There are a couple of forms that I always have buyers sign before making an offer (because the Tennessee Real Estate Commission makes me, not because I like paperwork). I usually start explaining what these mean and I see eyes start to glaze over. Nobody wants to hear it. But. They. Should. Listen.
What are you talking about, Jules?
Glad you asked.
I'm talking about a buyer's representation agreement and a confirmation of agency disclosure.
Buyer's Representation Agreement
Many buyer's agents will request that you sign this as soon as you start looking. And that is definitely a valid request. Basically, it's an employment contract between you and your agent. Prior to signing this agreement, legally, you don't have an agent. Since I work pretty much exclusively with buyers, I don't ever really have a conflict of interest (i.e. I'm not showing you a house for which I am working for the seller) and I don't ask buyers to sign this form until they are ready to make an offer.
So what are you agreeing to when you sign this form? You are agreeing that you will call me no matter whose name is on the sign in front of the house you like. If you go to an open house or otherwise come in contact with another real estate licensee, you'll tell them that you are already represented. There is also a clause that specifies how much you will pay me in the event that the seller doesn't. In practice, I always fill this in with $0 because that's just how I roll. Other Realtors® will disagree strenuously with me but that's OK. We all run our businesses differently.
So what am I agreeing to when I sign this form? I am agreeing to put your interests first, to keep anything you tell me confidential and basically work for you to the best of my ability. There's some other stuff too but these are the high points (I don't need you falling asleep and taking a nose dive into your screen here).
Confirmation of Agency Status/Disclosure
This form discloses to all parties to the contract (see how well I speak legalese?) just who is working for whom. If you are buying a house in Chattanooga, you want to see the box that says "Agent for the buyer" or "Designated agent for the buyer" checked underneath the name of the person you are talking to and telling all your secrets. If you don't see one of those boxes checked, keep your mouth shut.
Maybe you did call the name on the sign in front of the house. And maybe you never signed a buyer's rep agreement. And maybe you just told "your agent" that you want to offer $175,000 for the house but you'd really be willing to pay $200,000. If "your agent" is listed as being an agent for the seller on this form, guess what you're going to pay for that house? Yep, that's right, $200,000. Because the seller's agent is legally obligated to tell the seller, "Hey, this guy is willing to pay two hundred grand."
So take this good advice from me to you and make sure you know who you are talking to and who that person is working for. And hire a buyer's agent to look out for your interests. It almost never costs you anything but it could save you a lot.
**These forms are specific to Tennessee real estate. For my out of town visitors: there's probably something similar in your neck of the woods.
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