Mastering Buyer Representation

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Mastering Buyer Representation & Broker Fee Negotiations with Jessica Forrester

 

Kristina Kendig [00:00:00]:
For. So we have Jessica Forrester coming to us from the look at her background, and I’m sure if she looked out her window, it’d be very similar, but the Emerald coast of Florida. And she’s going to talk to us today about mastering that representation agreement, whatever it’s called, in your locale buyer, broker agreement, and negotiating those fees. So we’re going to turn it over to Jessica and let her take it away.

Jessica Forrester [00:00:32]:
Appreciate you taking the time to jump in here. I’ll try to be mindful of everybody’s time as well. But we definitely need to have the buyer conversation on what’s going on right now and possibly things coming to change in our market. We’ve already seen it the past couple of years that the buyer agent, our average payout is 2.2% for the buyer’s agent. And we have a small team. I am the team leader, and I think our agents are worth more than that. And so we constructed a buyer consultation, and we present a buyer’s representation agreement where the buyer makes up for our fee. So I’m going to go through that with you all and then leave it open for some questions.

Jessica Forrester [00:01:22]:
So I want to talk first about the mindset of going into the buyer consultation. We work very hard on this because you’ve got to know what your goal is with the buyer consultation. If your goal is to get this sale, to get it under contract, to get that commission check, you need to stop and go back and reframe your mindset. Your goal as an agent is to help these people and possibly change their lives for the better. Buying is exciting. It’s one of the most expensive things that the person is ever going to purchase. And you get to be a part of that, and that’s an honor. So your mindset needs to be around helping and being thankful that this person is sitting with you and not counting your commission check before it even happens.

Jessica Forrester [00:02:17]:
So we make sure our mindset is in the right place. And then going into the consultation, I think all of you as well, need to have a written consultation that you practice, practice, practice, practice. The best thing about a successful buyer consultation is your confidence level. So practicing in the mirror, practicing recording yourself and then listening to it back with someone in your office, a mentor. If it’s somebody in real estate, that’s great, but it doesn’t have to be. It can be a partner or a spouse, someone like that. But practice until you feel super confident going in that you know what you’re going to say, you know how you’re going to answer the questions because it’s going to read through your face and through the consultation. So number one is mindset, number two is practice.

Jessica Forrester [00:03:12]:
So what do you do when you get to the actual consultation in 2021? 2022? I think a lot of us were in the same boat that we were rushing and a lot of times buyers needed to put an offer in like that. We didn’t have time to stop and say, oh, tell me a little bit more. They were just like, I want this home. The home already has 13 offers we need to get an offer in. So I think a lot of us are guilty of rushing through the buyer experience and not having the full consultation. And while that was needed at the time to get offers in, it sort of did the buyer and us a disservice because they didn’t truly understand our value. And sometimes that causes problems once you go under contract if they don’t understand the process. So now is the time to get back to, I say, the basics.

Jessica Forrester [00:04:05]:
Get back to the basics and slow down to hurry up. I really feel having a good buyer consultation will cause the transaction to be a lot smoother and also less problems come up. So know that going into the consultation that you are going to take some time and you’re going to take some time to find out about your client, the buyer. This is not about you and everything that you’ve done, you’re going to show value asking questions. So our team still uses the LP mama. That’s location, price motivation. If they have an agent, mortgage and appointment and you don’t have to do it in that order, but it’s getting to know your client and asking questions and not just saying what price do you want to spend? And them saying 550 and you stopping there and writing that down and going on to the next question, like dig in. If they want a three bedroom, two bath, why is that important? Tell me more about that.

Jessica Forrester [00:05:13]:
Find out more about do they have pets? Is that why they want a fenced yard? Dig in and don’t speed through this. This is your chance to prove your value and also learn as much as you can about your clients. I always say that you need to come from genuine curiosity too. Be actually curious about these people and learn the most that you can about it. It’s exciting to work with all different kinds of people. It’s exciting that not everybody is the same. It makes our business sometimes challenging, but also keeps us going every day. That every day is a different day.

Jessica Forrester [00:05:58]:
So genuine curiosity with the LP mama. If you’ve nailed your LP mama, if you’ve nailed that initial part of your buyer consultation where you’re getting to know your buyer, your client, that’s when you go into the next step, which is presenting the buyer’s representation agreement. Phil Jones of exactly what to say. He says that if you’re going to propose to someone, you pretty much know that the answer is going to be yes. You don’t go in to propose to someone thinking that the person is going to say no. That’s the same thing going into this next part with your buyer’s representation agreement. You should be asking yourself at that point if you’ve shown your value, if you’ve built tremendous trust, if this person is believing in you, if you doubt that, then you haven’t done enough in the consultation and you should probably practice some more. Going into the buyer’s representation agreement part of the consultation, that’s where personally I feel very confident going through what our value is and how we work.

Jessica Forrester [00:07:10]:
So this is the how we work part of the consultation. And I’m not going to go into our buyer rep agreement because I know everybody’s in different states and everybody does it differently. But you should know your buyer representation agreement inside and out. If your state is like Florida, it points out what our duties are to our client, it points out what their duties are to us, and it’s very much a mutual relationship. It’s not one sided. It’s not they’re signing this and they are attached to you, only you are working for them and they are loyal to you as well. So go through and explain the buyer’s representation agreement and explain how you work. By the time that you get to the point of the buyer’s rep agreement and ours says the part in it where what we charge, I’m not sure if everybody does that, but comes to a point that says what is our buyer brokerage fee? And so it can be whatever you want it to be.

Jessica Forrester [00:08:15]:
Ours is personally 3%. So when we get to that part of the conversation, we say our buyer brokerage fee is 3%. Most of the time the seller is going to pay for all, or some, if not all of that 3%. In the case where they’re not willing to do that, we’re going to look at that property and if that’s the one that you want, we’re going to take that into consideration when you make the offer. Some ways that we do that is ask for a seller concession so that in essence they are paying the buyer’s brokerage fee. So for example, if there’s a $2,000 gap. We might ask for a seller’s concession seller to pay $2,000 towards buyer’s closing cost. That way that it’s not directly coming out of your pocket.

Jessica Forrester [00:09:02]:
And then I say, at that point, what questions do you have about the buyer brokerage fee? And most of the time, nine times out of ten, they say that makes sense and go on. Sometimes they might say, what if we don’t have that money? And I’ll answer those questions in different ways, that we can structure the contract to cover that fee. But then I also tell them, I don’t want this to be a worry point for you. At no point are we going to put our financial needs above yours, the client. So if it gets to that point, we will address it then. And nine times out of ten, that’s great. The one time that somebody says, no, I’m not good with that. No, I’m not good with this buyer representation agreement either.

Jessica Forrester [00:09:52]:
Number one, you haven’t shown your value and built that trust, or maybe this isn’t somebody that you want to work with. Your time is valuable. And I stress this to the agents that are on our team, that they are valuable, their time is valuable. They don’t need to drop everything that they have to go out and work with every single person. Some people are not worth it. If they are combative at the buyer consultation. Most likely this is not going to be a smooth transaction. And maybe you don’t want to do this, or you could do that and get the sense of that, or you could say, I completely understand, we just met each other.

Jessica Forrester [00:10:30]:
Let’s do this. Let’s go out today, look at a few properties, and at the end of the day, let’s revisit this conversation to make sure that it’s a good mutual fit. Does that sound fair? And if that’s the case, then at the end of the day, you revisit. Remember when we talked earlier about the buyer’s representation? This is how I work. How do you feel now? And go from there. And again, if they don’t feel good about working with you exclusively, your time is valuable and it’s probably not a good fit. And maybe you refer them to somebody else in your market and get a 25% referral fee. So that’s one way to do it.

Jessica Forrester [00:11:10]:
But the buyer’s representation agreement, again, I’m not sure how it is in your states. Don’t think of it. Of this is how I get my fee. This is how I get my fee covered. This is the agreement of how I get my fee covered. The buyer’s rep agreement is so much more than that. It is the protection for the buyer and also the protection for you and how you represent your client. With all this stuff going on, with all the lawsuits in NAR, I personally believe a buyer’s rep agreement signed by both parties is more important than it ever was.

Jessica Forrester [00:11:49]:
In fact, our agents were requiring them to do it because it’s spelled out right there what our duties are, what their duties are, and everybody is in mutual agreement. So I want to open it up to questions. Again, I didn’t go in huge depth of our consultation. If anybody wants more information on that, I can send you our written consultation and what we practice. Again, it’s for Florida. In Florida, we’ve got two different ways that we can represent a transaction agent and a single agent. If you are in Florida, we do represent as a single agent. But opening up the Florida questions.

Brian Olivard [00:12:33]:
Hi, Jessica Forster. Brian Olivard here in Atlanta, Georgia. Thank you for all that. Sometimes you have the opportunity of working with amazing buyers. Sometimes more than once. Can we role play? I think what might be excellent is what if we just role play that conversation. So for those that obviously think we’re have. Jessica’s my personal realtor in Florida, and so we’ve been through the process twice.

Brian Olivard [00:13:02]:
So would you mind role playing this so that we can just go over that piece of it, just so we can hear kind of your nail down, your tie down, all of that?

Jessica Forrester [00:13:11]:
Absolutely. We’ll absolutely do that. And keep in mind that at this point in the consultation, when I’m talking to Brian about this, I have built tremendous trust. I have showed my value. I’ve told him, especially if they’re a short term rental buyer, I’ve told them about what we’re going to do for them when it comes to a cash flow analysis. So this is not just something that comes out of nowhere and you ask for your fee. You’ve got to build your value and the trust before you get to this point. Or else you are going to get pushback because it might not make sense for the buyer.

Jessica Forrester [00:13:47]:
Go for it. Where do you want to start?

Brian Olivard [00:13:51]:
I’ll be Mr. Jones and I’m the buyer. Mr. Jones, the. So if you just go over your rep agreement and you’re talking about your responsibilities, my responsibilities. And go from there.

Jessica Forrester [00:14:03]:
Okay, so your responsibilities, my responsibilities. And so I’m looking at the agreement. If we’re on Zoom, we do a lot of consultations over Zoom because a lot of our clients are not local, then I’m sharing my screen. And so whether in person or sharing my screen, I’m on the second page of the contract and I’m pointing at where in the contract. So at this point in the contract, this is where we go over how we get paid. Our buyer brokerage fee is 3%. Many times the seller is going to cover some or if not all of that fee. If they’re not, we’re going to look at that individual property if that’s the one that you want.

Jessica Forrester [00:14:44]:
And when we construct your offer, we’re going to take that into consideration so that it’s basically a wash and it doesn’t come straight out of your pocket. And what I mean by that, for example, is if there’s a $2,000 gap or 1% gap, we’re going to ask the seller, in additional notes, seller to contribute 1% towards buyers closing costs so that it covers your fee and not coming right out of your pocket. Does that make sense?

Brian Olivard [00:15:14]:
Yes. That’s wonderful. Thank you.

Jessica Forrester [00:15:18]:
And I think that agents get so in their head and so scared that they’re going to be like, oh, I don’t want to pay for that. It rarely happens on the consultation. The time that it does come up is when we’re at a property and it’s that property and they’re trying to get the offer together and there’s multiple offers on the table and they’re like, we don’t want to do anything to this offer to make it not attractive to the seller. That does come up. And at that time, we can talk about what we can do. Sometimes we’ll just waive it depending on the price point and the work, depending on the payout. And sometimes they’ll say, don’t ask for that in special concessions, we’ll just pay your fee. And I think that we’re going to be seeing more and more of that as things change.

Jessica Forrester [00:16:08]:
And buyers are paying this fee regardless if it’s built into the sales price or if they’re paying you directly, they are paying the fee. So the agents that sort of have the drunk monkey on their shoulder and are in their head about, oh, nobody’s going to pay that fee. That’s where you need to talk to yourself and change your mindset, because it is a fee that they’re paying already.

Kristina Kendig [00:16:37]:
Do you ever have, let’s say that your buyer did need seller concessions for other things? How do you overcome that? Or I say to you, you’re like, hey, I’m going to need help with closing costs or something like that. How am I going to get the seller to pay closing costs and even cover this?

Jessica Forrester [00:16:53]:
Delta. So what’s funny is if they do need like a 1% concession or $2,500 concession, I always ask for more like double. So if they wanted like 1% seller concession for our fee, 1% seller concession to go towards some of their closing costs, we would put seller to pay 3% towards buyers closing costs. That way, if they come back to negotiate and we land on two or we land on one and a half, then we’re covered. The other point to that, Christina, is that sometimes you can’t ask for seller concessions to cover, because if it’s a Va loan, you cannot charge the buyer. And I don’t know if that’s going to change in the next couple of years. It should change as this industry changes. But right now, if it’s a Va buyer, you cannot ask the buyer to pay anything.

Jessica Forrester [00:18:01]:
You could negotiate on the offer with the seller directly, but you cannot because it will show as a buyer’s cost on the closing statement. What other questions? Good question.

Heather Pilcher [00:18:19]:
Hey, Jessica, I have a question. So when you’re doing this consultation, and obviously you’re super friendly and professional and everything too, and you probably are more like referral based and have a good network, but if you do have a random person that doesn’t necessarily know your history and trust you and everything, and you sit down and do the buyer consultation and present the agreement, and you explain everything, and they say, well, what if I sign this and there’s still a house that I want to buy, but the commission is not 3%. How do I know? How am I supposed to trust you? Because if I sign this legally, I’m bound to pay you.

Jessica Forrester [00:18:54]:
How do you handle that? What’s funny is because we’re a second home market and our sphere. Every other person is a real estate agent. So normally, if you’re like PTA or whatever, my child in his class of 13, there’s four parents that are real estate agents. So we do a lot of consultations with people that don’t know us at all, that don’t live here. It’s not from just referral. So it’s all about building your value and building that trust in the beginning stage of the consultation. Yes. Friendly.

Jessica Forrester [00:19:33]:
And I guess how you come across needs to be very genuine. And that level of trust is built during that initial part of the conversation, so that when they get to the buyer rep agreement, if they don’t feel that trust, I feel like that’s something that I did wrong. And that’s where I might say, let’s spend the day together today and see how this goes and see at the end of the day, how we feel about working with each other. But I also say this is a mutual agreement. If you find out that it’s not a right fit working with me, I want you to be happy. I want what’s best for you. So we can end the agreement. We’ll put it in writing, and we will end the agreement again.

Jessica Forrester [00:20:19]:
I want what’s best for you, and I mean that 100%. If it’s not a good fit, chances are it’s probably not a good fit for me either. And I don’t need that headache.

Kristina Kendig [00:20:33]:
Yeah.

Jessica Forrester [00:20:33]:
Awesome. Thank you. Other questions.

Brian Olivard [00:20:42]:
Jessica, I have another question. So let’s say that you’re having the consult and this is just an objection. Well, the agent at the other company didn’t make us sign anything, I guess. What is that now? Because obviously we’re going to have to start heading the charge as leaders to get all of our teams to do this so that we can teach the rest of the industry that this is how you play, I guess. What would your objection, if you have any, if you’ve come across that the company down the street didn’t ask us.

Jessica Forrester [00:21:20]:
First of all, I would say, wow, that’s really unfortunate, because this agreement gives you so much protection as a buyer, and you need that protection as well as I do. This is a mutual agreement, and we’re working together, so it’s important for you to be protected by the duties that I owe you. That’s pretty much what I would say. Again, at that point, you’ve probably shown your value. And also in our agreement, it shows how we work differently because we work as single agents for the client, not customer client. That’s probably only 10% of agents in our area do that. And so that’s a benefit to the buyer. And we explain that as we go through the buyer rep agreement, that operating as a single agent, yes, it’s going to create more liability for us.

Jessica Forrester [00:22:16]:
It makes our insurance even higher, but it gives you better protection, and we’re owed you additional duties. Duties. Good question. What other questions?

Kris Shannon [00:22:39]:
Hey, Jessica, you may have already touched on this. Have you ever had it where you have the buyer agreement signed, you’ve shown them houses, you’ve got them pre approved, done all that. And they say, oh, my cousin got licensed, or I forgot my friend or my brother’s sister or something like that. How would you deal with that?

Jessica Forrester [00:23:00]:
I’m trying to think through the team and the transactions I don’t think that we have. But what I would say first is, oh, my gosh, that’s so great. I’m glad they just got licensed. Let’s bring this in and let me mentor them through this transaction and we’ll work on it together. I’m happy to do that for you and see what they say. If they say we’re just going to go with him and blah, blah, blah, I think I would definitely set up a conversation and plan around that to make sure that that’s in their best interests. And how is he planning on representing you, he or she, as a transaction broker, as a single agent, and just question them a little bit. So it sort of puts, I mean, I’m going to say doubt puts doubt in their minds, which they should have, because is that really what’s best for one of the most expensive purchases and most important purchases?

Kristina Kendig [00:23:56]:
Right.

Kris Shannon [00:23:56]:
So tactfully, kind of.

Jessica Forrester [00:24:00]:
I would never talk down about him or her, whoever. I would just ask questions to see. And again, if they were like, I don’t know if he’s not going to do that, I would say, let me mentor him. I’ve been doing this for 23 years. I’m happy to do that. We can share the commission, whatever, or give him a referral Fee, whatever it is. It can’t be all about your bottom line. It needs to be about the relationship.

Jessica Forrester [00:24:30]:
Because this is a longevity business. This isn’t a get rich quick business. This is an immediate gratification business. This is long term. Brian always says people will remember how you make them feel. What’s the other part? People remember, don’t remember what you did.

Brian Olivard [00:24:53]:
They’ll never remember what you said. They’ll never remember what you did, but they will always remember how you made them feel. My Angelou.

Jessica Forrester [00:25:00]:
Yes. So I am 100% on board with that as well.

Kristina Kendig [00:25:09]:
Okay. So much great stuff. I have so many pages of notes here. But will you reiterate or say again what you said at the beginning, that if you’re in this for the commission, you had a really great mind at the very beginning, and there were some people that didn’t, weren’t there right at the beginning.

Jessica Forrester [00:25:23]:
Gosh, what did I say?

Kristina Kendig [00:25:24]:
Go back to your notes.

Jessica Forrester [00:25:27]:
So I said, what’s your goal of the conversation? Know that before you go into the consultation. What’s your goal of this? If your goal is to get another sale, it’s to get to that closing table. If that’s what you’re thinking about in the conversation. Then you need to step back and reset your mind because that you should be thinking about what is best for them. And by you practicing and getting this consultation down, you know you’re best for them. You know in your consultation, you’re not going to boast, you’re not going to brag, but the way that you come across with your confidence and your genuine curiosity is going to let them see that you are the best for them. But you can’t think about it as a commission. You can’t think about it as a sale.

Jessica Forrester [00:26:15]:
You can’t think about their price point. You need to think about how you can best help these people, maybe change their lives for the better.

Kristina Kendig [00:26:24]:
I love that. And then I loved how you said, take the time to find out about the buyer and find value in the questions because I know that so many of us are afraid. We got the appointment, we’re going to show and then we’re afraid to ask the important questions.

Jessica Forrester [00:26:39]:
Yeah. And so many of us, especially with the frenzy of the last couple of years, have gotten to, oh, you want to see one, two, three, banana street. Let’s go. Step back. That’s not in their best interest to do that. And it’s not in your best interest. It’s not the best use of your time. They’re going to appreciate you so much more if you step back and say, absolutely, let’s jump on a zoom, let’s jump on a call.

Jessica Forrester [00:27:04]:
Let’s meet at the office first. Don’t be scared to do that.

Kristina Kendig [00:27:09]:
So we have a lot of zillow flex people on there, and that’s what you have to do with flex. Like you make that appointment and you meet them first. But we’re coaching that once you’re there, that’s your in and you have to have that consultation that’s so important to have that. But anybody else trying to get it ahead of time is.

Jessica Forrester [00:27:30]:
Yes, and you can do it there. You can and you should.

Kristina Kendig [00:27:44]:
Any other questions? Any other comments?

Brian Olivard [00:27:48]:
One more.

Kristina Kendig [00:27:49]:
Jessica, older or the younger brother?

Brian Olivard [00:27:52]:
Just pestering younger brother, quick question. So you as a team lead, you had talked about, and I just want to reiterate that it’s y’all’s standard at Emerald Coast beach homes that does 3% and you teach the value because you want your agents to know the value, but you teach them that up front in their first onboarding with the different platforms that you go through, right?

Jessica Forrester [00:28:17]:
Yes. It can be whatever percent you want. Maybe you don’t even want to make up your fee, but the buyer rep agreement is still so important. It’s not about the fee.

Brian Olivard [00:28:37]:
And this is what I’m saying. A lot of people have heard like, oh, well, everybody else charges. We just had an instance where somebody goes, everybody else charges this. You can’t do that. So I think that was my big takeaway is let’s teach them up front what our company standard is, because we have recordings of this and everything. But I love that, that you guys are training to that immediately.

Jessica Forrester [00:29:03]:
And this is not new for us. We’ve been doing this for years and years. So I know it is new for a lot of people with the changing. And many people think I’m not getting them to sign a buyer rep agreement. That’s not fair. It is more fair for them because it outlines the duties that you owe them as well. I put my email in the chat. I’m going to put my cell phone number, too, in case anybody has any questions or needs anything.

Jessica Forrester [00:29:39]:
Tessa asked. Would you have a copy of. Yes, I can send you my buyer’s consultation. And I call it a consultation, not a presentation, because it is very much two way and actually more about them than it is about me. So I’m not presenting, I’m consulting. And I was going to do slides and stuff today, but again, I feel like the buyer consultation is very much two way. I don’t even have slides when I show them or when I’m working with them because it’s so much about them. And I’m taking notes.

Jessica Forrester [00:30:15]:
And I say at the beginning, I’m going to take a lot of notes. I don’t want to miss anything. So if I’m looking down, taking notes, just know that I’m coming right back to you. Anybody else?

Kristina Kendig [00:30:40]:
Nobody else? All right.

Jessica Forrester [00:30:42]:
We’ll call it a day.

Kristina Kendig [00:30:44]:
Such amazing stuff. I have, again, pages of notes. So Jessica, again, reach out to her and she’ll send you that information. And it’s like Brian said, it’s our duty to teach the industry. So let’s all role play, let’s all get this together, make it part of our sops, and do what’s right. So thank you so much, you guys. Thank you so much, Jessica, everybody.

Jessica Forrester [00:31:12]:
We’ll see you guys next week. Thank you, guys. Bye.

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