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Recommended Steps Prior to Discussing the BRBC with a Buyer

by | Apr 12, 2024 | Advisories and Forms, Agent Liability, BLOG for May Webinar, BLOG POST, BRM Bay East Presentation 11.7, Broker Practice, Commissions, Contracts and Forms

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

The NAR settlement remains the most important issue facing real estate agents.  That agreement is gaining importance because, once the settlement goes into effect, a BRBC will be required of all MLS participants prior to showing properties to a buyer.  However, many buyers’ agents have historically chosen not to use the BRBC and are unsure how to start using it now. Many are reluctant to ask a buyer to sign a BRBC for fear that they may refuse and go elsewhere. 

 

Unless agents learn how to become comfortable discussing with buyers the “why” and the “how” of signing a BRBC, their businesses will be negatively affected.  BRM has prepared this Tip with the goal of assisting buyers’ agents to establish their value to buyers in an effort to obtain signed BRBCs.

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It will likely be difficult for many agents to request the fees that have traditionally been paid by the seller’s broker if the agents cannot sell their own value proposition.  If you cannot determine and communicate the true value of your real estate services to buyers, then you cannot expect buyers to value your services enough to pay for them.

 

The discussion of your value should take place before any discussion and negotiation of compensation and before the introduction of any type of written agreement.

 

TRUST:  Before you can ask a buyer to commit themselves to work with you, you must establish trust with the buyer.  Establishing trust is a two-step process.

 

STEP 1: INTERVIEW BUYERS REGARDING THEIR NEEDS AND WANTS

 

Professionals establish their value by having an in-depth conversation with their prospective buyers in which they:

(1) determine the buyer’s actual needs, wants, concerns, and questions; and

(2) determine and communicate how you are going to accomplish the foregoing.

 

It is essential to learn what knowledge and experience your prospective buyer has with regard to purchasing property.  Also, your prior experience with the buyer may impact the type of discussion that you have regarding your value proposition.

 

You need to learn each prospective buyer’s needs, wants, and concerns as quickly as possible. One way to gain this knowledge is to ask the buyer whether they have any particular subjects or questions that they would like to discuss with you.

 

Another way to gain the requisite knowledge about the prospective buyer is to ask: “What are you looking for in an agent?”  (i.e., First rule of selling: Ask the client what THEY want)

 

Develop a Buyer Presentation package similar to your listing presentation package.

 

  • Prepare your CV emphasizing your skills, experience and unique services focusing on your history representing buyers.

 

  • Ask the buyer to fill out a Buyer Needs and Wants questionnaire. Create your own questionnaire or use an industry standard form.  For example, the PRDS Buyer Needs and Wants Assessment form being used in the Silicon Valley area is an excellent example of such a form.  (NOTE:  The PRDS form is copyrighted and can only be used by PRDS subscribers.) CAR will be introducing a similar form in June.   If you create a questionnaire, ensure your manager or broker review it before utilizing it.

 

  • If you use a questionnaire, or ask the questions yourself, you need to ensure that you keep the buyer’s responses in mind moving forward so as to address them during the process.

 

  • If a prospective buyer does not have a solid understanding of buying property, and/or you want to discuss activities that will take place in this process, consider breaking down the agent and buyer activities into a timeline.

 

  • With inexperienced buyers, or those without recent buying experience, consider having a set of the standard types of transaction documents so that you can demonstrate your knowledge of, and experience with, the forms that the buyer will receive or use during the purchase process.

 

  • Determine if your buyer needs a referral or has access to qualified professionals, lenders, contractors, inspectors, etc.

 

 

STEP 2.  COMMUNICATE YOUR VALUE PROPOSITION

 

Many articles identify lists of the many tasks that a real estate licensee can perform at various stages of a transaction.  The import of these articles is arguably to establish an agent’s value by showing buyers a list of the various functions and tasks that an agent might perform. However, a task-focused definition of a licensee’s value does not consider the perspective of the buyer you are interviewing.

 

A buyer’s agent’s value to the particular buyer must include the knowledge and experience of the agent in representing this buyer in the specific type of transaction for this buyer.  Also, the knowledge, experience, needs, wants, and concerns of the prospective buyer will form the basis for determining and communicating the agent’s value in representing that buyer.

 

If you are going to identify specific tasks to be performed, explain whether you will delegate any of that work to an assistant, a team member, or another agent; if so, be prepared to explain what work will be delegated, to whom, and why.  Set your client’s expectations upfront.

 

Develop a Buyer Representation Program

 

  1. Develop a Buyer Representation Program that is exclusive to you and customize it for each buyer. See the example Buyer Representation Program form.  The Program you present to a buyer should contain:
  2. The usual tasks that you perform for a buyer, especially those that you specialize in, are known for, and extra efforts/steps you take when working with buyers (i.e., your “Brand”).
  3. The special needs and wants that you and buyer have determined are wanted/needed by THAT buyer.
  4. A name: Give your program a name so that it is clearly unique to you and your value proposition.

 

  1. Advise the buyer that:
  2. You only work with buyers who agree to work exclusively with you.
  3. State that, if buyers agree to work exclusively with you for X days, you will provide them with all the services on your Buyer Representation Program.
  4. At the end of X days either party can choose to cancel or renew.

 

  1. Recommendations:
  2. It may be easier for a buyer to sign a BRBC for a relatively short period of time, such as 30 days, since the buyer may be unwilling to sign a long commitment, especially if the buyer has just met you.
  3. Do not make promises that you cannot keep and be sure to fulfill all the commitments you make to the buyers if you want the buyer to be comfortable extending your representation of them.

 

  1. THEN, present the BRBC and related forms. Go through thoroughly those forms with the buyer.
  2. Explain how both listing agents and buyer’s agent are compensated.
  3. Use the CAR Buyer Compensation Advisory.
  4. Ask the buyer to sign the Program, BRBC and related forms.

 

Exclusive Buyer Representation Program – ExampleBNWA Final

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.