A buyer representation (agency) agreement is a contract that delineates -“portrays” the relationship between a prospective home purchaser and a real estate broker or agency like Property 24/7. While the agreement serves as good protection for the real estate agent, the home buyer can get significant value out of it as well. If, as a real estate agent, you have trouble broaching -“raise” the subject with buyers or asking for a signature on this document, here’s some help.
Ask any buyer’s agent who has been practicing real estate for a while and you’ll hear sad stories from those who wished they had signed a buyer to a buyer’s broker agreement, sometimes referred to as a buyer representation agreement. When the buyer finally decided to make an offer, he ended up writing it with a different agent, leaving the agent unpaid.
The Buyer Is Assured of Your Best Efforts
If a buyer is working with multiple agents or is out cruising the open houses, you are at risk of losing that buyer’s business at any time. It’s only logical that you would have a significantly higher level of comfort when a representation agreement is signed, and thus you’d be willing to spend more time and effort in scouring the market for the right properties for your clients.
To help you put this in front of your prospective home buyer in a positive way, you might say that you do a pre-showing drive-by of properties for your clients who have signed the agreement. Due to the time commitment and expense of doing so, you’re unable to offer this service to non-clients. People are very risk-averse and will dislike the idea of missing out on great properties as a result of not having access to this additional service.
A buyer might feel resistant to signing a binding and—in their mind—limiting agreement with you before they know you a little. In this case, you may choose to start working with the buyer and present the agreement again once they get to know and trust you.
Your Buyer Representation Clients Are Exposed to Every Eligible Property
Seeing every eligible property is a very important part of your representation clients’ buying process. If the assurance of plenty of choices doesn’t get potential clients into the mood of signing the agreement, then nothing else is likely to do so. Continued resistance to signing might also indicate a less-than-serious buyer.
Basically, you should say something along the lines of the following: “Mr. and Mrs. Buyer, I am aware of some properties that might possibly meet your requirements that are not listed in the catalogue. I feel it’s in your best interests, and my duty, to look for properties sold by the owner that you might want to see. But we’ll need to agree that I’ll get paid a minimum commission if one of these direct sale properties that I find you turn out to be the right one for you. You can negotiate its payment as part of the transaction.”
Believe it or not, buyers have been known to sue later when they see a home listed that they weren’t shown. It’s just good practice to show them all the homes that meet their criteria and keep a record of doing so.
You Get Paid for Sure
The knowledge that you will get paid for your work will help with your own mental and financial comfort. It’s a whole lot nicer going to the office each day knowing that you’ll be showing properties to buyers who are serious enough to guarantee that you’ll get paid. You’ll also be able to enjoy that great feeling of knowing that you are able to show them all the homes that meet their requirements, as well as having them well-informed as to their choices in representation. It’s not fun having a buyer ask you after a purchase why they didn’t see the home three streets over at a better price.
It’s rarely the buyer’s fault because most don’t totally understand how the business works and how an agent’s compensation is managed. These agreements can be beneficial to everyone involved, putting expectations and an understanding in black and white.
When a Buyer Switches Agents
An agent typically works with a buyer for a few weeks to several months or even longer. The agent’s efforts include introducing the buyer to lenders and obtaining loan pre-approval letters. Agents might email listings that fit the buyer’s requirements and call listing agents to determine availability of properties.
They’ll make appointments with sellers to show homes, and they’ll drive their buyers from one neighborhood to the next, sometimes touring up to 10 homes a day. They’ll research comparable sales.
It’s a lot of work. Then the buyer calls one day in breathless excitement to announce that they drove by a new subdivision, stopped to look at a model home, and signed a contract to buy a new home from the builder right then and there.
That’s great…for the buyer. It’s not so great for the agent who has put in months of work for no compensation. Real estate agents work on 100% commission. If there’s no sale, there’s no pay.
How to Find a Buyer’s Agent
A referral is the best way to find an agent. In fact, many buyers are referred to buyers’ agents by family, friends, or co-workers. But buyers who are relocating to a new area don’t usually have this option.
They can’t quickly figure out which agents list most of the homes in certain neighborhoods by going through online listings of properties for sale. But that would mean those agents are likely to specialize in seller representation, not buyer representation, and this isn’t always ideal.
You might want to run keyword searches on a search engine instead, such as “Property 24/7 agents.” You can also search websites where agents maintain national profiles.
Open houses provide excellent opportunities to interact with clients and to find out more about them. Provide a business card, you should also appear knowledgeable and that your personalities mesh, clients can look you up on our website https://www.prop247.net for more information.
Agreements Should Be Bilateral
Finding someone you work well with can involve a little trial and error. Likewise, as a buyer’s agent will also want to feel that a good match is being made with the buyer.
It’s often beneficial to lock in your arrangement when you do finally narrow your search down to the professional who’s right for you and your needs, and it’s someone who’s eager to work with you.
Like listing agreements, buyer’s broker agreements are typically bilateral. They spell out the rights and duties of both parties. They’re essentially a promise in exchange for a promise. The buyer might have the right to fire the agent if the agent doesn’t ultimately perform. It all depends on the agreement’s terms.
The agreement should also spell out its duration, such as whether it will expire at the end of three months or automatically roll over into a new contract at that time. Buyers and agents can work out the time period that works best for their expectations and needs.
The buyer should not work with another agent to purchase a property during this time-frame.
There’s really no boilerplate contract for this situation. Each one can be different and tailored to the needs and concerns of that particular agent and the buyer. Read the fine print carefully so you know what you’re getting into, and take it to an attorney if you have questions and concerns. Don’t make assumptions.
T’s and C’s
The terms of a buyer’s broker agreement is negotiable. Many agents request a 90-day commitment at a minimum. It’s whatever you can negotiate.
These agreements provide compensation to the agent if buyers switch agents midstream but end up buying a home that was actually introduced to the buyer by the first agent.
Most of these contracts contain a description of the type of property buyers are looking for. Buyers might want to specify the terms and the areas they’d consider in the contract if they are undecided about areas or locations. This will allow you to work with other agents in other areas or at different terms.
For example, you might specify a certain price range. You can choose a different agent to show you homes in another price range if your contract includes this type of information.
Many agents will accommodate a guarantee request if you ask for it. You’d be released from the agreement if either of you decides that the relationship isn’t working out or that your personalities clash. You’re not cemented to a business arrangement if the agent is too pushy, too argumentative, or too stubborn.
The rescission of the contract should be in writing and signed by both parties.
The Bottom Line
It’s important to understand that any agreement you reach and sign is usually with Property 24/7, not the agent. Buyers can often go to the brokerage and ask for a replacement agent if they are unhappy with the individual first selected.
In this regard all our Property 24/7 have been equipped with our certified documentation.
See link to our Property 24/7 Buyers Agreement