Ken's Naperville Real Estate Blog : WHAT IS UP WITH BUYER'S AGENCY AGREEMENTS?

WHAT IS UP WITH BUYER'S AGENCY AGREEMENTS?

I was reading a post featured on Active Rain this morning. 

The post was written by Canadian Realtor Lindsay Walls and titled "The Real Reason you should sign a buyer representation agreement." 

I know my opinion won't be popular amongst the real estate agents, but...

I DON'T USE BUYER'S AGENCY AGREEMENTS.  IF I WERE A BUYER, I WOULDN'T SIGN ONE. 

Yes, I understand the arguement.  Buyer's agency agreements explain both parties responsibilities in a real estate transaction:

  • The Agent's Responsiblity:  LOYALTY, OBEDIENCE, DISCLOSURE, CONFIDENTIALITY, REASONABLE CARE, DILIGENCE, and ACCOUNTING. 
  • The Buyer's Responsibility:  Must make sure the agent gets paid if they buy a house.  Any house.  A for sale by owner.  New construction.  Even dear old Mom and Dad's house.  Your Realtor must get paid.  And if the seller isn't going to do it, then you, the buyer, will have to.

The agent's responsiblity seem fair enough.  But do I need a written contract to tell me how to do my job?

I believe the buyers agreement is there to cover the agents butt.  I can assure you, it wasn't written by buyers...

Realtors as a workforce don't like working and not getting paid.  Who does?

So if the Realtor getting paid is the buyer's main concern, they should sign the agency agreement.

If the buyer's concern is great service?  Then how in the heck signing a contract binding one to a Realtor is going to accomplish this.

As a consumer, the one way you can GUARANTEE great service is by maintaining your right to go elsewhere.  Once a buyer signs the agency agreement, they lose that right.

As a Realtor, I would never ask my clients to give up that right...

Ken

 

Comment balloon 15 commentsKen Tracy • November 28 2009 10:03AM

Comments

Ken, I'm with you on this one. If I ever give less than great service to my clients I want them to walk. Period. No piece of paper can restore lost trust or redeem broken promises. My buyers' freedom to shop around is my incentive to be diligent, professional, and thorough...and nice.

Posted by Dave Roberts (Healdsburg Sotheby's International Realty) over 8 years ago

Hi Dave.  Thanks so much.

I was scared to post this.  I expected to be shelled by a mass of agents.

Thanks again and keep rocking,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 8 years ago

Ken.  Most astute post I've read of yours.  You will get shelled.  Everyone will have an anecdote about why Buyer Rep Agreements are so important empirically but rest assured you are 100% correct in your action AND your reasoning.  Kudos sir.

Posted by Leonard Thomas (RE/MAX Dallas Suburbs) over 8 years ago

I would let a buyer go elsewhere if they were not happy with my services.  A contract would not bind them to me.  It all has to do with the individual agent.  Some want to fight for their commission others do not want to go through the trouble.  There are plenty of buyers out there to be fighting over one.

Two months ago I let a homeowner out of their listing agreement.  If they tell me they want out due to changing their minds or financial reasons that is fine with me.  Better to know early on then to have spent lots of advertising money.

Posted by Angelia Garcia (Pure Realtors) over 8 years ago

I DON'T USE BUYER'S AGENCY AGREEMENTS.  IF I WERE A BUYER, I WOULDN'T SIGN ONE. 

Hi Ken,

I'm not sure what the answer is.  Different states have different rules.  Recently a very nice agent told me she had invested lots of time and gas money showing houses.  The buyers then used someone else to complete the transaction.  This lack of loyalty hurt her feelings and her wallet.  She told me she will never again work without a buyer's agreement. 

Posted by Bruce Brockmeier, Coached By Crouch (Internet Marketing Consultant to REALTORS®) over 8 years ago

You know it's funny the only person I have ever heard say that I "should" use the Buyer Broker Agreement is my Broker. 

HOWEVER, I have used it on clients who had wasted my time for lengthy periods...meaning, I showed them homes over and over again, and with the EXACT criteria they had told me they were looking for, within their price and location, only to time and time again, have an excuse of why they didn't like it.  SO, AS A LAST RESORT...I've used the Buyer Commission Agreement. 

Funny how it helps to motivate the serious buyer's in finding a home and CLOSING transactions.  Maybe because they now feel they are now commited to the transaction, and by signing it tells me (and them) that they are in fact serious about purchasing a home.

Oh, the other option was for them to move on and find another agent...because after 1 or 2 months of home searching, they already know I am doing a good job and working hard for themmost buyer clients realize they now run the risk of having to take the time to find another agent that will give them the same effort.

I don't look at this form as an explanation about how I should do my job, or me asking my buyer's to give up their rights, in fact I rarely use this form, but I do use it as a motiovational tool to help weed out the "lookie loos" when I need to.

Posted by Paul C. Wilkinson, GRI, REALTOR -Menifee, Murrieta, Temecula - (951) (CENTURY 21 Preferred) over 8 years ago

Hi Paul, Bruce, Angelia, and Leonard.  Thanks for stopping in.

Leonard, I can't believe it.  You like this post?  I was sure you would disagree...

Maybe I am on to something.

Quick point.  Bruce mentioned a Realtor friend that will never show a buyer without an agreement.  I hope she changes her mind.  She will lose business in the long run.

We all occasionally get "screwed" out of a deal.  But you can't punish the masses because of one bad experience.

At least I choose not to.

Paul, great points. 

Angelia, I am with you on fighting for commission.  Next!  I am too busy to waste time like that.

Thanks again everyone,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 8 years ago

Man let me be the one who takes the contrary opinion.  I have all my clients sign one.  I put a clause in there that allows the client to terminate me at any time.  So by inserting this clause I'm addressing your concerns.  I want the clients to sign this, because that indicates that they can at least sign something.  If they can't sign this, how are they going to get up the nerve to sign a purchase contract or a mortgage app.

Posted by Mike Henderson, HUD Home Hub - 303-949-5848 (Your complete source for buying HUD homes) over 8 years ago

I'm with Mike.  My clients sign but are free to walk at any time if my service is not up to par.  That keeps me on my toes.

Posted by Linda Lohman, Former Teacher/Broker (Fonville Morisey Realty) over 8 years ago

Hi Linda and Mike.  Thanks so much for stopping in.

Well it sounds like you both have a setup that works out amicably. 

I just don't like the extra paperwork, as a consumer, or a Realtor...

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 8 years ago

Hi Ken,

Relax dear. I won't shout at you...! :) However, I think if every one worked with honesty I would say I am with you. But, I have had a few cases when I had worked hard for the buyers and they have ended up sneaking to someone they knew, a cousin, a new friend, or someone in their community of ...!  I know in order to be fair we have to either have all or none to sign it.  With some of my clients I would feel dumb to ask them to sign agency because they are very loyal and honest. And, some I do not want to work for unless they are willing to commit themselves to me.  Because I know I will work hard any way. 

For instance, I have one client I am debating to ask him/her to sign it.  I really do not want to even log into MLS for him/her unless I know he/she will be loyal to me. I work hard regardless of fear of losing them.  This particular buyer has been referred to me by a past client who not only had me work hard to find an impossible for her, she even asked me to give up my commission on a small condo that I found for her to a mortgage broker's office (her nephew happen to be working there) so she could get a better rate...! The mortgage Broker's office apparently had someone who did Real Estate too.  I did not agree and kept my earned commission.  Later I worked hard to find another property for her. She promised me verbally and told me, "Oh, I wouldn't have you work and buy something on my own".  *** And, guess what, she did buy with someone else.    

But, the fact that SOME buyer's level of understanding can be such that they do not respect other people's time is mind bugling for me.  So, that is why I think the signing of the buyer agency is important. But, one agent doing it and the others not is not effective in my opinion.  Every one should do it.   Why should we work with someone who does not want to be loyal to us...?

Hoody

Posted by Hoody over 8 years ago

Hi Ken,

Relax dear. I won't shout at you...! :) However, I think if every one worked with honesty I would say I am with you. But, I have had a few cases when I had worked hard for the buyers and they have ended up sneaking to someone they knew, a cousin, a new friend, or someone in their community of ...!  I know in order to be fair we have to either have all or none to sign it.  With some of my clients I would feel dumb to ask them to sign agency because they are very loyal and honest. And, some I do not want to work for unless they are willing to commit themselves to me.  Because I know I will work hard any way. 

For instance, I have one client I am debating to ask him/her to sign it.  I really do not want to even log into MLS for him/her unless I know he/she will be loyal to me. I work hard regardless of fear of losing them.  This particular buyer has been referred to me by a past client who not only had me work hard to find an impossible for her, she even asked me to give up my commission on a small condo that I found for her to a mortgage broker's office (her nephew happen to be working there) so she could get a better rate...! The mortgage Broker's office apparently had someone who did Real Estate too.  I did not agree and kept my earned commission.  Later I worked hard to find another property for her. She promised me verbally and told me, "Oh, I wouldn't have you work and buy something on my own".  *** And, guess what, she did buy with someone else.    

But, the fact that SOME buyer's level of understanding can be such that they do not respect other people's time is mind bugling for me.  So, that is why I think the signing of the buyer agency is important. But, one agent doing it and the others not is not effective in my opinion.  Every one should do it.   Why should we work with someone who does not want to be loyal to us...?

Hoody

Posted by Hoody over 8 years ago

Hi Hoody.  Thanks for stopping by.

My clients are loyal.  My concern is my clients best interest.

If a client ever wants to sign one, I will happily oblige...

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 8 years ago

I am not an agent, broker or realtor of any kind.  I am a buyer who got stabbed in the back with this buyers agency agreement.  My wife and I were going to buy a home and have been working with a realtor for several months.  We put two bids on houses but was not lucky enough to get eigther.  During this bid process we signed several pages of paperwork.  One was a buyers agreement that we never received an explaination.  The only explaination was that it dealt with dual agency and things like that.  I know, I should have read more carefully but we trusted our realtor.  Anyway, after the second bid and not getting that house, my wife and I went through some dramatic personal issues where we thought for sure we were going to divorce.  This happened all in one weekend.  During that weekend, we called our realtor and told her we would not be looking for any homes any longer and told her why.  After the weekend, my wife and I worked things our and began counseling to make our marriage work.  Still needing a house (living in an apartment was adding to our stress - two teen kids).  So we decided getting a house was something that could help our stress level and help our marriage.  My wife learned about a new development and looked into it.  She found a good house at a good price.  We talked to contractor and decided to sign contract.  We didn't go through our realtor because we were pretty embarrased over the situation.  We ended up sending her a thank you card with a gift card telling her we appreciated everything.  We told her we ended up working things out and bought a new constructon home.  That didn't settle well with her.  Now she is demanding her commission becuase of this freaking agreement.  Pure trickery and just plain wrong.

Posted by Tricked by Agreement about 8 years ago

Hi Tricked.  Sorry to hear about the challenges you are facing...

Good luck!

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 8 years ago

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