Trust Me, I’m a REALTOR®
Update 9/2015 to this 2007 post. Frankly. com, the unique home search site will now be exclusively for the benefit of our clients after a 10 day no obligation trial, that means signing one of these contracts. Read below to better understand it, and watch this VIDEO on why. Exclusive Buyer Agency Agreement?
This is a contract that a buyer is oftentimes asked to sign by a buyer agent Realtor. In part it commits the buyer to use this one agent exclusively for several months. this? ,? Where is the Whats in it for me? in that proposition? Use another Realtor if you dont like this one? be paid!
Bypass the buyer agent and make the listing agent give me the commission? Walk into a New Construction and sign papers, who needs a Realtor for that? I got them down k! Have 2 or 3 eager Realtors compete for your business.
Each one working their tail off to find you that hidden gem. Doesnt cost you anything, so why not? (just like the Double Agents show, where see If you find the home, why should he get paid anything? Why sign an exclusive agreement, when you can sign a agreement? My broker requires it before showing you anything.
This is standard. If you dont sign this, then I am legally working for the seller. If you sign this, it acknowledges that I am working for you, the buyer. (my favorite, as the law reads, it is true, but in reality, it is just a pitch) What a ton of B. S. So let me know if I missed anything. All of the above is the typical viewpoint of the buyer right?
I know it well. I grew up with it. My mother was the most and would never sign one of these agreements. She didnt see the how can this help me.
In part it is the Realtors fault for not explaining the process clearly. But, and here is the, I have seen the other side! It isnt always as shady as it initially appears and. As a Realtor, many newbies feel bad getting their clients to sign these contracts.
Sometimes they let it slide, until one day they understand. Then Ill go into how it helps the client. What? This exclusive contract can help the buyer?
How in the world is this going to come around full circle? Ah, the suspense. I was helping some clients buy a home in 2004. Many buyers might think we are paper pushers, but some of us Realtors go above and beyond.
Including once of one unit. Why? Because of The agent only had 1 photo, and the buyer was out of town, so I created a virtual experience for them. (I do this for all of my buyers, I take about 50-100 photos of EACH place we see together and I create on online private album for them to remember everything. Does your B. A. do this? ) Anyhow, we put an offer in on one place.
We didnt get it. Im ok with that. I could have talked them into a higher price, and won, but I didnt do that. I worked for their best interest, not mine.
Then they found a For Sale By Owner. It was literally (as many FSBOs are). They had me run the numbers and do a full analysis on the neighborhood etc. I even helped them talk through what they wanted to offer.
I warned them no matter how upgraded it was, it was a really high price. It was like buying the best house in the worst neighborhood. They decided to offer anyhow. I then get an email the next day saying that my services were no longer needed, they had bypassed me and bought the FSBO for k over what it should go for. , (hours wasted).
Having some consolation knowing. Since then I require my clients to sign an Exclusive Buyer Agency Agreement early on. Not before the first showing, like some, but shortly thereafter. I give them enough time to feel me out, but I cant invest a ton of time with a customer that is still shopping around agents and might bolt at any moment.
A catch 22 of sorts. So, ok, you got screwed, that sucks, help me understand how this helps me, todays buyer? The contract outlines what the agent gets paid. Mine says 3%.
And that means if a listing is offering 2% (only a few homes do), my buyer pays the balance, and if there is a FSBO offering 0%, my buyer pays the full 3%. Wait a second, that sucks. Ive always been told that the seller pays. Again, a sales tactic brainwash: Buyer agents are Free.
Dont believe that. Guess who is writing the check/loan for a 0,000 house? Guess where the Realtor fees get drawn from at closing? Correct, that check.
You are indirectly paying for all the fees. b. Wait it gets better. My exclusive agreement also states that if the buyer compensation exceeds 3%, the rest is rebated to the buyer! See ( ) Isnt it great no just normal that you have a contract that outlines what your Realtor is getting paid?
Overpayments/bribes go back to the buyer, and there are no behind the scene shenanigans going on. , and they can give unbiased advice. Come on, human nature is going to kick in. How can you ask a Realtor What would be a good deal for this, (a question I dont directly answer, but that is a long story) knowing t hat if the buyer doesnt buy this place, the buyer still has the right to snatch up another place and fire the agent. if their commission might drop from ,000 and guide you through a lower bid? It just cant happen.
The agent in this situation is NOT WORKING WITH THEIR BUYER, BUT AGAINST THEIR BUYER. This does NOT help the buyer. : Buyer agent is working FOR the client, not competing against them). Double their efforts. What Realtor in their right mind is going to go above and beyond and try to find you houses that are off the market or spend too much time on a buyer that doesnt see the process as a team effort? I oftentimes send out letters to entire communities that my buyer likes.
And that works. Usually for every 10 MLS places I show, Ill scrounge up 1 or 2 places that are yet to be listed, withdrawns, FSBOs, or another hidden gem. Without that commitment from the buyer, Id see it as a waste of time, or too risky. More time invested in finding you more places equates to a better price or more inventory/options.
Help you or help another committed buyer? A good buyer agent will be turning away clients, or referring to another good agent, when they get too busy. If you want a new Realtor that has nothing better to do than drive you around forever on the 50/50% chance you will use them, great, but why not use a Realtor that respects your time as well as their own time and puts his foot down and sets guidelines for the work that they perform? buyer agency agreement? I heard some agents will use that.
Doesnt that help me while protecting me? All that does is a) squelch the I work for the seller trick and b) outlines how the Realtor gets paid. Both good things, but knowing that the buyer might go buy something after seeing something at an Open House or a new construction without them, the bias will still be there for you to buy quickly and for a higher price. What about New Constructions, isnt it better if Im Realtorless? (wow a pitch that you might have heard, that is essentially true).
But, yes, on a rare occasion the sales office might get a bonus if they sell a unit to you without a Realtor, but who cares?. Who cares if you got them to drop ,000, a good Realtor might be able to say Wait, in another community across town, they have been dropping 0,000! or Dont believe their comps, they are illegally not posting the seller subsidy (see ). Recently I helped a client get a new construction for ,000 under if the prices of the condos continued to drop (a pricing guarantee). That single handedly could save him ,000.
And all you thought we did was show up with a smile and cash our check? What about the can buy? Will I get a free ride at least? Also in one case with an Arlington new condo, is the sales office going to sinking?
Um, I dont think so. What about bypassing the buyer agent and making the listing agent give me the commission? Heck even Money recommended this step (see From somebody that has been in over 10 national publications, (CNBC, WSJ, NYTimes etc) magazines sometime give new reports a beat to cover. Sometimes they are not experts and they think they can jump in and reinvent the wheel.
This reporter is an idiot. When a listing agreement is signed, it is between the seller and the agent. If an offer comes in with 3% back, the buyer cant simply void the listing agreement. The offer is netted out and the listing agent.
Even if they dont still get it all, (oftentimes they do) you still have nobody representing you to help you get the best price and help you avoid all the shady Realtors tricks that are out there (DOM fudging, etc). Who cares if you save 3% if a good buyers agent might have been able to get you 5% or more? What about these FSBOs, isnt it better if I find one without a Buyer Agent? Yes.
In theory. But those FSBOs tend to be cheapskates. This is fine, but cheapskates (like my mother!! ) are notorious for overpricing! Great you save on Realtor fees, but you get a horrible deal.
With a Realtor who is on the same team as you, can help you evaluate the pros and cons of that unit and also strategize how you can get the seller down. No not just with a low offer, but other ways. I love dealing with FSBOs that think they know it all. My client pays the Realtor fee (wink wink) but then they get the place for k under true value.
Again, yes, signing the agreement that is underpriced and not offering Realtor commissions. That is a risk that you have to understand and be willing to accept, in trade for the other benefits of having a dedicated Realtor. Buyers cant have it both ways. You cant expect an agent to work their tail off for you, offer unbiased data analysis, and offer aggressive negotiations the agent knows you hold an out card.
What, is the agent expected to just that his time invested will work out favorably? Is it worth holding onto that out card? That is up to the buyer, and if they see any value in their agent. Ive put myself in the buyers shoes.
I know where they are coming from and their hesitations. I can understand and respect that initial viewpoint. Now put yourself. How likely is that agent going to be to help you try and fight for an extra ,000 or ,000 off?
Human nature would kick in and say, Why should I be aggressive on this offer if they might just go elsewhere if this deal doesnt happen? If I sign one, when should I sign it? Wait until you are comfortable with your agent. Even if the agent didnt ask for one, consider signing one before you put in an offer.
That way you are saying a) What are you getting paid? b) Dont worry, I will use you, now tell me honestly about the value of this place. Good luck. Hopefully after reading the rest of this blog that highlights the, you will better understand why this exclusive buyer agency contract is requested by some and required by others and how it ultimately helps the buyer. Also make sure to leave a comment and read others comments. 703-827-4OO6 Please report all typos, I dont like looking stupid.
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