Buyer Broker Agreements: You Tell Me, John Q. Public

Jonathan Dalton, Phoenix Real Estate AgentWhile I always encourage comments, in this instance I’m fervently begging for members of the public to chime in down below on this question.

Recently it has become fairly commonplace for buyers to call me (or another agent), ask to see some homes and then buy a home without using the agent. Maybe it’s one of the ones they viewed, maybe it’s a different home. It doesn’t really matter. From what I’m hearing, it’s happening even more than what I’ve personally witnessed.

Many agents use a Buyer Broker Agreement, an employment contact for a set period of time which says the buyer will use this agent to aid them in their home search. It’s fairly straight-forward stuff.

I’ve rarely used this agreement because I always felt a handshake should mean something. When it comes to real estate, though, that doesn’t seem to be the case.  When I do use it now it’s usually after showing a handful of homes, enough time for the buyer to get a good sense of who I am, what I know, what I bring to the table.

I’ve been urged in the past not to work with any buyer who refuses to sign a Buyer Broker agreement. Most exclusive buyers’ agents work this way (mooting the misinformed suggestion from the Wall Street Journal’s Real Estate Online that said buyers should hire an EBA but not use their services if a retainer’s requested or an agreement’s involved.)

One could argue that a buyer truly interested in an agent’s expertise would have no issue with signing such an agreement. One also could argue that some ready, willing and able buyers will walk away rather than tie themselves to an agent, even one who’s pledged to work diligently and in the buyers’ best interest as they search for a home.

And so I ask you, those members of the general population who read this blog regularly … Why would you sign such an agreement? Why wouldn’t you sign such an agreement?

Leave only a first name if you choose to remain anonymous. I want to hear from you. Real estate pros are also welcome to comment, but you’re not today’s intended audience. Sorry.

[tags]Phoenix real estate, buyers agency, buyer brokerage[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

0 Comments

  • Patricia 10 years ago

    First, a disclaimer. I’m not exactly John Q. Public, because I’m married to an exclusive Buyer’s Agent. Oh- and I admin for the team that he works with. That said, here are my thoughts…
    You should ask your buyers to sign a buyer agreement. At what point you do that is up to you- and honestly, I think it should depend on the vibe you get from the client. It’s very rare that my husband will go out more than twice with a client without some sort of agreement in place. I also think that whether or not a prospective buyer has an issue with it depends quite a bit on how it’s presented. Agents always have to work through when/how to ask for these, and I know seasoned agents that have a hard time asking for it. There are a few things that I have observed that seem to work almost every time:
    1) Explain that the agreement protects THEM (as well as you)- and mean it! I don’t know what the wording of yours is, but our explains the Agent’s duties and responsibilities to the client.
    2) Understand that they are “trying you on”. Give them an out. My husband always writes in language that they can terminate the agreement at any time, as long as they give him 24 hours written notice. He then points out that there IS a clause that says that any home he has already shown them up to that point would still be covered. He makes sure they understand that he thinks they will never need this- and the proof is that he has written it in there in the first place. (He has not ever had a client request to be freed from an agreement)
    3) Be flexible. Some clients are just tough. They have usually been burned in the past. Allow them to add language to the agreement that makes them comfortable. Be willing to write the agreement to cover just a month, or just a week, or just a day if you have to. Let them know that after that time period, you are each free to walk away- no hard feelings on either side. You can even offer to refer them to another Realtor if they would like.

  • Jonathan Dalton 10 years ago

    Not quite John Q. Public, Patricia, but those are excellent thoughts … I like the idea of the out, while keeping the protection for homes already shown.

  • Frank 10 years ago

    when a realtor asks me to sign a buyers agreement, I tell him/her to take a hike and half. Realtors/Brokers that prey on people that do not know any better should not to be trusted. You need to earn client’s turst and make them feel the you are the right person for the job. The minute you give them something to sign that binds to an aggreement that migh cost them money in the future, you lost their trust. Imagine if I walk into a car dealer and they tell me that they are going to show me 20 cars and before they do so, I have to sign an agreement that I will buy from them if they show me the cars. If you are willing to sell properties, then you should show them as many properties as they want. This is how you earn their business, not by signing a buyers agreement.

  • Bob 10 years ago

    That trust works both ways Frank. Most Realtors work hard for their clients and have a right to expect to get paid for it. Imagine if you spent hours of your time researching homes, calling to make appointments for your client, then taking more time and gas to show the client all of the prpoerties that they want to see, and then having the client buy the property they like without you….meaning that you would not get paid for all of the work you did for that client. That could be several days of time and hundreds of dollars in gas. Would you think that is fair? Could you feed your family that way? It’s a lot different than the example you gave. That car dealer can show you 20 cars in a couple of hours and never has to leave the lot. They are all for sale by his dealership so he has all the information he needs about each car at his disposal. The dealer picks up all the extra expenses. A real estate agent is usually an independent contractor and pays for EVERYTHING out of their own pocket.

  • Bob 10 years ago

    By the way, Jon & Patricia, I would have no problem signing an agreement with any agent as long as I understood the agreement and it gave me a fair “out” if I was not happy with the service. Great idea!

  • Frank 10 years ago

    Bob, if you were a good salesman, you would not need an agreement. Most people, when they feel confortable with someone and they feel that they can trust him, they will not go and buy from someone else. By the way, car dealers let you drive as many cars as you want to make a sale, that cost money too. Selling anything cost money, it does not matter what business you in. I am telling you from a consumer point of view, people do not like to sign anything, if you obligate them to a contract, they will feel unconfortable and will never work with you again or refer business to you.

  • Jonathan Dalton 10 years ago

    > if you were a good salesman, you would not need an agreement.

    Not necessarily. I don’t hard close buyers because I believe they have the right to think before making such a substantial investment. A “good salesman” wouldn’t let them out of their sight without an offer on the house signed.

    Many people will not go and buy from someone else. But there’s a subset of the population who seems to look for whatever agent gets them “the best deal” even if it’s mostly illusory.

    There’s no value placed on the amount of time expended or knowledge of a given area. Should there be? Probably. But it isn’t the case. Which is one reason why I believe divorced commissions (buyers paying their own agent’s commission) will result in most buyers going at it unrepresented.

    Bob – thanks for joining in today. I really appreciate it!

  • Frank 10 years ago

    That is not what I meant. A good salesperson does not have to rely on hard sell, instead, by building releationships and providing good honest service. You Do Not Need a Signed Paper. You have to take your chances with that subset of the population that will go were the flow goes, that is part of the business, any business for that matter. I am not going sign a paper with a realtor that turns out to be a total bust, which is my experience with most of the realtors that I have done business with so far.

  • Frank 10 years ago

    One last comment, having a potential buyer sign an agreement before showing houses is a form of hard-sell or hard-close in this instance. (this will be my last comment, sorry to waste your time).

  • Jonathan Dalton 10 years ago

    Not wasting my time at all, Frank … are you the same frank with the home that is/was on the market in Gilbert?

    I see your point about the agreement before showing a house being a hard sell in and of itself. If you’re dealing with both an agent and a buyer who are up front about the whole thing, then it’s really not needed at all.

    Just doesn’t seem to happen as often as you might hope. After a while, you kinda get tired of being used as a taxi.

    Having an out saves everyone involved, though it has to be built in.

    Odds are I still won’t require it. But after being burned for the second time in a month, it became food for thought.

  • Patricia 10 years ago

    Frank is a perfect example of someone who has had a previous bad experience and thus has a hard time accepting any sort of agreement. What is really frustrating to me is that I have seen clients that have been burned in the past get burned again, over and over. Most (although not all) seasoned stellar agents that I know require some sort of agreement at some point. They also have enough business that they have no problems either referring someone who refuses to sign to someone else, or just letting them go their way. So finding a good agent becomes a needle in a haystack, and they get frustrated… and the cycle starts over again. Not that this is always the case, but it happens too often.
    I also think that part of the problem is the perception people generally have of Realtors. They are portrayed as money hungry and lazy, do little to no work for no reward. The truth is that the expense it takes to start out as a Realtor is enormous. If being a Realtor were as easy as TV makes it seem, everyone would be a Realtor. I don’t know of another industry where you work hours as long, spend as much of your own money out of pocket, for the possibility of no reward.

  • Bob 10 years ago

    Well said Patricia. Can I hire you to write for me? LOL I

    Frank,
    I see now your opinions are based on personal unpleasant experiences with Realtors. Just like most professions, it’s hard to find the really good people in the sea of mediocrity.
    Frank,did you know that a real estate agent in Georgia, by Georgia Law, cannot represent you in a real estate transaction without a written agreement. It’s illegal and an agent can lose their license and go to jail in extreme cases. I am not sure what other state laws require but that is why Realtors insist on a signed agreement in our state. If you read the Georgia agreement it actually gives as much or more protection to you than the agent.

    Oh and back to the car sales agent…yes it cost money to test drive cars…but it cost the Dealer that money, not his agent.

    I hope if you use a real estate agent in the future that you get one of the very best! You deserve it!

    P.S. Your post is your honest opinion, supported by your personal experience, and to the point. I for one appreciate that you took the time to speak up. Thanks

  • Frank 10 years ago

    Bob, it is nice to know that law makers in Georgia have the time to write laws that protect consumers, here in AZ they are busy fighting each other. I would not have any issues signing an agreement that protects me as a consumer. I have no issues with most realtors, they all trying to make a living but the majority that I ran into lack people skills. I think most of the issues rise with money hungry brokers that are pushing the agreements. I found that out when listed my house few months ago that they are pushing buyers agreements on clients who are about to list the house with them since the sellers are potential buyers also. What happend to earning someone’s business before you make them sign an agreement. By the way in regard to gas money, I drive 30 miles a day to and back from work, that will change to 50 miles in couple of months, if they have not layed me off by then.

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