It Can Be a Tough World
June 13, 2006 by Don MurrayHello Bloggers:
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We had an interesting "real world" question come up today regarding referral agreements and the appropriate related paperwork.
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Note:"? There are 2 distinctly different referral processes when referring Buyers and Sellers."? We will address both below.
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Its a tough world and if you want to get paid, you need to be careful.
For Buyers --
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Let's assume you are going to refer a buyer outside your geographical area, but you want to write the loan and you want to receive a referral commission from the real estate commission.
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What do you need to do?
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You will need the following:
- Exclusive Buyer/Broker Representation Agreement
- Loan Application
- Loan Approval Letter to provide to the Agent you are referring your client to
- Referral Agreement
Why do you need a Buyer Representation Agreement when you are referring your client to another agent?
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The referral agreement obligates the other Agent and that Agent's broker to us."? It has absolutely no commitment or obligation value with the client."? There are a lot of reasons (both good and bad) why your client may simply walk away from the other Agent and in the process indirectly walk away from you.
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Don't assume you have"?a strong relationship with the buyer that you only have to worry about the relationship with the other Agent and that Agent's Broker."? You can not afford to be casual or sloppy about the details."? You get paid to be sure the details work.
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One of our Agent's planned to write a loan for her brother and receive a referral commission from another Agent."? It did not happen."? Without the process of the Buyer/Broker Exclusive Representation Agreement, the brother did not realize when he did not purchase through the Referred Agent, it was detrimental to our Agent (his sister)."? Also, the brother wrote the loan with another lender and left our Agent in the cold on that part of the deal as well."? You can bet our Agent learned a very expensive lesson.
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When we include the "Exclusive" Buyer/Broker Representation Agreement along with the Referral Agreement, we indicate to the other Agent and Broker that you "own" the client.
What About Referring A Seller?
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The Seller scenario is similar to the Buyer scenario only a little more involved."? You will need the following:
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- Listing Agreement
- Referral Agreement For the listing (this is separate from the referral agreement for when the seller is a buyer -- you will normally use a different agent).
- Loan App For When the Seller becomes a Buyer you want to write the loan
- Loan Approval Letter for the agent to use when making offers for when your seller is a buyer.
- Exclusive Buyer/Broker Representation agreement for when your seller is a buyer.
- Referral Agreement for the Buyer's Agent you will refer your seller to.
Remember there are 5 legs to every deal and you do not want to miss out on any of them.
What are the mechanics of the process?
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The process is as follows:
- Fill out the Exclusive Broker/Buyer Representation agreement in WINForms and have the client"?sign it."?
- Select the Broker & Agent you want to refer the client to (prudential's web site is one resource if their is no Cal First Agent in the area)
- Interview the Agent and advise them of all information you have about your client's needs."? Don't disclose contact information until the referral agreement is signed.
- Enter the broker and agent contact information on the agreement."?
- Send the agreement to our transaction coordinator signature and administration.
- Monitor the progress with your client.
- Notify our transaction coordinator when the transaction is in escrow
- We will put a Demand in escrow for the referral commission.
- When we receive payment we will pay you.
Some of life's lessons are "Hard Learned.""? The purpose of these training lessons is to help keep you from having to learn expensive lessons the "hard way."
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Thanks ---
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Always remember -- I can help you!
Don
Don Murray
First Financial Group --
California First Financial -- Serving all of California
Financial Planning, Real Estate Brokerage and Mortgage Loans
949-413-2240 -- Phone
949-203-6355"?-- Fax
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