Pat Kennedy - Your Washington, DC Real Estate Connection

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Before you sign that buyer brokers' agreement: Don't get married on the first date!

Before you sign that buyer brokers' agreement...

It's standard operating procedure for a Realtor to ask a buyer client to sign a buyer broker agreement.  These forms are usually a couple of pages of legalese that say basically you agree to work exclusively with this agent during your search for a new home.  But before you sign on the dotted line, you need to read and, more important, understand what this agreement requires of you.

Depending upon the laws governing real estate transactions (and they vary from one jurisdiction to the next) the agent may be required by law to have your name on some piece of paper that authorizes her to show you homes and to represent you should you buy one of them.  But whatever the boiler plate agreement the agent provides might say about how this relationship will work, you need to understand that you can negotiate all of the terms of the agreement before you make a commitment to an agent.

You can limit the time frame and scope of the agreement. 

You are about to go on the first date with this agent who you might not know.  If she insists that the law requires a buyer broker agreement, you can limit it to one day and have it apply only to the homes she shows you.  If you are impressed with this agent, you can extend the agreement or sign a new one when you are certain that you are comfortable working with her.

You can include a clause that allows you to cancel the agreement if it turns out that you and the agent are a bad match.

Actually, a lot of agents (including myself) write this into the boiler-plate and include language that allows the agent or the buyere out of the agreement if it's a bad match. 

Like many commercial agreements, buyer broker agreements may not be written to protect the consumer.

Most of the boiler plate agreements are written to say that if you buy a house or apartment during the term of your agreement, your agent will get paid - whether or not she has anything at all to do with helping you to find it.  It can be a for sale by owner that you find on Craig's list or your mother's house.  It can be a place that another agent finds and helps you buy.  If you buy during the period covered by the agreement, you owe the agent a commission.  So the primary purpose of the agreement is to ensure the agent gets paid. 

Bottom line...

Never sign a buyer broker agreement without reading and understanding it.  And remember that you can edit it to fit your needs.

  • If the agent has made a lot of promises, incorporate them into the agreement.
  • If the agent does not live up to these promises, be sure you can cancel the agreement.

Working with a good buyer broker is the best way to buy a house.  And before you contractually obligate yourself to a long-term monogomous relationship with any agent, you need a period of time to get to know one another.  

Comment balloon 16 commentsPatricia Kennedy • May 07 2011 01:36PM

Comments

I like this post....and I hope that consumers read it and really understand what they are signing. I've gotten calls from buyers who are now stuck with an agent they don't like. And they don't realize it.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 9 years ago

Great blog Patricia... I kind of used the same analogy for this months mastermind challenge blog.. If you went on a date with someone for the first time and they were already demanding exclusivity from you,  you would probably run for the hills as quick as you could... But in order to get our clients to sign that agreement it does take a little bit of "wooing".

Posted by Stacey Smith, Your Orange County Beach Cities Realtor (Keller Williams Realty) over 9 years ago

It's also important to explain to the buyer that the agent may choose to cancel the agreement if we decide that we're not a good fit.

Posted by Maria Morton, Kansas City Real Estate 816-560-3758 (Platinum Realty) over 9 years ago

Pat,

I make sure it's written to protect them...and me. As an agent, I don't want to be bound to a buyer I'm not interested in working with for an extended period of time.

Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) over 9 years ago

Pat - I usually work on a short time-frame unless the buyer wants a longer time.  I also charge a small retainer that will be reimbursed at closing, that I implemented a short while ago.  There is usually no objections to this after I explain and show what I do for the clients.

Posted by Petra Norris, Realtor, Lakeland FL Homes for Sale (Lakeland Real Estate Group, Inc.) over 9 years ago

Great stuff Pat.  I too am not opposed to signing an agreement for even one day when I first meet new clients.

Posted by Paula McDonald, Ph.D., Granbury, TX 936-203-0279 (Beam & Branch Realty) over 9 years ago

If the agent has made a lot of promises, incorporate them into the agreement ...

That's a smart idea! We don't use buyer/broker agreements in my area ... but we should!

Posted by Cynthia Larsen, Independent Broker In Sonoma County, CA over 9 years ago

Karen, this was inspired by a woman who has a totally incompetent agent, and the broker will not release her from a very long agreement that she signed without reading.

Stacey, you are so right!  It's a great way to scare folks off.

Maria, our agreement does not provide for that unless we write it in - which I do. 

Richard, I dunno.  I don't see a lot of language in the any of the ones we use.

Petra, I think your approach is smart.

Paula, that's what I think we should all do.

Cynthia, we are supposed to here, but I know a lot of agents who do not get one signed.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 9 years ago

Pat

Great post - - -All the parties needs to understanding what they are getting into before they sign a buyers brokerage agreement.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 9 years ago

Pat - in all honesty - I should and I think we all should have buyers acknowledge that any properties WE show them - we would be entitled to the commission...... it isn't enougt to have an agency disclosure form signed by them... Best, G

Posted by Gay E. Rosen, As Real as Real Estate Gets! (Julia B. Fee Sotheby's International Realty) over 9 years ago

It can be overwhelming to buyers when they see the two-page agreement that really doesn't protect them, sorry to say. I hope your post is read by many consumers.  Suggested.

Posted by Yolanda Hoversten, Broker - O Fallon, IL Real Estate (Berkshire Hathaway HomeServices Elite Properties) over 9 years ago

Pat, I agree with Yolanda I hope your post read by as many consumers as possible. I don't think most buyers, if any are aware that a buyer's agreement can be tailored.

Nice!

Posted by Maria Couto, Realtor with "Results That "MOVE" You' (RE/MAX Premier) over 9 years ago

And it is always the fact that we should learn to read first before signing anything. 

Posted by Will Nesbitt, Nesbitt Realty is a family-run brokerage. (Nesbitt Realty at Condo Alexandria) over 9 years ago

I've had buyers insist on signing a buyer agency agreement because otherwise they felt I was representing the seller (true). I've also had situations where as an agent I have limited the term because I wasn't sure it was a good fit and I wanted to work with them long term. And yes....people should absolutely know what they are signing. It's amazing how very few agents explain these things and how little buyers understand. 

Posted by Jane Jensen (Century 21 New Millennium) over 9 years ago

Pat - a great post! We hardly ever use buyer/broker agreements down here although I know we should.

Posted by Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional, Palm Harbor, Dunedin, Clearwater, Safety Harbor (Charles Rutenberg Realty) over 9 years ago

Good information.  I never ask buyers to sign the agreement before we head out because I think it can be intimidating.  I also agree that there should always be an out on both sides written into the contract.

Posted by Dr. Stacey-Ann Baugh, A doctor who makes house calls. (Century 21 New Millennium) over 9 years ago

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