Caption transcript. This text is pulled from YouTube captions and may contain minor wording errors.
[00:00] Hey, if you're watching this video, it's probably because you're about ready to sign your life away and you're going to start working with an agent. Maybe that agent's me, maybe it's somebody else, but you have no clue what a BBA is. It just came out last year. Remember that class action lawsuit that we had around
[00:16] August that was settling August of last year and everybody was kind of freaking out like what's going to happen? Well, turns out one of the requirements um coming out of that was that every single buyer now has to sign one of these forms. It's three or four pages long depending on which one you use, but
[00:34] basically it creates a relationship between your your buyer's agent and your yourself. So, there's some good things and some bad things that has happened. I'll explain both for you the consumer and then for me the real estate agent. So, I don't want to get too much into the weeds on the whole class action
[00:52] lawsuit. Honestly, it's been a year. I try to put it out of my mind or forget some of the details. I know that somebody in the Midwest kind of got upset with how a transaction went and then it kind of became a bigger and bigger thing. More people added on class action lawsuit and then all of a sudden
[01:07] instead of a state thing, it's like, you know, or a local thing, it's like nationwide now. So basically the [clears throat] BBA has now created a relationship between you a relationship between you and your agent. Now this has helped agents in the sense that previously when you were working
[01:23] with somebody they could ghost you after a few showings. You could you could show them 10 or 20 properties and [music] um they could uh find another like the 21st property [music] they could view with another agent and uh all that work was just kind of put away. Um, so that was the bad thing for the agent, right? The
[01:43] good thing for the agent now is that you have not only do you have a signed agreement with them [music] and a lot of agents like myself, we might still put a $0 cancellation fee, but you can have a cancellation fee. And now this has become more normalized. you have a uh signed relationship and it's you're much
[02:01] less likely to ghost somebody when you have a uh a contract contract like that versus you know like an unwritten kind of verbal agreement that like oh we're going to work together. [music] So you have that but then also this contract now requires us to put down our commissions what we expect to like what
[02:22] we're making. So, you're agreeing now. The consumer is agreeing to >> [music] >> um the commission for myself before we even find a property, before we even know what the seller is willing to compensate. So, you know, we're about a year into this and I think a lot of
[02:37] agents, including myself, have kind of seen how everything's playing out. And of course, what the government does usually does not benefit the consumer. And I I feel like kind of in a way, this is another situation. So, I'll explain what you are getting as a consumer is you are getting transparency first and
[02:56] foremost. Um, you are getting to negotiate how good of a realtor or how bad of a realtor you want upfront. So, if you're getting your realtor to agree to like one or two% commission, then you know, maybe that's a sign you shouldn't even work with them. Um, ironically, right? If you want a good realtor, uh
[03:15] somebody who's going to negotiate on your behalf, they're probably not going to settle for um below, you know, minimum. So, I think that's a very important thing that we've gotten out of the way now is is you get transparency. You get to know how much of a commission you're agreeing to. On the flip side,
[03:31] you're now responsible for that full commission if the seller isn't willing to pay it. So practically speaking, right now we're getting sellers [music] to I mean sellers are still willing to pay the entire commission, but in a scenario where the seller is not willing to pay a full 3% commission, let's say
[03:51] I've had situations where um I have clients who agree to pay me 3%. The seller is only willing to pay two or two and a half. you're responsible for covering that extra difference, that gap. Um, unless it can be negotiated into the offer, which again, practically speaking, we're
[04:09] always negotiating it into the offer. But just so you know how it works out, this is this is now how how negotiation negotiations work. You're negotiating terms, you're negotiating price, and you're also negotiating the agent compensation. And I think I left that one thing, too.
[04:25] I think one other thing that you're getting as a consumer is you are getting a little bit more loyalty and a little bit more um [music] um I don't know like effort maybe from your agent because if you're signing a an agreement with them they know that you're not going to be able to
[04:41] just ghost them like the next day right or the next week after showing you like seven or 10 properties. So you are getting maybe a little bit more effort out of somebody who's going to be working with you long term just on average. Maybe there's been a little bit more efficiency created within the
[04:56] marketplace because you know if [music] if agents are more productive because there's more like like there's a higher likelihood they are going to um benefit from this transa from any transaction at all then I think maybe there's a little bit of efficiency there too. So, you know, maybe maybe but I don't know like
[05:12] I think on average probably this whole BBA thing has really swung more in the direction of a buyer agent because they can negotiate their price upfront, their fee up front, whereas previously a lot of agents, a lot of buyer agents would just take whatever the seller and
[05:32] the listing agent had already agreed [music] to offer. So, um I would say the average probably buyer agent commission was like 2.35%. And I don't have like a hard number, but I have what I know I had received in the past and hadn't negotiated. I I kind of have [music] like like lived experience
[05:51] over the last you know 5 to 6 7 years versus now um buyer agent fees you're like they've really gone up. beat this and like beat a dead horse here, but they've gone up because we have now given buyers agents a chance to negotiate that whereas it was a little bit awkward at first. You know, it
[06:09] wasn't super common you'd have an agent to like there were some brokerages out there and some high performers who like that [music] would be their practice and they would that would that would be their thing. But in general, like most agents would not get [music] a showing agreement signed. It was wasn't like a
[06:21] general practice type thing. So, okay, let's get into what the actual BBA is, right? We talked about it's a fiduciary fiduciary agreement between both the listing uh the buyer's agent and you the consumer looking to make an offer on a property. And these things have to be signed before you even like view your
[06:37] first property. Um there's a few things about this. Let's just show you what I'm talking about. I just share my screen. So this is just like the the basic form, right? You have the term date, you have the parties. Um, typically what we would do as a as a buyer's agent is we're going to put the type of property. Is it
[06:55] a single family or a multif family? And by the way, these forms really only need to be signed for residential properties. This is not a commercial thing. So like five and up, like I don't think that we're doing that really for these these these types of properties. Um, type of property, single family
[07:12] location. Um, listen, we can make this as general if we're looking at a lot of homes. I don't like to most people don't like to get these signed every week, right? So, we kind of have one that spans a couple months depending on your just kind of like the nuance of what you're looking for and what your
[07:27] time frame is. But location, it could be all of Hillsboro County or if we just met if you just met someone agent, you can put this the the actual property address, right? So, it's only good for that address and then you have to get another one signed if you [music] go out to another property. And uh again,
[07:43] that's kind of like you do that one time just to meet an agent maybe and see if you want to work together. And then after that, you make it a little bit more vague, a little bit more general, [music] and that way you don't have to get them resigned, you know, like in like every single time because that
[07:56] [music] like that's a lot of paperwork and it's uh kind of weighs everybody down. This is where uh this is where you can put a you can pay your agent a retainer fee or extra loyalty. Um you can have a uh a set of compensation agreements with your agent. And this is where all that happens right here.
[08:18] Section 7. And here's the protection period. So, this is what you need to know. Normally, I leave this at 30 days. I I'm generally a trusting [music] person. But if an agent was to show you a property, right, and then you decided to cancel this agreement [music] within the next 30 days, uh you may not go
[08:36] under contract for that property [music] without your agent being involved. Right? So, um, some agents may put 60 days, some may put 90. [music] Um, but I just kind of leave it generally as the boilerplate 30. Um, because, you know, if you want a property and you're not going to go like
[08:54] I just don't see that happening that often, right? I'm not too concerned about that. Um, conditional termination. So, this is your cancellation fee. Again, I you [music] know, depending on the person, generally have it as a uh sorry if you're out there and you're looking at a $1,000 cancellation fee
[09:09] from one of my BBAs, but generally I have zero dollars. I'm generally a trusting person. Just depends on the situation, who you are. Um uh again, not trying to be like a a this is going to be kind of awkward. [music] Uh generally, it just depends on on the type of transaction, what we're
[09:27] working with, right? So, there are some nuances available, but uh that's that. You may have other larger brokerages that do have a cancellation fee and there's plenty of them out there because there are plenty of agents out there who also have a cancellation fee for listing agreements, right? So, you can imagine
[09:42] those same brokerages and people will have a cancellation fee for uh terminating a buyer broker agreement. So, that's basically all there is. This one's a three-pager. This is typically what I use. Um it's pretty simple. It's again the government and the [music] attorneys who
[10:02] whatever settled the class action lawsuit, the the purpose was to provide more protection to you, the consumer. Um, I'm not entirely sure exactly where that is on this contract other than you get more clarity and more transparency. Now, you would always be like there was always transparency involved with how
[10:23] much a commission like you would always know by the closing period how much your agent was getting. So, um and it never really it was always it was always paid for by the seller. At least down here in Tampa, that's like in central west central Florida the norm here. Um but I don't know. Um that's just kind of my
[10:44] take on everything here. Um, scrolling through. So, if you're a regular home buyer, you know, I highly recommend >> [music] >> um, well, you have to get this signed, so I can't really recommend it. Doesn't really matter. I It's important to get
[10:58] it signed. It's important to review it yourself and not just take what I say here and just, you know, sign off whatever. I will say, excuse me, for investors, this is one of the best things I think that buyer agents for investors, it has [music] created way more loyalty back and forth. So, while I
[11:15] don't think it's really helped consumers all that much, um they had a lot of options. [music] I think it's helped agents more, I do think it's benefited both investor investor buyers and [music] and realtors like myself who work with a lot of investors because that loyalty piece has been a you know,
[11:30] I wouldn't say a problem, but it's definitely been [music] kind of a pain point in some ways because investors even have more more um options, right? uh a lot of times they would be they could [music] be brought deals and they could go try to purchase them without the agent involved. And so I think that
[11:46] was a little bit more prevalent with investors [music] and this gives agents a little bit more um I don't know security and again more loyalty to the investor so that way they're bringing that investor deals perhaps before another [music] another investor. So anyway, just keep that in mind. That's
[12:03] kind of my take on everything again. And uh hope you have learned something and please go ahead and finish signing your BBA with me right now.
