Profile picture for SoCal Engr

How does an exclusive buyer agency agreement protect the Buyer's interests?

This is a sample exclusive buyer agency agreement posted here. While it may not be the exact form you use/recommend, are the contents effectively the same? If so, I have these concerns...

2.1 Buyer hereby employs Agent as Buyer's sole and exclusive agent to represent Buyer to find a property meeting Buyer's Specifications.
Nice, Agent's interest is protected against immediate competition. And this protects the Buyer how?

2.1 Buyer shall promptly disclose and refer to Agent all written or oral inquiries or contacts it receives from any source regarding a possible purchase.
Even better. If Buyer finds something on their own, they are contractually bound to bring this back to the Agent?

2.2(d) Buyer shall identify to Agent as "confidential" any communications or information provided to Agent that Buyer considers confidential and desires not to be disclosed by Agent.
So, the only information protected is that which is specifically identified by the Buyer? All other info is fair game to be passed the Seller's Agent? Nice protection of the Buyer's interests.

3.1 Said Agreed Commission is payable without regard to whether the Transaction is consummated as a result of the efforts of the Agent, owner, or any other person or entity.
Sweet! Agent gets paid no matter who effects the actual sale? It's a good thing the Buyer is so well protected.

continued...

  • May 10 2010 - US
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (33)

Please let me put this in perspective:  Representation needs an agreement spelling out what the obligations of each party are.

Sellers agent:  Job is to get the highest price and most favorable terms for the seller.

Dual Agent:  Represents both parties with opposing interests in the same transactions...impossible to do and the reason why attorneys don't do it.

Transactions Broker:  Middle man who neither represents the buyer or the seller; no fiduciary duties of loyalty, confidentiality, or full disclosure.

 Buyers Agent: represents sellers, represents buyers or may also be a dual agent or transaction broker...many hats.

Exclusive Buyers Agent: only and always represents the best interest of the homebuyer, works in an office that never represents the seller.

There are millions of Real Estate Agents in the US...less than .002% represent buyers exclusively.  If you were homebuying and wanted the lowest price at the best terms which would you pick?

Eve in Orlando


  • August 26 2010
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Well, as a local expert with 11 buyers in escrow right now, if my help is wanted or needed, let me know. 

Thank you all for your comments and good luck on your home search.
  • May 15 2010
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Profile picture for sunnyview
Buyers agreement were designed to protect agents not buyers. If the Texas Commission doesn't agree, then maybe they are working for the agents' and not the buyers' interests.

OT Mr. Hale, you can voice your opinions all you want, but you are asked by Zillow's policy not to post your contact info in posts. Here people appreciate agents that are willing to speak their mind, provide information and let them make the choice to make contact through the profile page. Many agents get good contact rates from their time on the board, but only you can decide whether this format works for your business model or not.
  • May 14 2010
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Patrick:

Zillow's policy is fairly simple and sometimes overlooked by posters. No big deal here as you are not the first, nor will you be the last to have content removed.

Simply put, lnks to or contact information within the post is not permitted. Readers/responders are able to contact you through your profile. Many agents have benefited from Zillow and received business as a result of their commentary, opinions, etc. Zillow's policy is designed to level the field for all on these threads.
  • May 14 2010
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So socal_engr...do you work for zillow, are you a buyer or agent?



Actually I just think I answered my own questions since all my contact info was deleted from the blogs that you have written on. So, if I cant voice my opinion and give my contact info so that people actually needing answers are able to contact me, blogging on zillow only seems to help zillow with seo...
  • May 12 2010
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Profile picture for hpvanc
Jkonstant,

I have to disagree with you on this statement: "A la carte buyer's agency sounds good until you start looking at all the potential problems that are certain to arise. The first being that buyer's would be paying for their agent's failure."  Buyers are already paying for agents failure, closing the deal doesn't necessarily mean the buyers agent didn't fail the buyer.  Under the current system consumers do not have enough control over how the buyers agent is paid.  There has to be a better way than the current unofficial tax subsidation of this part of agency, where the only parties that can exert control over the buyers agent commission are the agents themselves.

One example is, how many postings on the sellers board are agents screaming about offering the buyers agent the expected commission for the area, and "if you are really serious a bonus commission."  Then come over to the buyers board having agents stating "buyers agency is free to the buyer and protects your best interests," when they are hoping to steer their buyers to those listings with the bonus buyers commission, whether or not they are creating a good deal for either party.  There are so many other topics I could pick where agents talk out of both sides of their mouths to the respective boards, and know that they are actually harming both sides on the transaction.  That is at least in part because the agents have almost total control over how that side of the commission gets awarded, it is totally lacking for checks and balances.

On the sellers side, "Listing agreements are by design intended to secure a commission and bind a seller, just as BA agreements do to the buyer."  Flat fee ala carte arrangement seem to be available in most markets despite Realtors(c) best efforts, that is balancing the control better with regard to the listing agent, but because neither buyer or the seller can control how the buyers agent is paid, this side is completely out of control.

I'm not even saying that there aren't agents that provide valuable services, I'm just saying that the industry has stacked the deck so that an agent can work as a buyers agent without providing any service, and are debasing the value of your industry as a whole. 

Where I am coming from I absolutely cannot stand being sold to I am very up front with that fact when dealing with any salesperson.  I am also very respectful of your time, and expect the same of you regarding mine (yeah I'd rather be on a forum like this BSing about philosophy).  I do acknowledge that the agents deserve to be compensated for their time showing houses, writing offers, and babysitting a closing, however if I'm paying for it piece by piece, I have no moral obligation not to dump the agent that doesn't meet my needs, and just because an agent succeeds in closing a deal doesn't mean I didn't go ahead and buy in spite of them instead of because of their wonderful sales skills.
  • May 12 2010
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Profile picture for sunnyview
Buyers agent agreements are a complete professional fabrication to benefit the agent. They lies that are told about them are many and often buyers are made to feel that they are not protected or cannot be represented without one. Buyers should not sign ANY contract that they don't understand in full. BA contracts are written to benefit the agent exclusively and should not be entered into without the buyer being fully informed about their binding nature.

Nothing that an agent tells verbally you negates ANY binding conditions in the BA contract. Once you sign one, you are on that agent's leash until the contract is fulfilled, breached or terminated under the terms spelled out in the contract. If you sign a BA and the agent is not good, you will have to ask "permission" from the agent in most cases to be released. That can be a tough sell since most agents don't want to let 3-6% walk out the door. Buyer beware.
  • May 12 2010
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Patrick:

I am one of the few agents here that supports the practice of dual agency. Not because I can double up on my pay, but because it is the easiest form of agency to practice. Have I managed a big fat juicy commission because I was the only agent? Sure, nothing wrong with that. I have also received big fat juicy commissions when I acted as the agent for just one side. A 3% commission can be far less real money than a 6% commission.

It is wrong to think that a dual agent can't get the best deal for both sides, just as it is wrong to think that having your own buyer's or seller's agent will.

The idea that you can't trust one agent to handle a transaction fairly, honestly and within specific guidelines only raises the possibility that it might be doubly dangerous to trust two agents.

A la carte buyer's agency sounds good until you start looking at all the potential problems that are certain to arise. The first being that buyer's would be paying for their agent's failure.

Listing agreements are by design intended to secure a commission and bind a seller, just as BA agreements do to the buyer. Now that the industry has them both tightly bound by contract, the 6% commission is safe and competition within the industry is controlled at the expense of both buyer and seller.
  • May 12 2010
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Profile picture for SoCal Engr
"Every licensed agent is bound to a code of ethics and obligations set under the department of real estate. The buyer representation itself was created to state clearly what the responsiblilties are of both parties and more importantly to protect the agents from not getting screwed over by buyers that use real estate agents as a non-profit."

Patrick, thank you very much for posting this information. Finally, an answer to my question. According to your statement...

 - The buyer representation agreement is in place to protect the agent's interests, not the buyer.
 - The buyer's interests are/should be adequately protected by existing regulations from the local Dept of Real Estate.

Given the above, agents will be ethical/unethical independent of any buyer representation agreement, especially since the role of the agents are fairly well known (since they are incessantly hammered on by the agents). So, the buyer is only protected to the same extent as without one; that they have done their due diligence in the agent interview process.

Knowing that buyers are people, and way too many people now seem interested in win-lose vice win-win transactions, I understand the need for agents representing buyers to protect themselves from unscrupulous buyers. However, it seems that conditions like those in the example I provided are overly draconian and heavily weighted in favor of the agent. With that said, some documentation of the agreed conditions under which the agent works seems reasonable to me.
  • May 11 2010
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Profile picture for SoCal Engr
@ Patrick - Having nothing to do with the quality of your input...
 
Please check your post on this discussion. You will note that Zillow is working to remove all of the website/phone contact info you are including in your posts. Please do us all a favor and quit including this info in your posts.
  • May 11 2010
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Profile picture for hpvanc
"Now let me ask you this: Even as an honest agent, if you knew for a fact your seller would go lower and knew your buyer would go higher, how would you be getting the highest possible offer for your seller and the lowest possible sale price for your buyer?"  You present the offers and let them decide without trying to influence them, and tell them that you have a fiduciary responsibility not to give advice at that point. 

"Most people seem to be okay having the seller pay me a commission if and only if they actually buy a house."  Yes most people also accept that it is free to the seller which is not at all true and a factor that keeps real estate agents from having credibility with intelligent people, in addition to keeping the market open to numerous abuses.

By the way it is against Zillow policy to put links to your website and an entire billboard in your posts.  If you look, you will see that it has been removed where the moderators they have caught it.  See here http://www.zillow.com/advice-thread/Please-help-to-bail-me-out-Loan-request-ZR-BXHLTFD/349312/#comment-response-1118293
  • May 11 2010
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Profile picture for sunnyview
Mr. Hale, you might benefit from reading the policy on Zillow against self promotion here. Hotlinks to your site and a contact block are really not needed in every post since Zillow offers a profile page so that people can learn more about you.
  • May 11 2010
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It is customary that the seller pays for the commission for both buyer and seller and is agreed to when the property is first listed for sale. Now let me ask you this: Even as an honest agent, if you knew for a fact your seller would go lower and knew your buyer would go higher, how would you be getting the highest possible offer for your seller and the lowest possible sale price for your buyer?

I definitely do agree that my services have value that buyers should be willing to pay for, that is why all of my past clients have referred others to me or use me on other deals. Hey, if any buyer would agree to pay an upfront fee for my services, of course I would be willing to accept, however, most people seem to be okay having the seller pay me a commission if and only if they actually buy a house.


Have a great day.

MY MISSION: "Help Over 360 Distressed Home Owners Avoid Foreclosure!" - [link removed by moderator]

Patrick A. Hale, CDPE, RSD
Certified Distressed Property Expert I REO Listing Specialist
BROKER/REALTOR

"The Best Way To Predict Your Future Is To Create It!"
CALIFORNIA REAL ESTATE & MORTGAGE, LLC. I [link removed by moderator]
A Division of Real Estate Professionals of America I [link removed by moderator]
[contact info removed by moderator]
  • May 11 2010
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Profile picture for hpvanc
"The commissions are already factored into the asking price of the home anyway, so rather than wasting your own valuable time, find a EXPERT."  So in affect an unofficial tax has been created on both the buyer and the seller, (pay to play for the seller, and not paid directly by the buyer) to subsidize said experts?

"On the listing agreement the agent states an amount of commission that will be paid to the agents, standard 6%."  So no one negotiates a reduced commission if the agent handles both sides of the transaction?  Oh wait they do, "banks will not allow double commissions to one agent" and some other sellers too. 

"They also will be trying to get the highest offer for the seller under their contractual obligation. Then the buyer of course wants them to get the lowest possible offer for them? Not possible."  So an honest agent would not be able to act as a dual agent to broker a deal that nets the seller more than they would get otherwise, and a better price for the buyer since the commission was reduced and the reduction split between the buyer and seller?  I would agree that there is opportunity for abuse here, but is it truly any more so than with a buyers agent that no controls how is paid?

"The buyer doesn't pay anything up front to the buyers agent, that is why this representation agreement was made, to secure that if an agent puts all of their time, effort and money into finding a home for a buyer, that they will get paid."  So you don't believe that your services as buyers agent have enough apparent value that people would see the benefit to paying for them on a fee for services or retainer (if trust is earned over multiple transactions) model, and that you have to create this unofficial tax to subsidize the real estate agency guild?   That may or may not be true, but it would certain shift the balance between consumers and agents.  If the buyers are able to make a choice, whether to go through the listing agent, or hire at their own expense a buyers agent it will definitely shift the balance between consumers and agents, but will it change anything between buyers and sellers other than eliminating some of the unofficial tax that currently subsidizes real estate agency?
  • May 11 2010
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Every licensed agent is bound to a code of ethics and obligations set under the department of real estate. The buyer representation itself was created to state clearly what the responsiblilties are of both parties and more importantly to protect the agents from not getting screwed over by buyers that use real estate agents as a non-profit. The buyer doesn't pay anything up front to the buyers agent, that is why this representation agreement was made, to secure that if an agent puts all of their time, effort and money into finding a home for a buyer, that they will get paid.

The BUYER (as stated previously) is protected by the department of real estate and the laws that agents must uphold. If the agent does something wrong, they can lose their license and be sued because they are a licensed professional.

One BIG TOPIC that many buyers assume is that they will get a better deal going directly to the listing agent. I will tell you that this perception is 95% untrue in the current market and here is why:

On the listing agreement the agent states an amount of commission that will be paid to the agents, standard 6%. From that we as agents decide how much of that we are willing to offer to a buyers agent - typically 1/2 or 3% however, because of technology and other factors these commissions have been reduced to 5% with 2.5% split. If I am listing a BANK OWNED PROPERY OR A SHORT SALE - I WILL NOT DOUBLE END THE COMMISSION. Agents will have another agent that works in their office represent the buyer in the transaction because banks will not allow double commissions to one agent. This makes the listing agent not really care if you come to them or not and if they are a listing agent and have the home priced right alot of listing agents wont have time to work with you with a prequal or anything else. They also will be trying to get the highest offer for the seller under their contractual obligation. Then the buyer of course wants them to get the lowest possible offer for them? Not possible.

The commissions are already factored into the asking price of the home anyway, so rather than wasting your own valuable time, find a EXPERT. If an agent knows what they are doing and has the time to devote to you, then use them. If they are uneducated and don't seem to pose a benifit to you, then don't and find an agent that does. I have had great success as a buyers agent. Negotation is key and knowing the local market and other agents in the local market will be the only way to really get a good deal on a home.

MY MISSION: "Help Over 360 Distressed Home Owners Avoid Foreclosure!" - http://www.reofsd.com

Patrick A. Hale, CDPE, RSD
Certified Distressed Property Expert I REO Listing Specialist
BROKER/REALTOR

"The Best Way To Predict Your Future Is To Create It!"
CALIFORNIA REAL ESTATE & MORTGAGE, LLC. I www.REofCA.com
A Division of Real Estate Professionals of America I www.REofUSA.com
Toll Free: (866) 538-6057 I San Diego: (619) 309-7883
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  • May 11 2010
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Profile picture for hpvanc
Socal,

I think this is an excellent discussion, 8 responses from agents, and only one of them acknowledged the question.  The rest of them just used it as a opportunity to present the normal spiel. 

Jkonstant,

You are a very unusual agent, and that is the best compliment I can think of for a real estate agent.  Too bad I couldn't find someone like you when I was looking.
  • May 11 2010
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Profile picture for Chuck19889253
These agreements are designed to establish a working relationship between agent and buyer client.  The sample buyer broker agreement you used is, in fact, very heavily stilted in favor of the agent/broker, and spends little or no time detailing the benefits to the buyer client.  I'd be reluctant to sign it, too.

I prefer to use my "Buyer Services and Loyalty Agreement" instead of the traditional buyer-broker agreement.  This loyalty agreement spells out in specific detail the services I provide my buyer clients.  This assistance includes, but is not limited to:

1) Securing best financing program for buyer's situation;
2) Frequent updates on new properties that meet their needs;
3) Arrange private showings on all listings, new construction, FSBO, and even unlisted properties;
4) Prepare a Comparative Market Analysis before buyer writes an offer;
5) Assist with offer to get best price and terms possible for buyer;
6) Present all offers on buyer's behalf, and negotiate in buyer's best interest;
7) Refer client to qualified affiliated professionals with respect to buyer's purchase;
8) Guide client throughout the entire proccess from offer to closing.

I work very, very hard on behalf of my clients, and I believe (and hope you do too) that the services I provide have great value.  All I ask in return is loyalty from the buyer.  Inform me which properties are of interest, and I'll arrange showings, without consideration of commissions offered, or any incentives offered.  In the interest of disclosure, I ALWAYS disclose if there is a selling bonus being offered. If and when the buyer finds the property he/she wants to own, then he/she agrees to write the offer through me.  Buyers are not obligated to purchase or build a home.  I think that's a reasonable trade-off for my time, my efforts, my knowledge, and my skill. 

The key, of course, is to develop rapport and trust before signing any agreement.  I don't doubt that there are those agents whose work is not commensurate with the commission to be earned, and it's those agents who make a bad name for the rest of us.  Working with a committed real estate professional can be a huge, huge benefit to a buyer.  But buyers do need to scrutinize the agents they come in contact with, and choose to work with one who is honest, ethical, and hard-working.  Believe me, there are for more agents who exemplify those good qualities than there are slackers and bad apples. 
  • May 11 2010
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Profile picture for hpvanc
I for one will never sign another buyers agency agreement, I made that mistake buying my 1st home. 

Despite the time involved in it I believe that it would be better to go directly to the listing agents, and negotiate a reduced commission.  Unless there are buyers agents out there that will agree to refund the full buyers agent commission, or negotiate it out of the contract and work purely on a fee for services model, or if they had established enough earned trust, a retainer, I will not be engaging another buyers agent.

The idea that the buyers agent can be compensated by the seller, then that agent cannot truly work for the buyer.  They are working for sellers in general, and not for the buyer. 

There is also the issue of additional compensation from the sellers on a property are there any buyers agents out there that are honest enough to put a clause in the contract that the bonus commission will be rebated to they buyer?  If not how do you expect us to trust you not to just steer us to the highest commission properties.  I am pretty sure that is exactly what the agent I used was doing, she never suggested a property I was actually interested in, and became upset when I refused to even look at the ones she was sending.
  • May 11 2010
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Profile picture for The Red Squirrel
Yes, the buyer agency agreement is designed to protect the agent, but it's primarily there to prevent the buyer from finding a way to weasel out of paying the agent anything. There are plenty of buyers who would have no qualms about stiffing an agent for time already spent researching and driving them to homes.

Looking more deeply, it's a symptom of the commission-based compensation system for agents. I think this system needs to be revisited to allow agents to be compensated fairly for their time, commensurate with their skill and experience instead of how well they can hustle a mark.
  • May 11 2010
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Profile picture for SoCal Engr
"Thats why you find an expert agent before you sign an exclusive representation agreement."

If you check around, the problem most consumers have in this area is with agents who are real good at "closing the listing" (or, "closing the buyer"), but then problems arise in the execution of follow-through. At that point, it is too late - the contract/conditions are already in force.

@ jkonstant - For what it's worth, I agree with you about the fact that the contracts tend to protect the agent/broker vice the consumer. However, I also see the side of wanting to avoid driving a client around to see houses and then have them go use someone else without a valid reason.

If I was to enter into one of these agreements, I'd want the following changes...

I'd want "kick-out" clauses added, identifying the agreed conditions under which the contract could be voided, and the process required. At least, I would then not find myself in the "now what do I do?" situation.
  • May 11 2010
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These agreements are designed to protect the agent and broker commissions. I wonder how often an agent sits down with their prospective buyer client and simply states, "Look pal, signing this also means that if you go around me, you might have to pay me anyway." Or "I expect x% if you buy anything while we are working together and if the seller is not covering this amount, you will make up the difference."

Two very real problems with exlusive agreements is they bind the client without any guarantee of performance by their agent and penalize them if they manage to succeed without their agent's effort. It could be argued that an agreement like the one socal presented could effectively prevent a client from buying a home they want.

Now, a buyer's agent can provide benefits and should be able to do so without the constraints of a written agreement. I have never used one, I have managed as little as $500 on a $300K FSBO sale and have had buyer's find and buy something without my assistance and after spending a fair amount of time with them. It happens and I have never been bitter about it. Why not? Maybe I didn't or couldn't perform. Maybe it had nothing to do with anything I did or didn't do and things just worked out that way. I don't have the time or desire to be bitter or act like a two year old claiming to have been "burned".

I don't consider riding around, listening to some tunes and generally bs'ing while looking at a few homes to be real work. Neither is calling a few listing agents and setting up showings really work in my mind.

Again, a buyer's agent can be very beneficial, but a contract is no guarantee.

Finally, a big reason I do not like them is I like keeping the option at my sole discretion to kick a "loser" buyer to the curb.
  • May 11 2010
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Thats why you find an expert agent before you sign an exclusive representation agreement. Agents require this sometimes because we put a lot of time and money into each buyer without any payment. The buyer doesn't pay for the agent, the seller does. 

If you find an agent that knows what they are doing and proves that to you, that is the only time I would sign something with an agent. You can always back out of the contract with mutual agreement and you can ask the agent for a non-exclusive. For most agents however, the less you are willing to commit to them, the less they are going to spend time working for you. 

Most people don't like to work for free and unfortunatly many buyers screw over agents even after the agent has put hours of their time and hundreds or thousands of dollars working for a buyer or seller.

The buyers interest is also protected because the agreement explains exactly what the agents or brokers are responsible in doing. 

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  • May 10 2010
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Profile picture for real estate mike
The agreement you refer to is not used by many agents. Some brokers require its use and some agents use it to protect them since it spells out obligations, terms, and clearly defines if the agent is acting for the buyer alone or as an intermediary. Just so you know, s.e., I reduce my commission if my broker is acting as intermediary, since my responsibilities and obligations are lessened. The paperwork is the same but the buyer(s) is presented with the neighborhood solds, expireds, actives and pendings and makes the decision with none of my opinion(s) on where to start negotiations. Another whole topic.
  The agreement also holds buyer information confidential which is a plus. The agreement spells out for the buyer the need for additional professionals which may not seem like a big deal but many first time buyers rely on their agent to know everything and protect them in all areas of the purchase when this simply isn't possible. The home inspector is a good example, appraiser is another.
   The protection period you speak of, is in my opinion, mostly neccessary because an agent hasn't shown value to the client or the client perceives that the value isn't enough to justify working with the agent. Or the agent could take the buyer from just looking to this is the house and then the client decides to utilize their acquintance, friend, family, etc. to work the contract and get a commission when the first agent brought about the deal.
  So in my opinion, the agreement spells out obligations, clarifies who the broker is representing, and protects the agents earned monies. The market area can be as narrowly defined as one property, a neighborhood, town, etc. Now personally if a potential buyer decides we are not a good fit for any number of reasons I would be hesitant to have my broker enforce the protection period. If I haven't earned trust, loyalty, couldn't find a good fit for the client then who's likely to blame?(me) I think the agreement can be utilized for good since it allows the consumer to set expectations in writing, shows how the client will be represented and allows the agent to focus on helping the client and not; will this be pulled out from under me when I've invested x number of hours in this client. Could proper communication upfront ensure a better buying experience, yes.
  • May 10 2010
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Profile picture for SoCal Engr
C'mon now agents. You've posted all over the forums about how important it is to have a buyer's agent, secured by an agreement, to protect the buyer in the RE transaction. I've found an example of an exclusive buyer agency contract - and just have some concerns about how the actual clauses/conditions protects the buyer.

All I'm asking is for you to address the following two questions.

1)  Is this example representative of the types of clauses/conditions contained in most Buyer Agency agreements?
2)  If it is, how does it protect the Buyer's interests?
 
You can add all of the other spiel into your post, but so far no one has addressed the actual sample contract and questions. This is your big chance to put substance behind the marketing.

Cheers
  • May 10 2010
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@ Mitch - I call BS on the "using a buyer's agent doesn't cost". The cost is built into the overall transaction, so the cost is there. You can argue all you want about who "actually pays", but the cost is built into the pricing of the house.

And...

You have also successfully not answered the two basic questions...

1)  Is this example representative of the types of clauses/conditions contained in most Buyer Agency agreements?
2)  If it is, how does it protect the Buyer's interests (i.e., insure the Buyer gets all that wonderful service and representation you referenced)?

What "threat" is it that you guarantee your agreements against? Are you saying that your clauses/conditions are more weighted towards the Buyer's interests than the example I found online?
  • May 10 2010
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Profile picture for Mitch Young

If you are looking for a home, using a buyers agent doesn't cost, it pays. When you use a buyers agent, you get the experience and advice of a professional that does this type of work daily for a living. Your home is your biggest investment, use a professional to help guide you through this. I guarantee my buyer agency agreements so there isn't a threat.

  • May 10 2010
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Profile picture for SoCal Engr
@ Suzette - And the sample contract implements all of these wonderful services how?

Your marketing spiel sounds good, but what does the agreement do to make it anything other than "spiel"?

One of the big things I've heard multiple times is "without an exclusive Buyer's agreement, there is no guarantee that the agent will not share your information with the Seller." However, if you refer to section 2.2(d) of the sample agreement, only the information explicitly identified to the Agent as "confidential" is protected. Based on the wording, I read this as protecting the Agent when information is shared that shouldn't have been...and the Buyer didn't explicitly say "Now, don't share this."

This is just one example, but the basic question is two-fold..

1)  Is this example representative of the types of clauses/conditions contained in most Buyer Agency agreements?
2)  If it is, how does it protect the Buyer's interests (i.e., insure the Buyer gets all that wonderful service and representation you referenced)?
  • May 10 2010
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A Buyer's Agent is representing you!  When you work with a Seller's agent, that agent is working for the seller. Although they owe you fair and honest treatment, they have a client relationship with the seller and are looking out for their best interests.  

The Buyer's agent has obligations to you that they will not have to you as a Seller's Agent. For instance, when you are about to make an offer, a buyer's agent should prepare a market analysis for the home you are interested in and help you determine the best asking price. They should also be working for you to help locate the right property beyond how a seller's agent does. This might be done by writing letters to homeowners who have properties that might interest you, making phone calls on your behalf, and sometimes even advertising to help find the right home for you.  When the negotiations finally do start between buyer and seller, the buyer's agent will be working to get you the best possible sale price, Whereas as the seller's agent, his obligation should be to try to get the very most money they he can for the seller.  

Yes, you will need to have an exclusive relationship with the agent you sign with, but usually the seller has an exclusive agreement with their listing agent too.  How is this different?  The buyer's agent is going to have a lot more to do for you than he would as a seller's agent. Just make sure you choose an agent that you think is effective, knowledgeable and honest.

 In the event that the buyer's agent finds a "for sale by owner" for you, or you notice one and fall in love with that particular house, your agent is going to help you negotiate effectively, and in most cases assist with all inspections. Also remember only one side of the commission will be paid in this kind of transaction. 
  • May 10 2010
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Profile picture for SoCal Engr

@ Pat - I probably don't, but that's not the reason for this post and question. Over and over, agents on this forum tout the benefits of this agreement to make sure the Buyer's interests are protected. I just would like to know how this document protects the Buyer...it seems more aligned to protecting the Agent's interests.

Cheers

  • May 10 2010
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I have the same answer as I stated above: 

From your question, I understand that you do not like exclusive buyer agency agreements.  My answer is that you should find a Buyer's Agent who does not require you to sign an agreement.

  • May 10 2010
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