Buyer Broker Agreements Simplified

Florida Real Estate Broker 407-873-2747OK this is a follow up to my post yesterday. I received this email:

You are right Bryant, I should not work with 2 realtors at the same time and got a bit excited after reading your blog. It occured to me you are more than an average realtor (broker/listed agent) and may get few properties ahead of everyone else and sometimes yet to be listed in MLS. There are few foreclosure specialists in Chicago area that work on fee based service.

Please don’t think otherwise but appreciate if you can clarify the following:   If you are like anyone else, what advantage does a buyer have in hiring you to acquire an REO? What is this retainer for? I can see some buyer advantage in short sales but for REOs I don’t see any. Am I missing anything?? END 


Hi there,   OK so I like the part about getting excited after reading my blog 🙂   A Buyer’s Broker Agreement (BBA) creates a bilateral agreement between you and I. It obligates you to work exclusively with me in areas we define. For example, if you had a BBA with the agent in Celebration you would not have contacted me and we would not have had this issue come up. It would have helped to solidify a loyal and professional relationship. It lays out the framework for the entire relationship. It obligates the Broker to do his job.

Also, as we had discussed on the phone, it gives the broker a monetary incentive to work harder. Foreclosures are very inexpensive (in my area) and can also be much more frustrating as it may take offers on numerous properties in order to get one accepted. Good properties sell quickly and usually with multiple offers. Finding the right property takes time.    

REALTORS(R) are usually paid by co-brokes (commissions) offered by the Seller’s agent or Builder to bring a Buyer. These commission usually range form 1% to 5% of the purchase price with 3% being an average. This can create a conflict of interest. Suppose there are 5 properties that are perfect for what you are looking for. All offering different co-brokes within this range. Wouldn’t I rather sell you the one where I make 5% as opposed to the one where I make 1%? Of course I would. It’s human nature.

The BBA elimnates this conflict by setting a minimum AND a maximum fee upfront. In my case it’s $2,500 or 3% whichever is greater.**** Anything above these amounts would be rebated or credited to you at time of closing.   In the price range you are looking at, $65,000, the co-broke could range from $650 (1%) to $3,250 (5%) but would probably be $1,950 (3%). If it were 1% you would have to contribute $1,850 to my compensation. If it were $3,250 you would actually receive a rebate of $375 (half of $750).

More than likely you will have to contribute $500 to $750 to a deal. Don’t you think we could save at least that amount by being more aggressive with finding you a property? Of course we could.  This is why what is an advantage to me (guaranteed minimum pay) is actually more of an advantage to you. Make sense?  

The retainer I charge, of $1,000, is nothing more than a fee to make sure I am only working with serious buyers. I get upward of 20 buyer enquiries a day and I am not able to work with them all so I have to pick and choose. I do this by asking for a retainer and requesting a signed BBA. The retainer is applied towards any commission differences. For example, if you bought a property where you needed to contribute $750 towards my compensation you would actually get $250 back because you had already paid me $1,000. The retainer is included in the $2,500 or 3%. It’s just paid in advance. If you break our BBA it is mine to keep.

The advantage of working with me is that I am very good at what I do which is evident by all that you have read and learned from me in the last couple of days of communicating. Of course the choice of whether or not to hire me is solely yours. I only have a couple of more Buyer openings left for this month but will be happy to place you on my waiting list if now is not a good time for you.

Investing in foreclosures is certainly the way to go right now. I hope we can come to an agreement to work together to get you some deals.   As always, let me know if you have questions.  

****Commissions are ALWAYS negotiable. This post is NOT about commissions it is about BBAs. So get off my a** Sherman!!!  

Here’s a sample BBA. 


Sell Poinciana Real Estate Poinciana Real Estate Poinciana Real Estate Poinciana Real Estate Agent

Copyright © 2009 | All Rights Reserved 


Leave a Reply

Your email address will not be published. Required fields are marked *