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all right you ready to start I'm ready to start okay today's lesson we're going to talk about the exclusive buyer agency agreement now keep in mind we're in the agency section and so part of this section will be not only understanding agency but also understanding the contracts that go there with and so to start off with I know it seems like a minor thing but I wanna start with the name of the aforementioned well keep it in mind the fact that we've already talked about the working in real estate agency we've talked about creating verbal buyer agency and the fact that verbal buyer agency has two problems one is that it is not binding and secondly you can't bind someone for a period of time both of those can be taken care of in the exclusive buyer agency agreement and by binding someone I mean you're going to get paid if they find a house during the course of this all right so when I want to make sure that I / my firm are the ones that the buyer has to use and that I'm going to get paid this is the form that we want absolutely that's the essence of exclusiveness and in fairness to the buyer I think we owe it to them to explain that that's what they're signing okay makes sense to me all right well I always think that one of the most important parts to point out to people is this idea that this is not a contract between me and the client it's a contract between the buyer and the firm the firm is who they're actually hiring so if for some reason I decide to get out of real estate or I join another firm there's not a guarantee that I'm gonna be able to take my client with me that's something that they need to you need to talk to your Vic about what happens when you join a firm if you leave or go out of business what that just needs to be a conversation yeah and completely valid and important point because we know that the Commission tests on your understanding of this remember all the things we talked about in our notes for example what happens if an agent of a large firm dies I don't want to be morbid but the fact is that the firm retains the the listing in this case the buyer are listing also as I Candace said if in fact you leave and go to another ferm it's not it's not automatic that you can take that buyer with you because you know the the buyer always belongs to the firm according to this agreement true all right so our next section what I think it's important to point out is that the buyer is saying yes I did get the working with real estate agents and they're also saying I'm not working with another firm right again hugely important because just because you're not with your buyers on weekends doesn't mean that they're not out looking at real estate so the question you're asking here is have you already entered into this agreement with another agent it would be a bad situation in most cases if a buyer was under multiple exclusive buyer agency agreement so this is where we're asking them and getting getting their acknowledgement of it okay our next section we have a box where we're saying hey am i helping this buyer find a residential property and let's go ahead and say residential property or am i helping them do a commercial property and what they just need to do is check one or check both yeah and as we talked about a little bit earlier although exclusivity you would normally not have multiple exclusive agency agreements do you see here how it would be possible that you would have a multiple exclusive agreement so for example if I were to do a residential transaction I would most likely want to do a transaction with someone who specializes in our residential having said that oftentimes people are moving to our area are also buying a business here they might would want a separate agent for our commercial so hey it's actually possible that they would have multiple exclusive agreements that would make sense based on the type of property they're looking for I also think about well what happens if I have somebody who hasn't decided between Wilmington and Raleigh so when you've got this general location section maybe you're putting in Raleigh maybe you're putting in Wilmington I mean you want to talk to the BIC about how do I fill this out to best protect our interests because even though I live in Raleigh I may not want to be selling a house in when Dale because I know nothing about window so just a good point we should know that how you fill out the type of property is going to have a big effect on how and when you get paid yes in most cases people overlook this but it could be very very relevant if you later try to enforce this agreement on someone so next we have the effect of the agreement which I just go ahead and point out to the client you know what once you sign with this with me you are going to have to do all of your business with me so it says here by employing the firm as the buyer's exclusive agent the buyer agrees to conduct all negotiations for such property through from and I think really the key word right here is going to be all everything they do including new construction has to be through this farm yeah from a value-added standpoint I think this is whereby your agents say hey look you just go live your life let me handle the negotiations I will be working in your best interest so let me handle this so you can go and go about your daily routine next section are duration of agency it's actually pretty straightforward however one of the reasons that this is in here is simply because agency agreements agency agreements are types of contracts and contracts have to have terms specifically spelled out so it would not be appropriate to have a firm that was just open-ended so what the Commission requires is that there be a start date and an end date in all agency agreements so for test purposes you will see this come up multiple times in fact what does it the Commission require in all agency agreements well I like to point out that there's five separate things that have to go in all agency agreements all agency agreements have to be in writing now again you have to remember the slight exception with the oral buyer agency agreement but even that has to be reduced to writing no later than the offer to purchase right yeah has to be in writing all agency agreements and must have a start date and an end date they must have a start date and an end date they cannot be automatically renewable they cannot be automatically renewable unless it is a property management contract but that's for another video yes correct however it is always important to note the differences because that's where that's prime area for test questions all agency agreements must have standard non-discrimination language fair housing language right you'll see that later than actual emanation language perfect and all agency agreements must have your license number and so you will see that at the end where you put in your license number as the agent who procured by okay so we know that has to be there and in this section three duration of agency this is where we have a start date and that end date perfect so maybe the most important part of this form is the compensation of the firm compensation of the firm so a really this is something you can talk about later once you get hired are you going to charge a retainer fee is somebody gonna pay you just for you to help them look start looking for houses and if you do get that retainer fee do they get it compensated or they get it credited back to them at closing or not so that's a different conversation we do one of our training videos should you charge your retainer fee so you you shouldn't the big part the big part of this is going to be B so why don't I let you go ahead and talk about it okay now keep in mind you're looking at the buyer's agency agreement and as we'll talk about in this class as we have surrounding agency how you are compensated does not determine who you work for what determines who you work for or your agency agreements so what we're putting in for B is what we anticipate that we are going to make by being a buyer's agent in this transaction it's not uncommon in our area for there to be a certain number that we see come up I'm not going to guide you on what those odd numbers are but for this example can we say I want to get 5% for example we can absolutely use that so I'm going to say 5% of purchase price you gotta love my handwriting and notice there are some guides down here it tells you you could put in the percentage of the purchase price it could be a dollar amount you're gonna figure all of this out when you have a good training class right yeah I think the key there is this is what we anticipate making in this transaction but then it gets really interesting because we are typically paid out of the sellers in at a transaction so when you go down to the first little one there that little eye the firm shall seek the fee from a cooperating listing firm or from the seller if there is no listing firm and most important so much so let's put that in a different color the buyer agrees that the firm shall be entitled to receive nope that's not what I want to say so I'll stop where I said and most important yes yeah I'm gonna pick up on that point so in 4b 1 basically you're saying hey look in most cases I'm gonna get paid by the the listing side of the transaction whether from the seller or from the listing agent but then when you jump down to - is it - mm-hmm it does actually suggest you the buyer here that if I'm going to receive less than what I suggested remember 5% a little bit earlier if I'm gonna receive less than that or if there is no compensation offered by the seller or the listing agent then the buyer will in fact pay me for the 5% now is a huge point I don't care if it's for the test or real life I really do think that buyers should understand I'm going to try to get paid from the listing firm or the seller but you're a green buyer that if that is not 5% if they're only offering me 2% you're gonna pay me the difference if I just if you decide to buy a visible property of for sale by owner then guess what buyer you may end up paying me this 5% yeah not only is that important but I think it's fair then the buyer should understand that and too many times there's actually been a current lawsuit on this because a lot of buyers agents are using the verbage that says something to the extent of well if I agree sure buyer's agent you pay me anything and the interpretation of you don't pay me anything is kind of vague if you look at it it's coming from the cellar side well it's built into the transaction so technically is the buyer paying you and then certainly under the language of 4b to the buyer literally would pay you if there was no compensation offered so the agents need to be careful in fair I think about how to present this so our next section this is going to be for b3 this is again having to do with our licensing laws and Commission rules we know that the Commission says anytime that you're getting other monies you have to let your client know right so right here and here it says if additional compensation incentive bonus rebate or other valuable consideration is offer through the MLS or otherwise the buyer will permit the firm to receive it in addition to the fee but the firm also has to timely disclose the promise or expectation of receiving any additional compensation which is the fancy way of saying yes buyer you're green that I can have it but I also have to tell you in advance to receiving it that hey I'm expecting it we could spend a long time as a matter of fact we do in my class you know this is well that if I were you I would recommend writing in the margins here compared to rule 109 and when later when we talk about rule 109 we will go into extensive explanation of this rule 109 has to do with third party compensation and if you're the buyer's agent most often you are compensated by a third party and so we will spend a lot of time on that at a later date okay so our section C and I think again very important this whole first page is pretty important when it comes to testing is it yeah there's a lot that we will I fly through a little bit later but the first page page and a half really has some important language for real life and for test purposes industry so this is how you know you have gotten paid or that you will get paid because you have earned your commission when that buyer and we'll go ahead and highlight this directly or indirectly enters into an agreement to purchase option and/or exchange any property of the type described above so buyer if you agree to buy something if you buy something I've earned my commission okay let's put three points together to tie a tie together so first of all we have the exclusive by your agency agreement yep we have a period of time and then we have this comment here which basically says if the buyer buys anything regardless of how they buy it during the term of this transaction that I the buyer's agent am entitled to it so think for example someone goes to a first sale by owner and they say well I don't have my agent with me I don't have to worry about compensation maybe I can save a little bit of money well maybe they will save some money on the purchase price but then the buyer's agent has a right to go back and say hey I'm entitled to the 5% that we agreed to pay me extraordinarily important for buyers to understand that especially with our market where we sell so many new homes so buyers can be out there on weekends looking at new homes without their agents entered into a transaction if the seller doesn't agree to pay the agent then the buyer is on the line for that agreed to commission very well then what's going on in this section 4c - you know I don't want to spend a ton of time on that other than to point out that there is what we call it an extender clause or protection period clause and in regards to this there are circumstances they come up where a buyer may end up having a agency agreement that expires but they go back and purchase a property that the buyer's agent actually showed them during the term of the agreement if that is the case this paragraph actually protects the agent for their compensation and let's be honest about this buyers are not stupid if they're coming up on the end of an agency agreement and maybe they say hey if I wait another couple of weeks I don't have to pay the agent in compensation or the agents not going to be compensated maybe I could use that to my advantage to protect their clause actually extends that now keep in mind these are only properties that were shown to the buyer during term of the agency agreement and I like to point out that it's blank so it's whatever you negotiate great point right so moving on to page two again I think we should go ahead and point out what's really really important here and that's going to be that do not expect a check handwritten from your client to you just because you've found a property in fact we know if you're an agent especially if you are a provisional broker you can only get paid through your your BIC your broker in charge and the payment that payment is going to be due and payable usually at the sale or the closing or if the buyer defaults now again if somebody defaults good luck getting paid but legally if they were to default they will owe you that money immediately otherwise most of the time you're going to get a check after settlement when all of the parties meet and the monies exchange hands and then after recording after that attorney that's hired by the buyer goes through and records that the deed of trust the the general warranty deed then that attorneys gonna come back and write checks to the firm and then the firm's gonna go ahead and write you the provisional broker a check yeah it's interesting when we talk about the listing agreement we will revisit this because listing agents have some abilities that buyer's agents do not have I often tell the class exactly what you just said in just in a little different way and that is that if you don't close your it's not likely that you're gonna get paid even though legally you may be entitled to the compensation buyers are tip bars agents are typically paid a success fee and that means what it sounds like it means so notice you've got this blue note which means it's got to be something important and in this case I want to remind people about the Sherman Antitrust Act which says hey we cannot preset any kind of Commission's or fees or charges that's the Sherman Antitrust Act and there is no price-fixing so whatever you're getting paid is negotiable between you your buyer client and your phone you cannot say well the average in the area is this or what people normally get paid is that what I would suggest saying is what I am charging what my firm charges because you know what as I say in class all the time nobody looks good in prison orange yeah it's interesting that you bring up that part of the blue the part I bring up about the blue often times in my class has to do with the conflict of interest because I often ask my class I'll say hey would any of you ever be involved in a conflict of an interest you're an agent so you'd never be involved with a conflict of interest right and they all agree well no I would never do that by your agency is in fact a conflict of interest and the reason for that is I get paid more if I'm being paid on a percentage basis I get paid more the higher that the buyer pays for the property so literally I have to act against my own interest to try to get the buyer the best end of the transaction well I will say I do cover that but I usually cover it okay section five when we talk about other potential buyers I point out that hey buyer you you're working with me you've hired my firm but you're working with me and there could be 20 other people in my firm if you're looking for a 3-bedroom 2bath house under $400,000 any place in the Triangle there's probably a good chance somebody else in our phone is going to be looking at with a buyer at that house so there could be some conflict there and the other conflict is you know what the more offers are generally the higher price the house is gonna go and that means there's more money that the the firm is gonna get so they I want them to really to truly understand the conflict between other clients that the firm might be representing as well as if there's any kind of competition even if there's not the more they pay the more the firms are gonna get paid yeah yeah well stated I don't have anything to add to that perfect section six is the firm's duties and I mean you're going to go ahead and read this you already know what it says you're gonna perform all the terms of this agreement you're going to help them find a property at the price in terms acceptable to them but really what I like to when out is as presenting all offers in a timely manner right we're gonna make sure that we don't lose any monies so you know loads the loyalty obedience accounting disclosure of all information skill care and diligence not only do we have to provide that because it's you know agency law we're promising to do it and I know you've seen these words before you're gonna share all those material facts so this is literally just putting into writing what we already know something that we were are already going to do because we understand how agency works in North Carolina right want to add anything that nope all right moving on you've got section seven our disclosure of buyers name and mailing address now both of us being AdvoCare Allina fans go Heels if one of us had our house on the market and an offer came in from Coach K from that school named puke what would happen to your sales price price well certainly if I look at the name on the other side and I knew that they are well vested and have the capability it could affect my negotiating position on that and how strongly I'm saying that price is going up o heels yeh state you can't say anything about Duke but there's a chance that your client your buyer client doesn't want people to know hey I have a lot of money because of Oprah were to offer for my house I probably wouldn't be willing to negotiate because I know she's worth more than me so this is just letting them know if you're putting in an offer unless we make other arrangements your name will be out there I often cheat on this in the field and once it gets too complicated I just tell the agents to seek legal advice on this if someone wants to buy the property as an LLC a corporation or an undisclosed client then I just want to make sure that they have the capacity to be able to do it and the right people are saying that and the trust or the LLC is set up appropriately so I send them straight to the attorney on them my favorite saying in class is cya call your attorney there you go our Section eight you talked about earlier what did our section eight discuss well this is the standard non-discrimination language that I was talking about a little bit earlier a couple of things that are interesting here this is one of the five things that have to be in the agency agreement according to the Real Estate's I Commission and notice also that it's in all caps and a boat printed anytime that you see something that's like that in a contract that's it's because there's a corollary rule that says it must be set aside in such a way that it draws attention to itself in this case it clearly does if you'll read that closely you will notice that it does include all seven of the protected classes if you have not gone over the fair housing chapter yet then you that will become blatantly obvious to you at that time that there are seven protected classes but then notice also at the end there is a class that's not protected by fair housing laws but is in fact been protected under the realtor a code of ethics and it has to do with sexual orientation or gender identity that this contract we are also agreeing that we will not discriminate on that as well so section nine the buyers duties you know this is not the class that we're going to talk a lot about this but the buyer does a you know promise to do what they're supposed to do pay people be available for negotiations showings anything like that section ten talks about other professional advice and I think this is a really interesting point for statement what we do and what we don't do I've often told agents that on the buyer side we're more project managers is what we are and so we're aware we're going to help the buyer find the resources that they I need and we're also going to make it evident that they need to pay for these are resources for example home inspections surveys etc etc what are you pointing out there I am pointing out the fact that the buyer is advised to seek professional advice and the matters of law taxation financing insurance surveying wood destroying insect infestation structural soundness engineering prop building construction and other matters pertaining to any proposed transact right yeah you know it seems awfully wordy to say all that good gosh when you look at the offer to purchase at paragraph 4 of the offer to purchase it goes in the detail about these and you wonder why do we feel like we have to say this literally to the point why did the attorneys feel like it needed to be in here because people don't realize it and in fact we have to point out not only do they need to get those services they need to pay for them not one of us correct and then later down at the bottom of your 3 bullet points you'll see there is a form there that we recommend the professional services disclosure in election form that actually allows you to when you when you recommend a service have the buyer acknowledged that they either would want to choose that service or waive their option on that again it seems like it's a lot of time and effort to spin but there have been lawsuits based on the fact that well why didn't my agent suggest that I get a radon inspection a structural inspection etc etc again other professional advice here there are people that are better versed than you as an agent as an agent let's turn this into a test question and remind you of this agents are responsible for what they know or what they reasonably should know is true if you're not changed in law or structural integrity you should not comment on those topics so they're not responsible for the latent defects but they are responsible for the patent defense yes and we I mean we have this professional services disclosure in election form but as a great agent you're gonna make sure that you give them the offer to purchase and contract the questions and answers on home inspections which is written by the Commission and of course that professional services disclosure and election form right so a home warranty how do you explain a home warranty to people well to be quite honest with you I don't spend a lot of time on in the buyer agency agreement other than to say that this may be something that we want to consider in regards to our negotiations oftentimes we can get a seller to provide one if the buyer would like one we will discuss that and talk about some of the options that are available there but this will be a significant part of the negotiate at the time of the offer it will and if we're looking at it from a test point of view we do like to remind you that any kind of monies that we're taking we've got to let the buyer know a great point going back to rule 109 oftentimes there are compensation from these third parties that we would have to disclose if you choose to take them great point all right so confidentiality of offers now Chris in your opinion what are the chances that they're going to have a test question on this 100% 100% and it's interesting if you read this paragraph it's actually misleading because during class we will talk about the fact that as agents you will not disclose the terms of competing offers is that rule 115 I think it could be real 115 but we can look that up we've got up a little bit I later I promise you we will nail it down in my class and here's why notice again what the language was the language says that agents will not disclose the terms of competing offers without the permission of the person who made the offer now when you read this paragraph it tells the buyers not to assume that your offer is confidential well that doesn't make sense if we just said that agents couldn't disclose the terms of competing offers how are they not considered confidential what could happen tellers could disclose it that's exactly right I was could disclose it so don't assume that's confidential but I promise you it won't be an agent exactly does it okay well moving on we've got our additional provisions which you know what since this is pre licensing I'm gonna tell you don't touch it okay that would be my first at this point please don't touch it and then we get to dual agency so we know from previous classes that there's different roles we can have as agents we could either be an exclusive agent or a single agent we could be a dual agent we could be a designated dual agent or we could be a seller sub agent that's working with a buyer and although we've taken this class and we understand all of this when we're sitting down with our clients we need to be clear that hey buyer what you're getting ready to with me is an exclusive buyer agency agreement you're hiring my firm and my firm will exclusively be looking out for you however there is a chance that you might want a house that is being listed by our firm now you've got a buyer you the buyer who's being represented by our firm and then you've got the seller also being represented by our firm and that would be dual agency and if it's dual agency we know that we must have consent in fact as the buyer's agent whether it's oral or written you have to have that permission before you can even show the house there are so many places on the test that this is going to come up we really can't get into all of them right now however in working on the buyer agency agreement one candidate said is exactly correctly in fairness and if you want to write down another law ninety eight nine ninety three a 6-4 says that an agent cannot work for more than one party in a transaction without the consent of both parties so what we're asking here is hey buyer if dual agency comes up will you allow us to do that I will say I don't always love the way that attorneys write but the dual agency paragraph is very very well written it is to explain this so in class I usually like to point out that when you're the buyer's agent you're going to have your buyers either say you know what yes you can be a dual agent or they're gonna say no you know I don't want dual agency I want exclusive representation there is never a time that you're going to check both this line and that line or they're going to initial it's either one or two either they're signing on the first line or the second line perfect now if they choose this first line and said yay to do a dual agency they get to choose whether or not they want designated agency so a buyer could possibly choose the first line or they could choose the second line or they could choose lines 1 and lines 3 okay and what I meant by we would not cover it a lot in this lesson is that we spend a lot of time in class talking about what it takes to create dual agency what it takes to create designated agency the advantage of designated agency so what Candice is pointing out here is the technical part about about how to complete it now as a broker in charge haven't seen hundreds and thousands of contracts as hundreds and thousands not a hundred thousand but I've been seeing a lot of contracts I see that this is done incorrectly canvas you know what the most common mistake that I see what is it all three of them ah initialed now here's what I know about that an agent did not explain to agency if I client initialed all three of those they didn't understand what they didn't understand it my guess is probably what happened was that they were doing a document or dot loop document you know lectrons igniter and they just clicked and scrolled clicked and scrolled now keep in mind not to describe to you a little bit earlier that dual agency undisclosed to agencies not just a against the Commission rule it's against the state law it is a class 1 misdemeanor so it's possible something that you could be fined by the courts for an undisclosed dual agency and you would almost certainly forfeit your compensation if you were in dual agency without being formed consent of the parties this is extraordinarily important this is very important and I gotta say on a personal note it drives me batty when people can't get this right I agree with that okay moving on to our section F the dual agency compensation go ahead with that I'll make this a really brief for you the dual agency compensation no one understands this paragraph so I'll explain to you what it means and then in the future if you're ever working for me what I'll do is I'll tell you what to put in there and just let it ride keep in mind we're looking at a buyer agency compensation and we owe it to the buyer to disclose to them the extent of the third-party compensation that we are receiving in a transaction so Candice mentioned a little bit earlier as agent I'm expecting to receive 5% well in a dual agency situation my firm remember it's the firm that is the the party that's involved in this transaction the firm would actually be receiving maybe 10% so what we disclosed to the clients here is the extent of how much the firm will be receiving only if dual agency applies so Ken that's right 10% there so we'll have a placeholder for it all right put 10% okay if dual agency does arise then that's what we expect the firm to receive now I promise you 100 percent at a time if a buyer looks of that line they'll say wait a minute why are you making 10% in this transaction you'll have to explain to them that the 10% will most likely be split between you and a listing agent but this is a requirement because the the rule 109 does state that you have to give the full extent of your third party compensation and that's all we're doing there all right so let's just finish this contract up the mediation just says that you know what buyer if there's a problem let's try to mediate it before we go to court we know this is the entire agreement so any changes that are we want to make me to be written surveillance now actually when we get to a post licensing class I think we should talk a little bit more or a cej but keep in mind that the law say if you're going to be recorded you have to give permission for oral for the audio somebody can record you and it can be visual right but the audio you have to get permission for that yeah and I would think in this day in time this may be just a tip for you I doubt seriously if it comes up on the test but a tip for you if you're acting as a buyer at this point you should assume that you are being videoed while you're in someone house today is so it is so simple to do yes and then our fede photographs and video says you know what there could be video there could be photographs and buyer you can only take a look at things that are in plain view this is not the time to go snooping under people's beds now opening a cabinet to see how much space there is that's one thing but opening somebody's underwear drawer not allow yeah okay and then our wire fraud warning wire fraud I've got to say it's been pretty bad lately and you just want to remind your buyer that if they get any wire and wiring instructions they need to call and confirm with the Attorney's Office whether it comes from the attorney or us as agents there's a good chance if it's going through email it's fraudulent always do all of your white ear off did I say your wire fraud stuff but we always do your wiring your bank wiring information via phone call yeah I'm getting ready to do a transaction a personal transaction right now and I am so paranoid about this that I will literally probably be on the phone with the attorney at the time that I'm doing the wiring just to make sure that we have no no discrepancies in that and then having said that the other way that you know that this is important is it shows up in every agency agreement it shows up in the offer to purchase and a lot of firms actually have a separate wire fraud warning so that the buyers are acknowledging this and you know what buyer still will occasionally fall for scams there may not be a way to get their money back all right in our last page is where everybody's going to sign remember if it is an entity buyer they're going to sign on behalf of that entity they entity there and I think that's pretty much it anything else you want to add to this just the only thing I'd like to add we told you that there were five rules and you've seen them by at this point that they have to be in writing they had to have a start and an end date it had to have standard non-discrimination language it can't be automatically renewable and look at the last page there where it allows you to put in your license number why well because the real estate commission said so and and actually that's an acceptable answer if the real estate commission says so by rule then you have to do it okay well I hope this helped is pretty much covered anything you may see reasonably on the pre licensing exam now again you are responsible for the whole form but these are the major points that I think come up a lot yes yes and I'd like to reiterate what I said at the beginning and that is simply when you're came at this forum please always related to something else we talked about in class we did not do service to do agency in this because we were talking about the mechanics of dual agency not the theory of do agency which was a whole two hour lecture in and of itself relate it back to something that we talked about in class maybe we'll do a lecture on that later video recording okay you know I have a great day