it with, even though it says buyer brokerage agreement, it has a section on leasing. So it is a place where you can lock in the leasing compensation.
Speaker 2:Few buyers will be able to afford it, because now you're asking the buyer to come up with the entire down payment plus 100% of their cost for representation. It is a lot of money. Typically, what's the big limiting factor of how much people can afford, how much cash they have? It's more expensive to buy than the nicer house. At least it's more expensive in cash. So what I'm saying is the house for 500 and the house for 540, the house for 540, that's the nicer house that's offering co-brokerage compensation may actually wind up making it so that the buyer needs to come up with less cash out of pocket to buy than the house at 500. Because now they have to pay for their co-brokerage on top of the down payment.
Speaker 2:What about post-inspection deficiency seller contributions? So that is not going to change burden? Um, there's limits to what sellers can contribute to buyers based upon the mortgage, but all the major lenders have said basically, we're not going to upset the apple cart. The co-brokerage compensation is not going to be counted toward any of those percentages. So typically you're going to take the way it's been normally expressed. When we've ever done it, it has been that if there's a repair credit like what you're talking about, as long as that buyer is not up against their mortgage contribution credit limit from the seller's side, we'll just take and rather than say it's a credit for repairs, we're going to say, hey, the seller is contributing to buyers prepaids and closing costs. In other words, we're contributing cash to reduce how much cash the buyer is going to need to allow them to have the cash to fix the stuff that's got to be fixed in the house. Fix the stuff that's got to be fixed in the house. Yeah, guys, that's, I think, what you're hitting on puff and everybody is. This is nothing new, it is. It is the longest standing seller's contribution to buyers, closing costs out there and all the prices out there are reflective of that seller's contribution. Being there Is the new law of compensation the MLS forever. Yeah, there will never be compensation in the MLS forever unless the Colorado law takes and makes a major change and maybe new law gets passed, but for right now that's what it says.
Speaker 2:The appraiser guys understand this. The house does not become more valuable because the seller is not offering compensation. So imagine we have three closed listings in an area. Let's not talk about co-brokerage compensation because I don't want to run against the fair housing. Let's say we're talking about the sellers. In all three of these homes that closed for $500,000, all three sellers offered a $10,000 buyer credit. And now this new seller sees those $500,000 close prices and they want to sell their identical home for $500,000, but they are not going to offer the $10,000 buyer credit. Is that home worth $500,000? Well, the other three homes that closed and netted to the seller $490,000. So, no, no, the house that's not offering the credit is not going to be able to appraise for $500,000. It's going to appraise for $490,000.
Speaker 2:This is the reason why, for those of you that have been doing this a while and the appraiser calls you and asks you hey, were there any seller contributions? Yeah, richard is here. Gene Richard is here. You got to love it. You got to love it. You got to love it, cool, cool.
Speaker 2:For those of you that want to actually understand how it's going to work with the appraiser. The appraiser is going to do what they've always done when it comes to a seller's contribution. They're going to mark down the value of the property. They're going to reduce the value of the property to offset the compensation, to offset the credit that was given, because the net value of the house is actually lower. Okay, appraisers will ask for much lower home values. Appraisers will ask and mark lower of the values of the homes that do not offer co-brokerage compensation. A seller will not net any more. Now, guys, there are instances where the seller will net more. If it is a cash deal and there is no appraisal contingency, then the appraiser doesn't get involved. But that would assume that a cash buyer is willing to pay more than any of the finance buyers Maybe very high end homes. A situation like that could exist, but typically it's going to be a buyer that's borrowing money that's going to pay the most for a home.
Speaker 2:So what I'm saying is you know, uh, gabrielle, I have asked that question and I'm still waiting to get the final answer on it. I've asked the heads of miami, the largest realtor association, what their plan is. They have had in our mls for a very long time what the sellers can say, if there were any sellers concessions and what they were. I don't think it's a problem after the fact to mark down what the compensation that was paid is, because it helps to do better valuations on properties and I don't think that is in any way antitrust. So hopefully it will be, because it's gonna help both us as agents and the appraisers. It is also gonna be very much incumbent on agents to correctly put the correct information in the MLS so the correct valuations can be done.
Speaker 2:So what am I saying? I'm going to tell my sellers look, only stupid agents would do this. And any agent that's going to take your listing without co-brokerage compensation on there has literally shown you how much they are willing to sacrifice of your best interest in order to get another listing, because the number of people that can buy your home will be significantly reduced and in addition to the number of people that will be significantly reduced, it will not increase the value of your home. So you're going to have fewer people seeing it and the number of people that can buy it is going to be reduced and you're not going to want to put more money for the benefit of doing all this. Some repairs, the credit states it's a seller's contribution toward closing costs.
Speaker 2:Now, what are we saying about the commission, angela? What we're saying is that we're going to have an agreement with the seller or the seller's broker. There are two forms to do this. There is the seller's contribution or seller to buyer broker co-brokerage form, which is going to spell out what the seller is offering to the buyer's broker for compensation. And there's a seller's broker to buyer's broker compensation form which spells out the amount of co-brokerage compensation that was in the listing agreement. So let's say you call the listing and the amount of compensation they have is the same or greater than what is in your buyer brokerage agreement. You're going to send them a seller's broker to buyer broker agreement form when you're placing the offer to lock in the agreement of what the compensation amount is going to be. That's going to be given to you, that is going to be expressed to the title company and everything will proceed as normal. Expressed to the title company and everything will proceed as normal.
Speaker 2:If the amount in the co-brokerage offered is below what you have agreed to with your seller and you negotiate on the contract that the seller is going to make up the difference, you're going to need to use both forms. The form's name is seller's broker to buyer's broker compensation. It may be slightly different than that, but there's a seller's broker to buyer broker compensation form. I believe that's the correct name and there's also a seller to buyer's broker compensation form. So in an instance where the seller has now agreed to make up an amount greater than the amount that was in their listing agreement let's say they were offering X minus one and your agreement was for X Now they're going to take and give you two forms. The seller's broker is going to provide you for the form for X minus one and the seller is going to take and provide you a form for the missing one.
Speaker 2:If that's what you agreed to, none of that is going to count against their mortgage credits though the limits for their mortgage. It's not going to count. The guidance has already come out from Fannie and Freddie, va, fha. They're not going to count it Soon. They would continue to track. They're going to have to because otherwise, ellen, they're going to have to totally come back. Yeah, they have those yes-no fields in there. We're going to see whether or not that stands up. There's a bunch of stuff that they're doing that's really running up against having a problem with the settlement. We'll see.
Speaker 2:They are excluded from the change, patricia, except that what they're doing with the rental listings is the exact same thing they just got sued for in the purchase listings, which means that it's just a matter of time till we get sued on that front as well. So I would not be surprised if the MLS takes those compensations out as well. Not saying it's going to happen, I just wouldn't be surprised. The only alternative would be for buyers to pay cash. Totally agree, andrew, totally agree. And frankly, it makes the buyer's experience of working with us more complicated. Yeah, that's what I would have expected, ellen. That's what I would have expected.
Speaker 2:My big question wasn't on that. My big question is whether or not, post-closing, we're going to be able to put the amount of co-brokerage compensation that is in there All right. It's going to make your home less desirable to buyers if you're not offering it. If you don't offer the people coming into the furniture store the ability to finance their furniture, they're going to buy less furniture or not buy any at all. It gives you a competitive advantage over every other listing that's not offering it too. So it's going to make your house look better. It doesn't hurt your net at all, unless it's a cash deal, where the cash buyer happens to be the highest paying offer, and even commercial deals have almost always offered it All right Working with other agents.
Speaker 2:Well, guys, you're going to need to answer your phone. Linda, you will always need to ask that. You will always need to. You cannot modify any form without mutual consent to amend a BBA If the seller offers more than they agreed on the BBA new home builders offering. But no, linda, there's actually a potential way around it. We are gonna see if it flies. I don't have. This is the shorter version of this class. Usually it's a three-hour class.
Speaker 2:In section 14 of the buyer brokerage agreement, the last line that is there basically allows the seller to pay you additional compensation. That is not co-brokerage compensation to the buyer's agent, that the buyer is not responsible for, and basically it is the buyer giving you that the buyer is not responsible for and basically it is the buyer giving you permission to access that. So if the seller is offering a bonus or things like that, that is what that's designed to do Rereading the settlement and the specific language that's in there about the buyer needing to know about any compensation upfront. I don't know if that's going to stand, but frankly, the buyer brokerage agreement is the best and closest document that we have. So I will tell the appraiser that there was no.
Speaker 2:What I'm saying to you, angela, is the seller. If it's not disclosed in the MLS, the appraiser will. There was no. What I'm saying to you, angela, is the seller. If it's not disclosed in the MLS, the appraiser will call you and ask you if there was any co-brokerage compensation and they will also ask you, as a separate line item, if there was any seller's contributions to buyer's closing costs. It will probably still be two separate categories. If it's not, you'll just aggregate the two and tell them the total.
Speaker 2:All right, the difference is we can negotiate as part of the offer. We've covered that as well. If the seller offers more. You can't ask for more than your agreement was. For guys, there is nothing in the settlement that precludes you from putting the co-brokerage compensation anywhere else, linda. Anywhere else it's just not going to be in the MLS.
Speaker 2:The good news for you guys is this and let's cover one other thing, because I saw before I do that Open houses. How do we handle open houses. You are allowed to show an unrepresented buyer an open house property as a service to the seller. But even if you know your seller is offering co-brokerage compensation, you cannot get that co-brokerage compensation without a signed buyer brokerage agreement from the buyer of the property. So if the seller is offering X times two X for the seller and X for the buyer of the property, so if the seller is offering X times two X for the seller and X for the buyer side, if you work with that seller and you close the deal without a buyer brokerage agreement, you will only get the listing side of the deal. No, giovanna, not at all. Listings are no good without somebody to buy them. And here's the thing I want you to understand. This is really cool, giovanna, because now this listing agent doesn't have a competitive advantage. If the listing agent wants the extra compensation for working both sides of the deal, they have to get a buyer brokerage agreement signed as well. So every single time that a buyer goes into a house, they're going to go around the agent. They're going to have to get a doc signed as well. So it's not that bad. It really isn't.
Speaker 2:Now one of the big things to consider is if a buyer comes to you unrepresented, what are you going to do? What's your play? Because you're going to need to have a play. Are you going to sit there and say what if they say, yeah, I want this property, but I don't want to pay you? What are you going to do? You do have the right to say no, go jump off a bridge. You have the right to say well, you know what. I need you to sign this no brokerage agreement right here that stipulates that I am not only going to not negotiate for you, I'm going to negotiate against you. I'm going to do everything, I'm going to move heaven and earth to make sure my side comes out ahead and you lose on this deal. You could absolutely, guys, whatever you want, but you need to anticipate it, because somebody is going to come to you and they need to know if they're not paying you and you intend not to represent them. They need to know that you're not representing them. You need to make it clear All right, what is this? Can we create an external website and have no, marcus? No, you will totally get nailed for that.
Speaker 2:Buyer agreement could have been in place anyway. Connecticut always has buyer's agreement. Absolutely, angela. I mean, florida is just one of those places where there was no agreement. In most states, you need something signed to work with a buyer at all. So the good news is the number of agents in the industry is going to decrease. The number of transactions will not. The deals that close will be spread among fewer agents, which means, if you get your head wrapped around this, you'll make more money. All right, get yourself in the right place. So these objectives are going to come in. Be ready to take a deal with them, commit to overcome them and, guys, get yourself around a group of people that are going to help you. All right, that's really the big stuff that I can give you for this. That being said, that's the thing that Jesus told you about. I know everybody is excited to get the questions and answers with Richard, so we can definitely get them in here. And yeah, thank you, linda, I appreciate it.
Speaker 1:All right, guys, we're back. We have Richard Barber here, Just for those of you that weren't around when I gave the intro before. So, richard, aside from being the that camera all right, great Aside from being the current chairman of the Florida Real Estate Commission, which I'm assuming all of you know what the Florida Real Estate Commission is he's also been an attorney. Richard, you've been a real estate attorney for man almost 20 years, almost 20 years, it's been a long time.
Speaker 1:Yeah, so I'm getting old and you know the thing is this. So you know, when you've been in the business as long as I have, you know there's real estate attorneys, and then there's real estate attorneys, right. What I mean by that is there's the ones that do you know 10 different things, and you know, one of those 10 different things is real estate, right? So Richard is a hardcore transactional guy. You know we have a title company together Coral Gables title, by the way, send business our way and so he's in the thick of it every single day with the nitty gritty stuff. So, you know, in his role as the chairman of the Florida Real Estate Commission, he, you know, understands what realtors are going through, what they should and shouldn't do, and you know, as a transactional guy, he understands the. You know there's always I always see the distinction between the classroom and the street, right, so he's in both.
Speaker 1:So today we're going to go over the buyer broker agreement, right, buyer brokerage agreement, yeah. So you guys should see that on your screen. We're going to go through that agreement together and then we're going to go right into question and answers. We've gotten a ton of questions already. So, yeah, richard, there you go.
Speaker 4:Thank you, jesus. All right, everybody, thanks for being here. So the reason why we're going to go over this what is pretty? It's a pretty basic form. It's only got, you know, two full pages of text and a little bit on a third page. And the reason why we got to go through it is because, if you are going to continue to be in this business now, you have to have a mastery over this form. You're going to have to be able to explain it to a prospective buyer, client, and you're going to have to be able to make sense of it so that they will feel comfortable signing it. I mean, it's a very difficult time now for agents that primarily represent buyers because, you know, prior to the NAR settlement, this form was very rarely used. In fact, it might have almost never been used. So it's very important that you understand the form and you understand how to complete it and how to put yourself in an advantageous position and, obviously, be able to take care of the buyer so that you can stay in the business All right. So what we're seeing on the screen is the first three sections of the form, and it's important that we understand the concept of what's going on here.
Speaker 4:Ok. So first is the parties. This may sound obvious, but when you're filling this out, you as a licensee, as a non-broker if you are a sales associate or just a broker associate broker if you are a sales associate or just a broker associate, you are not the party to the agreement. Okay. So you are not going to be putting your name on the line where it says consumer, broker at the end. Okay. So you know the customer is obviously going to go on the consumer line and then the broker your brokerage is the party to the agreement. Okay, the commission belongs to the broker. The broker pays you a split as a function of being employed by the broker. So make sure that you fill that out correctly, because that's an automatic and easy way to get a complaint filed against you on your license and it would be a serious issue.
Speaker 4:The second item is the term. So everybody is afraid of long-term contracts. Nobody likes long-term contracts and this is true in all areas. This is true when you know you're leasing a copier for your office. You don't want a long-term contract. You know, when you're signing up for a membership at the gym, you may recall back in the day there was these Bali, scandinavian places and you'd sign these agreements and you know people didn't realize that they were very long-term agreements and that you couldn't get out of them Right, and so a lot of people's credits were ruined as a as a result of that. So you want to be able to to kind of be flexible on the term that you propose to the buyer so that the buyer doesn't feel locked in, even though there is conditional termination, and we can talk about that during the Q and a is there a minimum?
Speaker 1:is there like a minimum time that we're allowed to put in there?
Speaker 2:No, I mean it could be for, it could be for a day, it could be for a single house.
Speaker 3:Yeah.
Speaker 2:It could be as specific as that. So if they say hey look, I just want to work with you to see this house and you know the situation and that's that's how you choose the business decision.
Speaker 1:Because again, so as long as the house is not shown without it. So it could be a 24 hour agreement, right, absolutely.
Speaker 4:And you need to have it in place before you show property, all right, and that's, and that's really the, that's really the trick. So be flexible on the term at the same, and also be cognizant of the fact that the agreement has what's called a built in protection period. So you know, it's not that easy to get screwed, which is what everyone's concern is. Oh, I'm going to show a bunch of houses and then you know the agree, I make the agreement for a week and then the next week the guy you know the customer buys one of the houses I showed him and I get screwed. That's not the way it works, okay. So just be ready to be flexible on the on the term, okay.
Speaker 4:And the third is the property. So this is the first section that has some art to it, and so if you read, it says consumer is interested in acquiring real property as follows or as otherwise acceptable to consumer, and then it says type of property and location Okay. So here you want to kind of try and be as broad as possible. Obviously, if you have a buyer that says I only want two-story single family homes with pools in Coral Gables, well, you're dealing with a guy that knows what he wants or a lady that knows what she wants. But other than that, you want to try and be a little bit broad. This way you're casting a wider net in terms of where and when you're going to be entitled to compensation. So, type of property, obviously, there it's probably going to be something like single family or condominium townhome, something like that. Right, you put them all you can, you can, no restriction on what you can put in.
Speaker 4:And again, my advice would be to try to cast as wide a net as possible this way. If you, otherwise, what could happen? Let's say, you say single family home and the guy ends up buying a condo. Well, that's arguably not going to be covered by the agreement. So again, what you're trying to do is avoid a situation where someone's trying to avoid paying you. All right, and to do that you got to be careful about how you set up the parameters of the doc. Same thing with location. Ok, like I'm looking at one here. That's a form, an example form, and you know the location says Hialeah. If you're not from Miami you probably don't know. But Hialeah is like this little town, it's famous for being terrible, although it's a little country.
Speaker 4:Yeah, it's really not that bad, but it has a bad rap.
Speaker 1:Well, there's more fraud in Hialeah than all other states combined. Combined states. That city commits more fraud than all other states combined, and that's an actual fact.
Speaker 4:Well, not the city, but the humans in the city. Right.
Speaker 2:So let me talk this out. There's a couple of questions that have come through that I want to take and hit you with Sure. Let me talk this out. There's a couple of questions that have come through that I want to take and hit you with Sure Because I'm looking at the chat.
Speaker 1:Yeah, yeah, absolutely. I got the laptop right here. That's great, isn't that cool? I like this.
Speaker 2:So, yeah, they're asking if they can just put residential there, whether that would be too much of a blanket term, or is it better to break it down?
Speaker 4:You can absolutely put residential Residential real estate Right. So so everybody knows there is no set of rules or statutes that says hey, for section three, you know, section a, three, a type of property. You can and cannot say this. You know, this is just the art of contract drafting. So you can put residential, you could put commercial, you could put you know, whatever you, you, you, you wouldn't put commercial, but you could, you could use a word like residential.
Speaker 1:So, richard, I have a client comes into the office. He says he wants to buy right. I do not know that he signed another seven of these for two months. Okay, I take him to closing. I'm the one that actually gets to closing and collect my commission, these other brokers and this would happen to me before where I had to go to these arbitrations, and it's because of procuring cause. What the hell are they going to do now with procuring cause? Because I have no way. There's no registry that I can look at and see that this particular buyer signed another five, six, seven agreements. And how does that happen with time overlapping? Is it the one who signed it last? I mean, how are they going to handle that? And Cadillac, maybe you know?
Speaker 2:Yeah, I'll defer to Richard. I mean, I think I know.
Speaker 4:Well, there were several questions in there, but let's Number one. The promulgated buyer brokerage agreement form is not sexy, okay. In fact, I find it to be less than spectacular, particularly because it lasts. Problematic yeah, potentially, and the reason why is that it's too simple, okay, and so I'm working on one. So I'm working on one, I'm drafting one that I will share with clients and people who, you know, who want to obviously use it. That will contain some warranties and representations from the buyer or the company saying I've not signed other agreements.
Speaker 4:Now they could lie. Ok, so it doesn't, or not having that in the document doesn't solve the problem that you're talking about. What it does is it gives us ammunition for when the problem comes up. That's number one. Number two in terms of the we'd have to understand that what a situation where a buyer or consumer signs more than one of these agreements? Ok, that puts the consumer at risk of breaching their obligations to the other broker or potentially to you. Ok, it doesn't really affect your entitlement to commission under the buyer brokerage agreement that you sign.
Speaker 4:Now where it could get complicated is if you show the buyer a property that another broker had already shown him. Now we get into a procuring cause. Right Now we're into getting into the world of the procuring cause, right? So, to the extent that a consumer has more than one active buyer brokerage agreement and you show, or each broker is showing, different properties, what's going to happen is probably nothing Right, unless, like I said, it just so happens that both brokers show the same property and then, when it comes time to pay commission on that, you know there's going to be a problem, there's going to be a dispute and and we, you know, we'll see how that shakes out.
Speaker 1:I'm going to spit fire. I'm sorry I'm throwing a couple of these out there here, but, but, um, okay, one that I know is going to happen. Um buyer shows up and says hey man, I signed a buyer broker agreement with this particular person because I absolutely had to. Ok, and this person's not answering my phone calls. This person is not working in a professional manner. I want to go with you.
Speaker 1:How do I protect myself? Right, Because the way it was happening before and the way I realized that before Richard and I'm going to obviously I'm going to exaggerate and make it, make a kind of a joke out of it, but the association and the NAR didn't really give a shit. If, if realtors shot each other, right is when you affected the customer, when you affected the consumer nowadays, like what they call it nowadays Right. So I always stayed out of trouble and I always kept my nose clean, knowing that as long as I did what was good for the customer, for the consumer, I was good, right. So if this particular person is stuck with somebody that's not helping them out has a high level of unprofessionalism, right, the way I see it is, I'm going to rescue them, I'm going to get the job done and I'm going to find them a house Right, but now I'm putting myself at risk. I'm putting them at risk. What's happening exactly?
Speaker 4:No, I don't think you're putting yourself at risk. I mean, section 9 of the buyer brokerage agreement contemplates what's called a conditional terminationate the agreement Okay, and if the broker agrees you can also provide for a fee there. So let's say you've already shown 10 properties. You're a little upset that the guy doesn't want to. Well, you got to anticipate this. So at the time of formation, right in the law, we call the moment when the contract is is coming into being. We call that the moment of formation Okay. So at formation, in section nine, you may want to consider putting some fee in there that says hey, if you are going to fire me, basically, and I've already done some work for you, you're going to pay me X money, okay, and you should. You should. You know again, the example form I'm looking at has zero, because that's being aggressive. That's you wanting to get the buyer to sign.
Speaker 4:Unfortunately, we're going to have to get a little better about protecting ourselves and so a little background noise there, and so what we're going to want to do is put something in there that makes it so that the consumer thinks twice about terminating the agreement for no good reason. Now, a situation like you're describing, where the broker they hired or the agent. These people are a disaster, you know. This is why a buyer, a savvy buyer, is only going to want to be tied up for a relatively short term. And that takes us back to the concept of section two. What is the term of the agreement? You know, if you try to lock in a buyer for a year, in my view you're not going to have a whole lot of success.
Speaker 1:Right, but here's the thing. So I was talking to a friend of mine the other day, and yesterday actually, and I said, man, you know what these changes? I'm not worried about me, I'm not worried about my business in these changes. Right, like I've been doing this 25 years, I've got you guys that are direct source of information. We're going to be all right, we're going to thrive out of this right. What I'm more concerned about is as a purist, as a guy who's been only done this business and it's probably only going to do this business for the rest of my life, right, it's the reputation, it's the damage that could potentially happen to the business, right? So what I mean by that is somebody comes to me and says, hey, I signed with this person, I don't want to work with them anymore. And now I don't know how it works in Wichita, kansas, when you do these classes over there, cadillac, but over here people don't answer the phone right, it's everywhere.
Speaker 2:And we can't it's a hundred percent of everything.
Speaker 1:So I come and now they can't get in contact with that person, or that person has no motivation whatsoever to cancel that agreement Right. So now, what do we do with that customer? We can't work with that customer because he has a contract with a buyer, broker agreement with somebody who doesn't answer the phone and doesn't answer emails. You can work with that person.
Speaker 4:So let's go through. It's a great question. Let's go through some analysis First. You're going to want to be very careful, and the reason why is because, in Florida at least, we have a cause of action called tortious interference with advantageous business relationships. And what that means is, if you and I have a contract, okay, and we're doing business together, and then Cadillac is in a competing business with me and he knows he's aware of our contractual agreement, okay, and he comes to you and he interferes with it and causes you to terminate and come with me. I could potentially sue Cadillac for tortious interference, okay.
Speaker 4:Now you may say to yourself well, shit, I mean, I see it all the time that we have. You know you're a customer of AT&T and T-Mobile, all day is running these commercials. You know, telling you that they're going to give you a better deal. Okay, now, that's indirect influence. That's not the same. That's not quite the same as saying, hey, I want you to violate your contract with Jesus. So the fact that you advertise or that you promote that you provide a better service than agents who, for example, don't answer the phone and don't do the things they're supposed to do, that's not going to get you in trouble If somebody comes to you and they say I signed with somebody else and I don't want to work with them anymore. You're going to have to think long and hard about what are the questions that you're going to ask, to make sure that you're not going to waste your own time.
Speaker 1:Do we have a form that we create to make that transfer?
Speaker 4:to say, Well, you can't. No, there's no form that would make the transfer, because you can't get rid of. The consumer cannot get out of their buyer broker agreement without the assistance of the broker, right?
Speaker 1:That's what the conditional termination is If that guy does not answer the phone, then Doesn't matter.
Speaker 4:So what you have to do is you have to find out, you have to ask for a copy of it, you have to figure out what the term of the agreement is. You have to ask him what he has seen you got to ask him what he's been shown right. And that's why a lot of these agents, if you notice and I've noticed in the past several years when you sign up with a broker or an agent, you want to look at houses. What they do is they put you on this email feeder and every day you'll get 50 houses in your email, even if it's not at all what you're looking at. And what they're doing there is making it so that they have a good argument that they're the procuring costs right. So you need to be aware You'd have to go through a vetting process with this consumer to see how long have you been a part of this agreement. You know who's the broker, do you know them? You know how many properties have been shown, et cetera.
Speaker 4:So I figure out if it's even worth your time.
Speaker 1:I've had. I've had to go to the board, to the association a couple of times to go through these arbitrations, these procuring cause arbitrations or whatever. And just seeing a property, just seeing an email or anything is nowhere near enough. In my in the cases that I've been there, it's been who actually not only even shows it, like the cases that I've been in that I've won has not been who shows it, it's been who actually puts the offer.
Speaker 2:And I think that's I mean realistically, and the cases that we're seeing here, the questions that we're seeing, is you know if the buyer signs represents to you that they don't have anything signed and they actually do have one sign and you find out about it after the fact. You know you've gone based upon what the buyer has represented to you and then you move forward. I mean realistically, the one that's on the hook potentially is the buyer for two commissions Agreed and that's why.
Speaker 4:but I think these forms you know like look, if you're not going to use one made from scratch, you should have like an addendum or a rider to the exclusive buyer broker agreement that contains representations like that. Hey, I am not a party to any other buyer brokerage agreement. Right, you know, not been a party, because here's the thing, just saying it could end. It could have ended last week, but the protection period is still in place.
Speaker 3:So they're still subject to it, right?
Speaker 4:So the phraseology has to be clear. But you're just going to have to vet these buyers.
Speaker 1:I mean, you're just going to have to be sure, Like I said, I'm not worried about my business, or I'm just worried about the industry and having to deal with this bullshit, right and just these buyers having more steps to have to go through to actually buy a home. You know what I mean.
Speaker 2:So so let me just take what it is, the question, one of the questions in here does the listing agreement have a clause about consent of a limited, of a limited representation? There's three different listing agreements and there's three different buyer brokerage agreements, all of which take and cover the three different types of brokerage representation that we're allowed to give no brokerage transaction, brokerage or single agencies. I think that answers your question, but I'm not sure. Connie basically asked the question which Richard just answered, which is the idea of adding a section and if they're not party to that, they're not party to that.
Speaker 2:They're not party to other agreements and it's hard to hear me. All right, let me try to get the mic a little closer, play musical microphone and see if that helps any. All right, can you guys hear me now Better? And fantastic guys, all your comments on the sound. The mic lost where the questions are. Give me one second here.
Speaker 2:Um, yes, angela, obviously we need to educate the consumer on what the document that we're going to ask them to agree to is. But just like any good, any good interaction with the buyer, I think first you need to make the case why you're worthy of getting a doc sign before you go over the document. The document in the listing presentation is usually the last thing that I bring out and then I go over that as the end of my agreement. I think mirroring your buyer presentation upon your listing agreement and the format that typically is most successful is probably going to serve you well. It was my understanding that, like the listing agreement, once the buyer signs a new BBA, it automatically terminates the protection period. Not necessarily so Well, we'll get there. We haven't let Richard do his thing, jose, good question.
Speaker 4:So sections four and five, cadillac, if you can pull them up, I mean, these are. They're not worth going over in too much detail, although it's important for you to know what your obligations are. So that's what. Section four is the broker's obligations. Okay, you're going to use your knowledge and skill. You're going to discuss property requirements. You're going to assist in negotiating all the usual things, okay. Other consumers so consumer understands that broker may work with other prospective consumers who want to acquire the same property as consumers. So there you could have more than one buyer that wants to look at the same property or wants to buy the same property. This is a disclosure that lets them know. You know that that's in play, ok, and the fair housing broker Obviously, we all know what that is. And the service providers. This is important. Okay, you want to be careful in this business.
Speaker 4:I recently had a case where an agent that I've known for a very long time she's very good at what she does. She sold a house to some very wealthy people and prior to the closing they were already asking her for a referral for a general contractor because they wanted to make some renovations. To the closing, they were already asking her for a referral for a general contractor because they wanted to make some renovations to the property. It just so happens that she was doing some renovations to her house at the time and at that time she was happy with the contractor and she referred the contractor to these buyers who eventually closed on that house and eventually did business with the contractor and the guy fleeced them out of like two million bucks. Ok, and then, to make matters worse in that process, ok, after the referral, but before the contractor screwed the you know her customers. The guy said you know, hey, if you refer me business, I will give you money, like, I will give you a cut of like what I made.
Speaker 4:And while that in and of itself is not illegal or a violation of any of the licensing statutes or rules, had it happened before, had that arrangement been in place before. In other words, you know you meet, you're an agent out there and you meet with a GC or a home inspector or any number of the service providers that we are exposed to in this business, and you have this referral fee type arrangement. You are then obligated to disclose that there is such an arrangement to any buyer or seller to whom you are going to refer that service provider, ok. Failure to do so can get you into a lot of trouble, both with the licensing statute and in civil court. So long story short, of course, these people they lawyered up. These people were very wealthy and they were very upset that they'd lost over two million bucks to this guy. And here's where it gets worse. That guy wasn't even licensed. The guy wasn't even a licensed contractor. And so imagine, you know you're referring a guy that is not a licensed contractor.
Speaker 4:So word of advice on this section even though this document, this section 4D, provides some cover for you, broker does not warrant or guarantee products or services provided by any third party whom broker, at consumer's request, refers or recommends to consumer in connection with property acquisition. You should still, to hit on the point that Jesus was talking about earlier reputation, goodwill, the integrity of the business. You need to make sure that you do a little bit of homework on the people you're going to refer. The state of Florida literally has a website on which you can check any license under the sun, except driver licenses, okay so alcohol licenses, you know. Liquor licenses, um. Firearm permits, um. Real estate licenses, you know barber licenses. All these things are available online. You go to myfloridalicensecom and you can search you know for, by the type of license, by the name of the licensee, by the name of the establishment, et cetera. So so, just as a cautionary tale, don't be referring anybody that you haven't done your homework on because you know it's it's a bad scene when things go bad.
Speaker 2:So really quickly, they, they, they hit, they hit us on one, yanni hit us on one that absolutely I know that there's a lot of questions on which is and you said it already being general, but location. So back from section three when it talks about we talked about property type, but location, I have agents that are all the time I'm just going to put Florida in there and I say, well, the world, yeah, you know the United States of America kind of thing, this you know the Milky Way galaxy, you know, and I don't know what your position on this, richard, but my thinking is, if you can't do business there, you don't have access to the MLS, you don't have specific area knowledge. One is broad, one is broad, too broad. Yeah, I think that's the thing.
Speaker 2:And then really quickly for Melanie no, melanie, this does not apply to commercial. The settlement has nothing to do with commercial or rents. Right now they're saying or rents. That's correct, although they are going to pull the rental commissions out of the MLS. I was informed. Somebody said that in here. So if that's accurate, then those are coming out of the MLS, which I wouldn't be surprised. But yeah, maybe if you want to speak about location a little bit, yeah.
Speaker 4:So look, obviously there is such a thing as overdoing it. You know, Florida might be a little broad. You're licensed in.
Speaker 4:Florida the world absolutely too broad because you're not light. So I would say you can't be broader than where you're entitled to practice OK. So is Florida too broad? I mean technically, not because your license works anywhere in the state of Florida, is it? Is it practically too broad? It might be in the state of Florida. Is it practically too broad? It might be.
Speaker 4:But again, I didn't mean to overstate the importance or the danger of not being sufficiently broad. It's not really going to be the end of the world. I don't anticipate too many buyers, especially during the pendency of the agreement, maybe after the agreement ends and you're questionable in terms of the protection period and you're questionable whether or not you were the procuring cause for that property. But as a general premise, you just want to make sure that you're casting a wide enough net to give you some leeway. People change their minds all the time. When they come to sign up with you they may think they want to live in Coral Gables come hell or high water, and then you show them 10 houses and they can't afford any of them. And then you know the wife or the mother-in-law finds a house in Kendall, for example.
Speaker 1:There's more bang for the buck and what's that neighborhood right across from Coral Gables? Uh, uh uh. Shenley park, shenley park.
Speaker 4:You find something outside of that area. Again, you just want to. You just want to be covered. Ok, so you know, is Florida too broad? Technically? Not, because you're licensed in all of Florida. Practically it might be All right, so section five if we can get that slide.
Speaker 2:You got it, I have. I have a question here, actually from what is a pretty good one, sure, how am I really going to know if a buyer who has signed a buyer brokerage has ghosted me and bought with another agent? I am not going to know really, and my position is that's what the tax roll is. You can go search the tax roll by their name and see if they close on the house. That would be the way, that only way that I know of the check.
Speaker 4:Yeah Well, I mean, here's the thing. This is true of the of the business right now. Right, right, I mean right. In fact, with a buyer broker agreement, I mean your chances are better, you're slightly more protected because now there's at least a contractual obligation. Otherwise, I mean, you could get a phone call from a random buyer, show them 10 properties and never hear from them again and you're not going to know. So you know that's an issue we already have and at least with the buyer broker agreement you have something. And then when you show certain properties you can look, you have access to the MLS. So all of a sudden, if the listing goes inactive or sale pending or whatever it shows when there's a contract pending, then you can inquire, bit of work to protect yourself, but nothing in the settlement affects that. That's the same playing field we're dealing with now. Last year, five, 10 years ago, the requirement to use this form does not implicate that issue that we're being asked Sure, sure, so anyway, consumer obligations right. So this is where it talks about what the consumer is obligated to do.
Speaker 4:And this goes back to Jesus's question about what happens with a guy that has like seven of these agreements signed out there and it's like well, the consumer then could potentially be in violation. Let's say that you're the broker that's first in time, ok. So they signed the first buyer brokerage agreement they sign is with you, and then you show a property and then later on they sign another buyer brokerage agreement with another broker OK, and then that broker ends up showing the same property OK. Now I think that the broker, a first in time broker, has the superior procuring cause argument, especially if, as Jesus said, offers were submitted but the buyer would theoretically be in violation of Section 5A, conducting all negotiations and efforts to locate suitable property only through broker. Now you may ask yourself OK, so they're in breach of my agreement. What can I do? Well, you could file a cause of action for breach of contract and if you're working on a, let's say, 3% of the purchase price and these guys are looking at a million dollar property, you know, then it might be worth, you know, hiring a lawyer and kind of shaking the trees. So again, you know, this is going to be a brave new world for people and we're going to have to kind of, you know, make sure that people stick to their obligations, right?
Speaker 4:So B, providing broker and necessary third parties with accurate information. C being available to meet with the broker. D indemnifying and holding broker harmless from and against all losses, damages, costs and expenses of any kind, including attorney's fees, and from liability to any person that broker incurs because of acting on consumer's behalf. So this is where all of a sudden, let's say, a guy has two buyer brokerage agreements. Jesus goes out and shows a number of properties pursuant to his buyer broker agreement. The other broker finds out, feels that Jesus might have tortiously interfered with his customer, files a lawsuit against Jesus. Under this provision, the consumer is going to have to indemnify Jesus.
Speaker 4:Now you might be asking yourself well, what good is indemnification from somebody with no money?
Speaker 4:And the answer is it's not it's, but you know what?
Speaker 4:It puts them in the middle and that's another pocket at the table. So you know again. This is why I say I think somebody brought it up to Cadillac on the chat that you know we have to educate the consumer on the document we want them to sign. That's true, but the first thing you got to do is educate yourself, because I guarantee you that 95% of the licensees, at least here in Miami, are unfamiliar with the form, don't know what indemnification means to begin with.
Speaker 4:Why Is it in English? Yeah, primarily. That's one good reason. So you know you have to be able to explain what you're asking people to sign. So, yes, you got to educate the consumer, but you got to educate yourself first, all right, so that's basically an overview of section five. It's not a real big deal, or it's not the barn burner provision of the agreement. We're now getting into kind of more of the meat and potatoes of where we're going, so retainer. So this is something that you may want to consider. Ok, and again, in this form that I'm looking at, I'm looking at a form that says zero, because again, the mindset is I need to just get the buyer to sign, ok, and if and if I require five thousand bucks up front, you know they're unlikely to sign my agreement, and that might be true.
Speaker 4:Ok, so a lot of this is going to be about business acumen and what you're willing to do to get buyers to sign up with you what you're willing to do, what you're not willing to do. So section six talks about a non-refundable retainer fee of X dollars. You could put any amount in there for broker services provided for consumer and is earned and payable upon execution of the agreement. The retainer is in addition to any compensation earned by broker. Broker and consumer agree that the retainer is for the real estate services described herein and does not constitute a fee paid for rental information listed as described in section 475453. So you might want to consider taking a little bit of money up front. That's the objective of this. The objective is to hedge bets against and, by the way, this has always been in the buyer broker agreement.
Speaker 1:So well, here's another thing. The guys, by the way and again, I'm not a fan of this, I'm not defending this, this, this whole situation at all, but let's not forget the facts this buyer broker agreement has been around since we've been. I mean, it's never not been there in my 25 year career Now, I said frankly, the thing that surprises me is the change that they made.
Speaker 2:That used to be. That used to be that you could take and credit the retainer on the backend against whatever the compensation was. Now it's straight up. In addition to there used to be a box to check whether it was going to be credited or not against the earned compensation. That's no longer there, but it's always been there.
Speaker 1:Now, the fact of the matter is that my personal opinion with my realtors, okay, and I got what? 500 realtors. I would tell them that, until recently, that this agreement is a cancer to the business. Right, it's an absolute-. The agreement, or the requirement of the agreement. Well, the agreement meaning that, the use of the agreement, right. So basically saying, hey, marry me before we date, right, I hated that about it, right, so you know, I say I would tell him.
Speaker 4:You're going to to a car dealership and say, hey, before I commit to buying this car, I'd like to drive it around for a month, right. Same thing with the cell phone Like it doesn't. It just doesn't work that way. Same thing with hiring a lawyer Like you go, yeah, Think about what you're talking about. Yeah, you're going to get married before like dating, right. So it's like you can't go to, you can't walk into Porsche. I know Guys, let me take a car home for a couple weeks to make sure I like it.
Speaker 1:Well, the attorney I know Richard. I know Richard, but I know my business and I know my business in my city. Okay, and you and I have discussed this a million times and again, guys, I'm going to be all right, my company will thrive through this right. But going back to worrying about the business, I the the crap that we have in this business. I know the fucking part timers that we have. That don't answer the fucking phone and they don't do what they're going to say.
Speaker 1:They're not going to be able to get anybody to sign I don't know man, there and again, we're the number one, the fraud capital of the united states. So, yeah, I do think they're going to get it signed. And now we're going to have a huge clusterfuck, okay, of, uh, of buyer broker agreement signed, procuring cause issues. You know, people not clients not being taken care of and getting frustrated with it. So that's why you know, it's, it's, it's. I find I, I don't mind the commission thing, I don't mind all the other advertising thing, I get, I kind of get where they're coming with this. I don't know where. Who came up with this part. Is it? Is it because the settlement that they, the, the, the NAR, uh, kind of give into this that they want this?
Speaker 4:or Wait, wait, wait, it came up. Well, when you say this, what are you talking?
Speaker 1:about this having to have every buyer sign a buyer broker agreement.
Speaker 4:Well, because it's the only way to to come to ensure that the buyer's broker will be able to collect to demonstrate entitlement, before the payment for working for the buyer was coming from the seller right.
Speaker 1:But the, the, but it still. It still is, I think, the obligating them if well, if I, if I don't use it, I don't use it, right, I could, I'm allowed to risk it the the actual obligating that everybody to show one property has to do it. So let's say I'm a broker, right, and I feel confident enough that I don't have to. I feel confident enough that when I submit an offer, the offer is going to specify that I'm going to make X amount of dollars. Why do I need to get one of these signed right from the get-go, right from showing them the first property? That's where it becomes problematic, not the fact that at some point it's going to have to be spelled out clearly, but that point should be when we submit an offer right.
Speaker 4:Well, the reason why the settlement requires that the agreement be signed before showing a property is because this is the only way to ensure that you're not going out there and showing properties where you know the seller is going to compensate the buyer's broker. That's the objective. The objective is to avoid your being able to go out there and only show properties where you know that the seller is in agreement with their broker compensating you. I mean, that's the whole heart of the lawsuit. So if they don't, if they don't.
Speaker 1:If they don't force you.
Speaker 4:if they don't force you to have an agreement in place beforehand, then you will stifle competition in other ways, Like you will literally only show properties where sellers are willing to compensate the buyer's broker.
Speaker 1:Or you will. You will say that I'm going to charge 3% and when you show a property, that's 2%. Okay, now you're going to have to get 1% from the buyer, right. So you're still going to get your right. Now, the average commissions and I've asked around the average commission paid on the buyer side right now, about 80% of them are 2% commission right. That's what people are, that's in my world. Okay, miami blue collar, call it price ranges. You know people are going to start putting 3%, so the consumer is going to have to pay more. Now, I mean that's it's going to become customary for them to ask yeah, I mean frankly.
Speaker 4:I just I disagree because I think that what I fear for my business being that in Miami Dade County and when I say my business I don't mean my, my legal practice, I mean the title is that in Miami-Dade and Broward counties the custom is that the buyer pays for the title insurance premium. But in what you described as the blue collar market, most buyers of real property, that is, let's say, $600,000 and below, those people don't know that they have a need for a title company. They don't know title companies, they don't have lawyers. Okay. So the source of business who sends my title company? Business Agents that represent buyers, agents that don't speak English, okay, that don't have command of the language, that aren't the best agents in the world, okay.
Speaker 4:And why do they represent buyers? Because those agents don't have command of the language. That aren't the best agents in the world, okay. And why do they represent buyers? Because those agents don't get listings, okay. So in our town, as you know, the sexy agents they represent sellers. They have listings. And why do they have listings? Because they're able to convey their value. And so people that are selling high-end properties they hire you know, audrey Ross, riley Smith Group, the Jills these people and these people. They have these listing agreements.
Speaker 1:We have lunch with Audrey next week. She's good. She's good people.
Speaker 4:And. But what ends up happening is that in the blue collar world I don't see too many guys that you know that are. You know, firefighters, first responders. You know people teachers, people on like fixed incomes first responders, teachers, people on fixed incomes the middle class to lower middle class these people are not going to commit to paying a buyer's broker 3%.
Speaker 4:They're just not going to do that In my view, that's the real danger for the consumer that they're going to end up going a cappella, as we say into into these deals and they're going to get trampled. So I've already spoken to many brokers let's call them white glove brokerage house type places and they're not having too much difficulty getting buyers to sign the agreements because these are sophisticated buyers that quite frankly, they don't want to be doing the work themselves. But it's like how many millionaires have you ever seen do a for sale by owner? Okay. Like there aren't too many for sale by owners in Cocoa Plum, okay. And that's because the more sophisticated you are, the more you understand the value of professionals. It's people who quite frankly, feel like they can't afford to pay the commission or that they're getting jacked right, they're getting taken by these realtors.
Speaker 4:Just today I was at the gym this morning. There was a guy who happened to be training at the same time and he was talking about how he thinks realtors are a complete waste of time and money. He's like I bought my house with my wife last year and I had an agent representing us and that person didn't do anything the exact point you were talking about. Number one they showed us houses for like the first two days, and then we were sending them the houses and we were on Zillow and we were doing this and we were doing that.
Speaker 4:And I mean I don't understand. And it's like, and I'm telling them, and imagine that nowadays you're going to have to pay, you're going to have to commit to paying these people in advance. So, in my view, that's why I think it's been discussed that a lot of agents are going to leave the business because agents that can't get listings, don't know how to get listings and then can't get buyers to sign these agreements, they're going to leave the business. And, by the way, and I think that there's two things you could be like I forgot what it was that we, we, what scenario we were dealing with?
Speaker 4:we were talking about explaining contracts to people that were like, not sophisticated and you were like, yeah, maybe our people weren't doing a great job of explaining it, but we could have a harvard professor explaining it and they were never going to understand, right, and that's that's. Where was that? I forgot where I was, raul, think in the project.
Speaker 4:So you know that's the same thing we're going to see here. People are just not, they're just not going to sign these agreements. They're going to say, forget it. Number one I can't afford it. I can't afford to pay 3%. And number two you know, I don't think you do much anyway. Okay, and this is where, again, the art of being able to explain your value, your worth, and to be able to explain.
Speaker 1:There's one very good thing about it it's going to really weed out the unprofessional part timers.
Speaker 4:And, by the way, that's when. That's why, again, having knowledge of the form is going to be important, because in the compensation section it makes it very clear that if the buyer agrees to pay 2%, but the seller on a house that we end up showing agrees to pay the 2%, then the buyer doesn't pay anything. So you have to be able to convey to the buyer that the only time they're going to pay you is if they buy a house where the seller isn't willing to pay anything. Okay, and then you're going to have to explain how you can get those concessions somewhere else.
Speaker 3:A lot of these banks are starting to allow for additional credits.
Speaker 1:Yeah. So, fannie Mae, I read, and I'm going to destroy it verbatim, so I'm just going to give you the summary. But Fannie Mae already sent out a notice that they're going to allow. They're basically going to separate the compensation, okay, from compensation. So basically you could go ahead. If the loan only allows for 3% seller contribution, right, they're going to allow for another. You know, let's call it X percent, right and not really call it contribution. So in addition to so it's not going to fit into that for commission. So those are the adjustments that are going to be made right, that for commission. So those are the adjustments that are going to be made right.
Speaker 1:You know I've also said that we're kind of lucky as an industry that we're going into a softer. This is landing. This August 17th is landing on a softer market where properties now, at least here in Miami, are taking 90 days 120 days, that's the average to to sell. So it's not the fly off the shelf market anymore. If that were the case, the template would be set in this market where you don't really I mean listen, in a hot market here in miami you could put a sign outside your house with the wrong number, and I'm not even exaggerating, and you're still going to sell the house, right? So, um, nowadays, yes, you're going to have to see certain properties, you're going to have to have somebody take you to the lender and get you qualified the whole situation. So we're landing as an industry. We're landing, if we're lucky on anything in this. We're landing at the right time for this, where our services are needed.
Speaker 4:And, by the way, I would, just as a general premise, I would strongly recommend that if you're a broker and you own your brokerage, you should probably hire counsel to draft one or a variety of buyer brokerage agreements for you, so that you're not tied to this form which, like I said, is, in my opinion, less than spectacular.
Speaker 1:Richard, can you draft me a couple of these?
Speaker 4:Yeah, thanks, man. And what I mean by that is that you may want to make one non-exclusive OK, to solve this problem. You know so that, so that the buyer isn't married to you, ok, so you might have a buyer that says yeah, I don't want to marry you on day one, and you might say you know what, no problem, here's a non-exclusive one you can work with me, I cover my ass.
Speaker 4:You're good, right, you're good, I'm good and you know, and so again, you want warranties and representations in there. You want to be able to do different things. So what we're talking about is this form, because that's what, that's what is promulgated, that's what everybody has access to.
Speaker 2:And I want to, just because there is lots of conversations going on while you guys are talking, but one of the big ones here is a comment that you know they don't have to sign a buyer brokerage agreement, they just have to sign something, and that there's the pre-touring agreement out there and all Guys, I'm hearing a lot from legal counsel and Miami Realtors in particular that they do not feel that those forms that were made available are going to stand. They are not consistent with what the settlement agreement stipulates and there's probably going to be guidance coming out from many of the local real estate associations if florida realtors continues to have that document out there giving guidance not to use it because it does not comply with what was agreed to in the settlement agreement. So just just be aware of that. That's the rumblings that I'm hearing in the backside. You hear it here first, right, guys? I just want to tell you.
Speaker 1:Whatever we're doing today, guys, is in 90 days is going to look drastically different.
Speaker 4:Let me just add something by the way everyone, you could feel free to wipe your ass with the settlement, okay, so so, just so you know, the NAR settlement only covers members of NAR, ok, so if you are not a member of the National Association of Realtors, you are not quote protected by the settlement. And what I mean by protected is that you could continue doing business, business as usual. Ok, god bless you. And if you're big enough and you may end up getting sued, and if you're big enough and you may end up getting sued, ok, and then you'll be sued for the same exact thing that was adjudicated or that was resolved in the NAR. It was not adjudicated, it was settled in the NAR litigation, ok, and in the several litigations. So again, you know, listen, you can, you can continue to do whatever you want. The question is how long before somebody you know, before you get stung for doing that, okay. So again, it's it's like anything else and I tell people all the time.
Speaker 4:I'm in the business of giving advice, I, I give advice in exchange for money. I can't tell you how often my advice is ignored, advice that people paid for it. Now, listen, by the way. I kind of like that, because if you follow my advice the first time I give it to you, I'll starve. Okay it's. You know, it's precisely because people don't take advice, and not just from their lawyers, like from their doctors. How many of us have gone to the doctor and the doctor's like hey, man, you really got to lose 40 pounds and, by the way, you can't drink so much and your cholesterol is a little high, you know you probably. And a beer. Okay, because humans are not real good with advice or lifestyle changes. Okay, so again you can continue to operate like like you were operating before. You just run the risk.
Speaker 1:Who's going to? Who's going?
Speaker 4:to police this whole? There is no police, that's the whole thing.
Speaker 1:There is no police, but there is no police there is no there, there is no police, there is no realtor. There's not going to be somebody knocking on my door checking if I have all these buyer-broker agreements, do I need to store them for five years, like all the other ones? And this, and that no one is going to come out and speak for copies of your buyer-brokerage agreement.
Speaker 4:What's going to happen is that's him man no, no. Do you know this? For a fact, yeah, it's the same thing. Listen, take it right now with the Conveyances to Foreign Entities Act in Florida. Oh, yeah, okay.
Speaker 1:Right now there is that's the governor saying.
Speaker 4:There is a requirement that every purchaser of real property has to sign an affidavit, and that affidavit at the closing has to it has. It's very simple and the Florida Real Estate Commission drafted it, so I happen to be familiar with it. And it basically says no, no, it was a team effort, Okay, so so it says. It says either I.
Speaker 4:I, I am an American citizen and therefore I am not covered by the Conveyances to Foreign Entities Act. Okay, or I'm not. I'm not prohibited from purchasing because I'm a US citizen or I'm not a US citizen. But here's why my purchase does not violate the statute. Okay, and every single purchaser of real property in Florida has to sign it. Okay, including, including our friend Mike Gow, which is the document that required notarization, remember? Ok, so what now? What? Unlike, unlike the FinCEN, the federal government's forms, where you have to submit transactions that close by LLCs or buyers and they're more than a million bucks it's at these geographic targeting orders that you must submit those to the IRS. There is no obligation to submit these affidavits that the buyers are signing anywhere. There is no obligation to submit them. No one is collecting.
Speaker 1:By the way, what's the name of that moron that says we weren't in meat and potatoes soon enough? What's the guy's name? Yeah, is this meat and potatoes, enough, buddy so look, I mean so so, for example.
Speaker 4:So going back to this form, yeah, no one wants.
Speaker 4:No one is going to knock on your door to find out if you have these things. What's what's going to happen is sellers just like what happened in the NAR litigation sellers who've talked to their buyers for some reason and find out that there is no buyer brokerage agreement and that the expectation is that they compensate you. And if they end up compensating you, those people are going to have a cause of action. And then there are these lawyers out there that they're going to hear it. Okay, because it's going to get out there. Ex-broker doesn't do this. Ex-broker doesn't use a buyer broker agreement. He doesn't care.
Speaker 1:But what about use the buyer broker? You know what? I'll ask you stuff later.
Speaker 4:Yeah, yeah, yeah, let's not don't ask me about how you're going to shirk the settlement, like while we're transmitting live.
Speaker 1:So you see what I'm saying there is one more, that that's Just think this is bullshit and it's not good for the business. So I mean it's not good for the Forget the business, it's just not good for the consumer.
Speaker 2:Your objection is noted.
Speaker 4:It's just not. It's just not.
Speaker 1:It's not still the consumer, it's just not.
Speaker 2:The one that I want to touch on and because I and there's been quite a few on this is agency status, that somehow signing a buyer brokerage agreement transitions you into single agency or precludes you from transaction brokerage. And there are three different versions of that form, I believe a no brokerage, a transaction broker and a single agency. It doesn't affect your agency status. You can still represent. If I'm a listing agent and the buyer comes to me, I have to.
Speaker 2:If I'm not a transaction broker with the seller, I have to either get a no brokerage buyer brokerage agreement and sign with the buyer, or I have to transition to transaction brokerage with my seller, which is just a pain in the butt. If you're a transaction broker with the seller, you can then take and sign a transaction broker agreement. As a buyer brokerage agreement, it is literally you providing the services that you always have. Nothing has changed. It is a gigantic nothing burger as far as changing how we do what we do, except that there's this form now that kind of codifies it and actually, nicely enough, has the buyer responsible to do a few things.
Speaker 4:Okay, and so, like I said, moving on, remember the important part of the compensation section of the agreement is to be able to convey to your consumer that they only pay you to the extent that the seller does not pay you. Ok, and you cannot make more money than the buyer agreed to pay you unless and we'll get to that, unless it's in the last section of the agreement agreed to pay you, unless and we'll get to that unless it's in the last section of the agreement. But as a general premise, if the buyer agrees to pay you 2% and you end up showing a house and that house, the seller, for whatever reason, is willing to pay 3% of commission to buyer's broker, you're stuck with the 2%. You cannot take the extra percentage. All right, that's important, right? So now let's talk about the protection period. But three percent, what? What people also get concerned about? So the protection period this is what protects you from getting screwed out of a commission If a buyer buys a house that you showed them after the expiration of the buyer brokerage agreement. Okay, so you have a buyer brokerage agreement. It's going to last two months on day 71. The consumer it gets into a contract to purchase a house you showed them and it closes, you will be covered. Okay, because the protection period clearly states consumer will compensate broker if within blank Now here blank line, just like on the, as is just like on all the contracts, there is a default.
Speaker 4:If you do not fill anything into this line, the default is 30 days, okay. So if left blank 30 days after termination date, consumer contracts to acquire any property which was called to consumer's attention by broker or any other person or found by consumer during the term of this agreement. Ok, so it's a housekeeping they found on their own. So consumer's obligation to pay brokers fee ceases upon consumer entering into a good faith exclusive buyer brokerage agreement with another broker after the termination date. Ok, so what does that mean? So you left it blank. Your buyer broker agreement was termination date, okay. So what does that mean? So you left it blank? Your term, your buyer broker agreement was for 60 days. If on day 61, day 61, they signed a new buyer broker agreement, you you might be screwed. Okay, if they do not, you're covered by the protection period that you defined here, whether it's 30 days, 45 days, 90 days, whatever it is.
Speaker 2:So specifically designed to keep them from going to the seller waiting for it to expire, then going directly to the seller with the property that you showed them and saying hey look, I just got rid of my agent. Now we can take and work it. That's what it exists to do.
Speaker 4:And sellers are less incentivized to do this nowadays as well, because before they were paying, I think them paying is not going anywhere.
Speaker 2:Co-brokerage is just such an important part of making the home affordable. The buyer is never going to write that check, and the reason why is because the net on that property isn't going to change.
Speaker 1:This system that is currently working before this August 17th thing. It wasn't made up, it started evolving and the reason why it started happening the way it happened. So when I started in the business in 99, every single sale for about two years when I started in the business it was every sale was FHA Right, I remember, because everything was FHA limits, pretty much Right and everything was 6% seller contribution, everything Like I didn't do on one of those deals, a deal that was something else for years. Buyers always need help, that's just it. The reason why the seller pays is the same reason why real estate is awesome is because there's equity built into it. So they have the money in there.
Speaker 2:Built in it's to allow the buyer to finance their cost of representation into the purchase price of the deal. It is the reason why and the analogy that I give is like you go to the furniture store, right, they don't make you pay cash, they give you the ability to finance, because if you can finance, you'll buy more crap. The buyer can pay more for the house if that seller allows them the ability to finance it into the purchase price.
Speaker 4:And the crazy thing is this I know, but you realize that this argument lost right, like we're screwed, like it doesn't, no, but I mean, you're still allowed to have, I get it, but I mean, but it's so much harder.
Speaker 2:No, but here's the thing Rich, why does?
Speaker 1:100% financing exist. Why does FHA exist? You need first time home buyers in this, this world. You just need that are in this. Are not our society collapses? I'm just saying you're preaching to the choir but I'm not even preaching. But remember I'm not talking to you, dude, I'm talking to 300 people online. You know what I'm saying. I know it looks like I'm looking at you, but I'm trying to.
Speaker 4:No, no you are, I'm gonna look at them. I mean, from now on, I'm gonna say well, I'm looking at, looking at them. I'm just saying that.
Speaker 1:It's fucking stupid. I'm not going to. This is a money grab. Ok, it's a money grab by the attorneys and I know you don't like when I say that, but it's a money grab.
Speaker 4:It's fair.
Speaker 1:They said that we're the ones fixing the fee, fixing the rate, and we charge only 6% and they're charging them 40%. These only 6%, and they're charging them 40%. These poor sellers that were affected so much, they're getting 40% of it. You know what I mean. So it is what it is. We got our ass kicked. Hey man, I'm not a sore loser. We lost. Now we got to figure it out.
Speaker 2:I wish I had a way to fix it. But if I'm on the listing side and I'm coming to your house, rich, to take the listing, I'm going to say to you look Rich, if you don't offer, if you don't make this available, the number of buyers who can afford to not only pay the down payment, whatever it's going to be the $90,000, now it's another $25,000 in cash the number of people that have $90,000 is already a small group. Now the amount of people that have $115,000 laying around that they can do this is an even smaller group. If you do this, understand, if you don't offer it, the currently appraised value of the homes that are out there has assumed that to be the case. They were all offering co-brokerage.
Speaker 2:If you don't offer that buyer contribution, that seller's contribution to buyer's closing costs, they're going to actually mark the value of your house down, because everybody else did. Because if your house is a $500,000 house and all the other houses that are $500,000 houses all offered a $10,000 buyer compensation for a mortgage, mortgage, prepaid, whatever, your house is not more valuable than theirs. So if they offer $10,000 each and they're appraised at $500,000 and you're not offering the $10,000, is your house $10,000 more valuable than theirs? It's not. The appraiser always calls us and asks us was there any seller's contribution? The reason why is, when they do it, when they're doing their valuation, they subtract that from the value of the house to the comp.
Speaker 1:Does that make sense? Yeah, yeah, guys, we've got to haul ass a little bit.
Speaker 2:We've got to go.
Speaker 1:Let's go on to the question and answer, but hold on. Well, let's go on to the question and answer, but hold on.
Speaker 4:Well, let me just. Let me just get through. Conditional termination is dispute resolution is hopefully you're never going to use it, ok. So the conditional termination provision is important. It protects the broker. Ok, it says at consumer's request, the broker may agree to conditionally terminate the agreement. In other words, guy's not happy, consumer's not happy says hey, I want to get out of the agreement, you can agree. And if you agree to this conditional termination, the consumer must enter into a written agreement to this effect. In other words, a termination of the buyer broker agreement and pay a cancellation fee of X dollars.
Speaker 4:My recommendation is if you think you are a valuable agent, you provide a good service and you speak the language and things like that you know minimally important things you might want to put something in here, okay. You might want to put a fee in here to cancel, all right. So you want to get rid of me after I've done a bunch of work for you, no problem. But you're going to pay me, okay, because I don't work for free, because I don't work for free. So then it says broker may void the conditional termination and consumer will pay the fee stated in the compensation section, which is up in section seven, less the cancellation fee If, from the early termination date to the termination date, plus the protection period if applicable, consumer contracts to acquire any property which, prior to the early termination date, was found by consumer or called to consumer's attention by broker.
Speaker 4:So what does that mean?
Speaker 4:This is so that they don't trick you into canceling and then turn around and buy a house that you showed them.
Speaker 4:Okay, so long story short, if you agree to a conditional termination, you sign the termination of buyer brokerage agreement, you collect your little fee 500 bucks, a thousand bucks, whatever the number is and then you find out that the buyer got into contract to purchase something that you had shown them or that they found themselves during the pendency of the agreement, prior to the early termination date. Then you can void that termination and you can insist on being paid your fee. This goes back to the young lady's question. Whoever it was, it was like how do I know if they just like listen, you didn't know before, but you got to keep an eye on it. So, houses that you, that you truly show, properties that you bring to the consumer's attention, or houses that the consumer brings to your attention that you then end up showing, you need to keep a list of those so that if and when you agree to these conditional terminations, you can then be checking on that.
Speaker 1:Whoever asked that question? My love, it's not practical. You're not going to be able to check every single house that you showed for every damn buyer. That's true. You got it.
Speaker 4:You got, you're going to have to know which ones they really like.
Speaker 1:But if you're working enough people I mean you're talking, that's a part-time job checking every damn property for the, for the team yeah.
Speaker 1:So listen, um, I gotta, I gotta. So we have sponsors real quick, all right. So we got max home inspections, all right. So a little bit about max max home inspections. We use them. My favorite thing about them is the 90 day um a guarantee. So if you close on the house and you don't um and something happens 90 days, within 90 days like the dryer, you know the air conditioning falls apart. It's kind of covered in towel. There's a 200% guarantee same day inspection, free inspection, warranty inspection now, pay later. So you can do the inspection now and pay at closing. Free home binder, free repair estimates, easy schedule and posting. So these are the guys that we use as a firm and they've been great. They're the largest inspection company in the state of Florida. So yeah, max Home Inspections.
Speaker 1:We got Coral Gables Title, our title company that Richard and I have. Again, it's to have his knowledge there. No, he's not going to be your attorney If you send work there. That doesn't mean that, but it does mean that you could. You know, if things get tough, you do have somebody who actually knows the business. Is this camera I'm supposed to be looking at? So yeah, coral Gables title. So we got Ace Investor. Ok, the Master, close for Life, the Mastermind program, which is $20 a month to get access to the Cadillac. It's that one. Now, all right, great.
Speaker 1:And my commercial is I'm looking up to hire, you know, actually, guys like you guys that actually spend, you know, three hours, four hours, you know, trying to learn the business. I want people that care about the business. I'm done with these part-timers that don't care. This industry is changing, so what I'm looking for is brokers that actually care and want to get better and want to make money and want to make the adjustments. So where would they hit me up? Kevin, I guess, or what? At Real Estate Empire Group Instagram and yeah, and also, and we also have a podcast together um, us, us three, we talk about stuff like this. So it's at real talk, at re talk, at re talk podcast, all right, so, um and um. So yeah, give me a call. All right, last thing we got, we got to cover the question and answers.
Speaker 2:Well, I richard is vast majority of questions. Richard is is the rock star. I mean I listen to him more than anything. But uh, they are as a request and it is the last little bit, section 14, the bottom. Yeah, I want to definitely take and cover that, um, because we actually already have a request so so what they've done.
Speaker 4:If you you recall, we talked earlier about how, if your buyer, the consumer, commits to pay you 2%, you end up showing a property that the consumer buys and the seller was willing to pay 3%. You left that 1% on the table. Okay, and that's the fact. There's no getting around that, however, okay, and I don't know why the Florida Association of Realtors did this. To me, it's just a Pandora's box.
Speaker 2:They told me it was for the developers Right, that's really.
Speaker 4:So they have added in Section 14, and it's it's bolded and underlined OK. It says brokerage commissions are not set by law and are fully negotiable. Broker may not receive compensation from any source that exceeds the amount or rate agreed with the consumer. That's what we were just talking about. Then it says, however, consumer agrees that broker may receive separate compensation from the owner of the property for services rendered to the owner by the broker and for which consumer will not be responsive. Ok, so I don't have very many creative examples, but let's assume that you, as the buyer's broker, get into an agreement with the seller that you're going to mow the lawn, ok, or you're going to help them, you're going to stage the property for them or do things that for some reason, the listing agent is not doing, or maybe it's a for sale by owner type situation. Okay, you will be able to receive compensation from the seller directly, over and above the amount that the buyer is willing to pay you okay.
Speaker 4:But it has to be as it says here. For services rendered to owner by broker, Okay, and what those services are? No, there is no definition. There's no glossary or index of terms that I could refer you to. That'll tell you what it is. But again, for example, you're going to wash the owner's car, no problem. You're going to help them take down the satellite no problem.
Speaker 1:Marketing.
Speaker 4:Mow the lawn, no problem Marketing. But again they have a listing agent, presumably, or they might. It's got to be things that listen. If there is no listing agent and there's no listing agreement, because again I don't know why you wouldn't do that, but it's short, it could be marketing.
Speaker 1:But just so you know. So there's a lot of cases where there's even a button on the MLS where you allow other people to advertise your property, right, you click here and you say, hey, other brokers are allowed to advertise their property. And this happens because if I'm selling, right, I'm marketing where I know how to market. But there's a Colombian broker, for example, that his specialty is, you know Colombian buyers, right, and he has a network of Colombian buyers. I'm going to allow him to market right To Colombia, to his network. Now, this might mean that he might have to spend a certain amount of dollars and might do a convention over there. And it happens with developers a lot too. Right, where it's you know, you go to Colombia and give a presentation on the project. So I think marketing, you know, should be a you know.
Speaker 4:Yeah, and it could be. It could be. I'm not saying it's not. What I'm saying is a seller the owner of a property, is unlikely to agree to compensate a buyer's broker for a service that their agent should be rendering to them. So it has to be some. It has to be a scenario where either the there is no listing agent or B it's something like you're describing where it's some extra service right that the listing agent can't provide. Or won't Right, or won't, so you know you are entitled to do that.
Speaker 2:All right, so a couple of quick things. One, alicia, on what you're saying. It will require a modification of your listing agreement to take and change the compensation that you agreed to with your seller to have you represent both sides that the buyer doesn't want to take and pay you. The other thing would be, I think really what was explained to me this is designed for developers. Instead of offering these accelerated compensation levels that they have, typically, developers offer extra compensation to agents Like a bonus.
Speaker 1:It will be a bonus, bonuses are their way of screwing the broker out of out of it, because a lot of these people are like well, I'm going to pay you x amount of commission and a bonus that the only reason it's called a bonus is because they think that you know they, they could get away from you know they don't have to pay a split on it basically?
Speaker 1:no, they do they absolutely well. They do, but that's just why they do it, because a lot of these people have brokers coming to me all the time with that.
Speaker 2:So what developers are going to do to try to keep their thumb on the scale with agents showing their properties over others is going to take, and instead of offering accelerated higher commission splits, they're going to offer a commission plus a finder fee or some other bonus type thing to take and provide the buyer. And that's how they're going to try to get around.
Speaker 2:That's why that's there, that's why I, that's what I was told, why that is there and, frankly, to me it lies in the face of keeping the thumb off the scale, which is what they were I think was part of what they were trying to do is to keep the agent's thumb off the scale of steering the buyer toward-.
Speaker 1:Now I was texting and I was not paying attention when Richard was reading that section, so I apologize if this is a super stupid, but doesn't that contradict with if they're offering two right and I go ahead and put two and later on I'm able to negotiate 3% commission. I'm not able to do it my exact words.
Speaker 2:When I saw that that because that was the big change in the buyer brokerage agreement when I called their legal counsel, I was like what the hell is this? Like, all the guidance I had is exactly what rich everybody I've talked to the exact you can't get an extra nickel above right. What's in?
Speaker 1:it contradicts.
Speaker 2:They just pulled the pen in the hand, grenade tossed in the middle of the room and kind of ran away on is what it looks like.
Speaker 1:It leaves an opening to be able to charge warren, right, richard? I mean, it's a shitty document. Everybody's agreeing on it.
Speaker 2:Right leaves yes, it leaves an opening for the broker to be able to receive compensation over and above what the consumer agrees to pay, and what which has not been disclosed up front clearly, and and that was all part of the settlement was that the amount of compensation the agent was going to get had to be clearly defined before they showed the first property. I mean, it was all. So, even this document, which is the best of the ones that I think that we have, I think it's a flawed document because that line.
Speaker 4:I couldn't agree more.
Speaker 2:I'm going to leave you guys to Q&A.
Speaker 1:OK, we don't have. How do we? Can you guys read the questions over there? Okay, yeah but, let's. Let's maybe Richard another 10 minutes. 10 minutes, all right, let's do it all right, josh, no, no, no, he's out yeah, I gotta, I gotta go.
Speaker 2:Thank you, no problem, my pleasure all right, throw me the questions.
Speaker 3:Ellen wants to know hi Ellen, what about? Developers, offering developers, offering buyer agent additional incentives. We just talked. That's exactly what we just talked about.
Speaker 4:That's in Section 14. The new buyer brokerage agreement contemplates that a broker may receive a compensation over and above the amount the consumer has agreed to pay for services rendered to the owner and for which the consumer is not responsible. And that's the thing. What those are is anybody's guess. Like I said, you mow the lawn, you wash cars, you're going to help me stage it, you're going to help with the landscaping.
Speaker 2:whatever the case may be, that's the important thing I think I'm sorry to butt in, but it's not co-brokerage compensation. It's not from the other broker. It's not from the other broker, it's directly from the owner and that's who they're contemplating is because the developer sits there and, as the owner says, hey look, I want to give you an extra X On a normal listing. I don't have any seller sitting here saying hey, josh, you did such a great job, we're going to buy her. I want to give you an extra.
Speaker 4:X, that's right. It's not from the seller's broker. It's from the seller themselves, not from the seller's broker.
Speaker 2:It's from the seller themselves here from Susan.
Speaker 3:Susan asks the Board of Realtors consult with other states outside of Florida to the effectiveness of those states and their longstanding broker agrees.
Speaker 4:I'm not a part of Florida Realtors, so I don't know the answer. I assume that they communicate with their counterparts in other states, but so I don't know the answer. I assume that they communicate with their counterparts in other states, but I really don't know.
Speaker 2:I can tell you that as a real estate commission, we do that.
Speaker 4:There's an annual conference called Arello. That's a conference where real estate licensing officers, like commissioners, basically get together and talk about what's going on in different states or in their state.
Speaker 1:Yeah, I doubt it. That's my answer to that.
Speaker 3:And then they're asking about Michael's asking. Well, first are we open to doing this event in Spanish?
Speaker 1:Yeah, I'm opening to do it in Spanish. He asked that question in English. Sí, google Trans English, sí, google Translate, sí, vamos a hacerlo en español. Lo único que perdemos a Carla si lo hacemos en español, así que por eso empezamos en inglés. Pero si Richard quiere hacerlo en español, lo podemos hacer en español.
Speaker 3:For clarification, if he wants to know. Is it a law or rule that we need to have a broker agreement?
Speaker 4:That's a great question and, like I said, the requirement of the buyer brokerage agreement is not codified. There is no statute or law that requires it. It is a function of the settlement and the National Association of Realtors got into the settlement, in what they'll tell you, to protect their members. So if you are a member of the National Association of Realtors, you are covered by the settlement, but you have to comply with it. Okay, if you're not a member of the National Association of Realtors or you just don't want to comply with it, you don't have to. Might you be sued? Yes, you might. And so, again, everybody can figure out if they want to roll the dice or not. So it's not a law.
Speaker 1:No, it's not a law. It's a stipulation of a settlement. That's correct. That you are a party of, if you are part of, the National Association of Realtors, if you are a member of the National Association of Realtors.
Speaker 4:If you are a member of the National Association of Realtors, you are covered by the settlement. If you play by the rules Correct, so that nothing you've done in the past can get you in trouble If you are a member of the National Association of Realtors and you do not abide by the settlement you can be sued.
Speaker 1:Got it Okay. You want to switch mics. They want to switch mics.
Speaker 2:Oh, got it. Okay, you want to switch mics?
Speaker 1:They want to switch mics? Oh, got it. Who said that? The people yes.
Speaker 3:The people have spoken.
Speaker 1:The people have spoken, All right.
Speaker 3:So Michael Davis is asking should we modify our existing listing agreements to cross out compensation fields in the initial day?
Speaker 1:They already did. The new one that came out I think it came out today or yesterday, yesterday, it came out recently, but yesterday there was one that came out yesterday that that um that changed, that made those changes already. So check, check um form simplicity or whatever Um, and it should be, it should be already changed, yeah All right.
Speaker 3:So, larry, can we offer to the buyer that they may choose for the buyer agent to decline showing any properties that are not paying buyer's commission? No, you can't do that. You can't.
Speaker 4:Yeah, yeah, yeah.
Speaker 1:Well, that that OK.
Speaker 4:But OK, so, if you, so, if you do that, if you say, hey, I'm not working for free, right, I'm only going to show properties that pay commission, but that's not no, because the buyer's agreeing to pay you your commission, irrespective of what the, but I know my buyer doesn't have the money, then that's the issue, though that's the issue that's precisely I have a buyer that does not have the money, by the way, Richard, like fucking 98, 99% of buyers.
Speaker 1:That's why they're first-time home buyers, so they don't have the money to buy unless they get seller contribution or anything. I say to them, hey, all right, you got to pay me this 3%, but I'm going to go and bust my ass to go get the 3% for you, right? Am I breaking the rule by only showing properties that pay the commission?
Speaker 3:That's what that person is asking right, yeah, the second question and the same question. He also said the buyers would have to agree to the stipulation to avoid steering before this.
Speaker 4:So I see everything in writing. Yeah, I mean, listen, this is a clusterfuck. It's better to have it in writing than it's. My advice would be yes, get it in writing. My advice would be Get what in writing? Yeah, that the buyer's okay with only being shown properties where the seller's paying commission. But again, the buyer is not the aggrieved party in that issue. That's what's being missed here, guys. The aggrieved party in this it's the sellers Right that we're taking advantage of this entire issue is the sellers.
Speaker 4:So now what you're doing is further disadvantaging sellers that now want to avail themselves of the settlement. So, and I'm telling you now, large brokerages, many of them, are literally telling their sellers to not offer any commission period. End of story. That's what's being told, Like if you're a seller and you're being told-.
Speaker 1:They can do whatever they want right now, but they're going to have to play the game that. I think that's an enormous mistake, because you are getting away from, from, from from these first time home buyers. So they're going to I suspect they're going to. They're going to, they're going to pull back it just depends on the market, man.
Speaker 4:It just depends on the market. If your house is the type of house that a first time home buyer buys, then listen, you probably have a greater incentive to offer compensation to the buyer's broker. If your house is in fucking Cocoa Plum, okay, or you know Westin or these high-end neighborhoods, I think you can avoid it.
Speaker 1:Absolutely, absolutely.
Speaker 3:Next question. All right, so Yanni wants to know can the buyer broker agreement be signed using DocuSign or does it have to be physical pen and paper? No DocuSign.
Speaker 1:No, DocuSign is fine. Docus sign is legal nowadays. It that? When was that that changed? Like what? Like 20?
Speaker 4:years ago or 10 years ago. There's a statute on it. There's a statute on it that that it doesn't say docu sign is legal statute that says that if you agree to conduct business with electronic signatures, they're valid correct john dow once said john dow john.
Speaker 3:D-O-W-D, but NAR can enforce this upon its members as a condition of membership.
Speaker 4:They can. I'm not an expert on NAR membership rules. I'm not a member of NAR, I'm not a real estate licensee, I'm a consumer member of the commission. So I have no idea. Sounds right to me because obviously they're a private entity and they can have their own requirements for membership.
Speaker 1:But they're not going to police it. At least so far that's what they've said. They're not going to check and knock on every door and see if every house you've shown has a buyer broker agreement.
Speaker 3:I agree, yeah, all right. So Robin asks can your buyer broker agreement say 3%, but on line 13, write in that you will accept less if the seller offers less. You understood that. Say it again. Can your buyer broker agreement say 3%, but on line 13, write in that you will accept less if the seller offers less.
Speaker 1:Well, I don't think you have to write it. I mean, if they're accepting less than no, no, no, no.
Speaker 4:The question is can you make the buyer feel better about the fact that you're not going to charge them the extra 1%? And the answer is yeah, you could do that. Or you could just not charge the extra 1%, you could just tell them that, Of course, if the smart buyer is going to be like, well, write it down.
Speaker 3:The answer to that is yes. All right, Jose asked will E&O cover silly mistakes as this gets figured out?
Speaker 4:That's a great question. It's going to depend on the policy.
Speaker 1:I didn't even think about that. All coverage issues depend on the policy.
Speaker 4:Good one, jose. I didn't even think about that. More shit to stress out about. All coverage issues depend on the policies, but it's a good question. I really don't know the answer. Yeah, it's so good, and we don't have the answer.
Speaker 3:A different. Jose asks regarding section eight, the protection period. I understand, richard, that the last line negates the protection if the buyer signs another buyer broker agreement with a different broker. Is this correct? That is correct. If yes, what protects the original broker from a buyer waiting for the contract to lapse and to sign a new one on day 61 with their cousin?
Speaker 4:Nothing, especially if the cousin is going to charge less than you are going to charge Nothing, especially if the cousin is going to charge less than you were going to charge Presumably. You know again, unless it's a cousin, someone with no interest in making money, the only incentive for a buyer.
Speaker 3:to do that would be that they found a buyer broker that's willing to work for less money. All right, michael wrote again. He just wants some clarification about the listing agreements that exist before. That's just the.
Speaker 1:Yeah, I haven't even read the new one, man, to be honest with you. I know that there was changes. I know that there were specific changes on how the commission, how the whole cold broke thing and it was. It was just kind of specified. It was updated to include all this crap, but I have not read it. It was literally. It was sent to me yesterday At the end of the day.
Speaker 3:I didn't feel like I think for new or existing listings are just a disclosure right.
Speaker 1:There's supposed to be a disclosure that you're supposed to sign for all existing listings, all existing contracts. I don't understand how they're going to. I mean, if you're already in contract, how are you going to force somebody to sign some sort of addendum or something like that? So yeah, I don't know. I don't know.
Speaker 4:Guys listen man.
Speaker 1:Whoever tells you they know everything here is absolutely lying. These things are changing as as we go. You know, so you do. You know we're going to do our best and we're going to follow as many rules as we possibly can.
Speaker 3:So let's do three more, all right, so we lloyd. He has an example. I represent a buyer. Buyer has a max five hundred thousand dollar buying power. We find a house. The lowest offer agreed is 500, but seller refuses to pay my commission. So effectively I have two choices walk away from the deal, or my buyer loses the home or work for free.
Speaker 4:I'm not sure that that's a question, so so so first of all a question mark.
Speaker 3:Yes, he did.
Speaker 4:So so first of all, you're going to have a buyer brokerage agreement in place before you show the property. So the buyer is committed to paying you the commission. He can't afford to pay the commission. That's a problem. You have a cause of action against the guy. So if he closes, he owes you the money. So you might have to sue your buyer. I mean, that's just the way it is.
Speaker 3:Yeah, michael, to answer your question, there's going to be a disclosure. He keeps asking about the existing listings.
Speaker 4:Michael, can we just trouble you to use your form, simplicity buddy, and read it. I mean, it just came out.
Speaker 1:Yeah, what does he want us to do? Exactly?
Speaker 3:He asked again previous listing agreement with seller that stated compensation in a listing with seller. His name is Michael. Yeah, michael read it.
Speaker 4:It's been removed. The compensation for the buyer's broker section has been removed. It is no longer in there.
Speaker 1:Yeah, and Michael reaches quota of 10 questions. So let's go, let's move on to the next one. Let's not even count, let's do two more.
Speaker 3:I think we're out Great, wonderful, awesome.
Speaker 1:All right guys, thank you, reach out to us for all the stuff that we said that we can do, all the commercials that I did. Everybody will get a video email, so thank you.
