What That Buyer Broker Agreement You Signed Really Means

Jonathan Dalton, Phoenix Real Estate AgentThree weeks ago I received a call from Sarah. She was still living on the East Coast, her husband was here, and they were looking for a home they could rent in Estrella Mountain Ranch. She asked for additional information, which I sent to her via e-mail.

On Monday I received a follow-up call. Sarah was in town and she and her husband wanted to look at my rental. She also wanted to know if it was available via a lease option. I turned her over to my rental specialist, who sent her the listing sheet and proceeded to set an appointment to show her the home Tuesday afternoon.

Tuesday morning I receive a call from a real estate agent who “has been working with Sarah for several months.” This is the first I’ve heard of the agent. When I mention I’d spoken to his client several times already he told me, “well, I have a buyer broker.”

Jump back to July when I received a call on a listing in Palm Valley from someone up in Washington. I answered all of her questions and sent her information on the home. We spoke a couple of times about the property. And then I received a call from “her agent” to set an appointment. When I told her I’ve been assisting her client this whole time, she said “well, I have a buyer broker.”

So what does that really mean? What does it really mean when a buyer signs a buyer broker agreement?

For starters, they are agreeing to work exclusively with that agent. Any questions they may have need to be funneled through their agent, not the listing agent. Because if they do go through the listing agent for information, and the listing agent has evidence of procuring cause, the buyer will be paying their agents’ commission out of their own pocket.

Some will argue this is as it should be. Depending on the day and the presentation, I may or may not disagree.  But as an agent holding the buyer broker, all you are guaranteed is that you’ll receive a commission if a transaction closes. Whether it’s paid by the seller via the listing agent or directly by the buyer is another story.

[tags]AAR purchase contract, buyer broker agreements, Phoenix real estate[/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

  • Chris Butterworth 10 years ago

    We’ve had this discussion numerous times in our office. In the end, I think the type of market you’re in dictates the ultimate response.

    In our current buyer’s market, we owe it to our sellers to do everything we can to sell their home. Standing firm on the buyer’s side of the commission is a good way to drive the buyer away, since they won’t want to risk having to write a $10,000 check to their “other” agent. Driving buyers away from our listings is not a good idea.

    In a seller’s market, many buyers will do whatever they can to ignore their “other” agent. They will very likely risk a lawsuit from him/her in order to get the house they really want (our listing).

    Either way, the agent holding the buyer broker agreement isn’t guaranteed anything but the right to collect a commission. They might take the buyer to court, and they might win a judgement, but that doesn’t mean they get their $10,000 check right there in the courtroom. It might take years, or never appear at all. And in the meantime you can be the buyer will be bad-mouthing the agent all over town.

    These are bad scenarios all the way around. I wish more buyers agents would do a better job of explaining the rules of the game to their buyers, so these types of situations don’t come up as often..

  • Jonathan Dalton 10 years ago

    I agree with you on that, Chris.

    Let me make clear, I never told the agent they’re not getting paid. I told them they need to have a talk with their client to explain that the agent is supposed to be doing the work with them.

    Yesterday, when my rental agent was waiting at the house for her appointment with the buyer when the buyer decided to go with their agent AND NOT CANCEL THE ORIGINAL APPOINTMENT WITH MY AGENT – yeah, there I was a little angry.

    In the past, though, I’ve worked with agents even after I’ve showed the house and answered all the questions and even paid them their co-broke. I didn’t have to, but I did to make sure the sale happened for my sellers.

  • Jennifer Kirby 10 years ago

    It probably comes down to that agent not thourougly explaining what a Buyer’s Agent does, or what that agent expects of their client. I always tell my buyers that if they have any questions, to call me first. And also that if they just can’t resist to call a listing agent, to please give professional courtesy and tell them they are represented. Once I explain “confidentiality” and how what they say to a LA could be reported back to the seller, they usually call me to do the work I was hired to do.

  • Jonathan Dalton 10 years ago

    Good point, Jennifer … I had a field day on one where, again, the client called and didn’t tell their agent they were doing so. I was showing them the house as the agent called to tell me there were going to make an offer.

    As we spent three days negotiating (and dealt with other issues), every time he told me how much inventory there was, I could tell him in all honesty “you and I both know your clients want this house, not one of the others” because I’d been with them as they gushed over the home for an hour.

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