You Are Fired! or Not? - Do You Use a Buyer's Representation Agreement?

Home : Blogs : Randy L. Prothero - Hawaii REALTOR® (808) 384-5645 : Hawaii Randy's Blog

You Are Fired! or Not? - Do You Use a Buyer's Representation Agreement?

Fired

This question is continuously debated. I have a few reasons why I have decided not to use them to this point:

If I get a bad client, I want the option of firing him.
If a client is not wanting to work with me I don't want him.
You can't make someone buy a home.
If I get a bad client, I want the option of firing him.

On the other hand I have run into a couple of situations that makes me think I may want to reconsider that decision:

Other agents have tried to poach buyers I have shown their listings to.
Some lenders have offered special rates if they go to their participating Realtor. I lost a client to this.
Buyers have been known to approach the seller or seller's agent directly to try and negotiate a better deal.
A way of servicing a buyer who may want to buy a property not offering a commission to cooperating brokers.

I am hoping to hear your experiences for and against Buyer's Representation Agreements.

--------------------------------------------------------------------------------------------------------

Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR

Century 21 Liberty Homes

Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.

Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) and the Leeward Regional Chairman of the Honolulu Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.

www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations

Posted by Randy L. Prothero - Hawaii REALTOR® (808) 384-5645 on 11/15/2006 01:55 AM

Comments (19)

buyers, contracts, agency, hawaii, mililani, realtors, real estate

Generate short URL

19 Comments on You Are Fired! or Not? - Do You Use a Buyer's Representation Agreement?

NOV

2006

Always have your Buyer sign an agency agreement, as soon as possible. Why run the risk of doing all that work without some guarantee of payment? No wonder clients take such advantage of realtors! We don't require any commitment from them!

Aloha Rich, How do handle the client you decide you do not want to work with?

I have actually had this happen. I fire myself. I write up an addendum that cancels and voids the agreement. Most Buyers don't want to work with an agent who doesn't want to represent them for whatever reason. Refer them to someone else. Any contract can be voided as long as it's agreed to by both parties, in writing.

I handle it with professional diplomacy. I try to put things in a positive light. "Mr. Buyer, you really need someone else to represent you. I appreciate you giving me this opportunity, but I think another agent might be better suited to meet you specific needs....

I am good saying no without insulting people.

I am just concerned that by having a signed agreement that I am obligated to provide service.

Well, typically, both parties realize when the relationship isn't working out. Most buyers aren't going to want to force someone to represent them.

Rich, Thank you for the feedback. You have definitely given me food for thought. I will certainly revisit my policy.

Randy:

You bring up good points but I'm sure you can address the "termination clause" in your BAA.

I'm alwyas a fan of the signed piece of paper. Kind of follows the old saw "good fences make good neighbors"

Two words Procuring Cause. One result Commission.

In CT it is the law. We cannot even show a property without one. So if I am unsure of someone I sign a short term agreement say for one month. You can even sign for one day if you like. At least protect yourself on the homes you have shown them.

Every class that I take that deals with this topic, the instructor always says that this form should be used. I dont agree with asking my buyers (mainly first time military buyers with almost no savings) to sign a form that says they will pay me out of their pockets if the commission paid isnt equal to.......or that they will pay me a commission if they go for a FSBO. The majority of them only have enough for the earnest money deposit to start with and they are getting ready to make the biggest purchase of their life. And now I should get them to commit to paying me out of their pockets if they dont comply with the agreement? Maybe if I was dealing with a different category of buyers then I may be more inclined to use it.

Partner Paul & I work mainly as Transaction Brokers.

Occasionally I will have a buyer that insists on a buyers broker agreement and then I use one.

We always use a written Buyer Agency contract when representing the buyer just as we do with our sellers...use a written listing agreement.

If the buyer is a "customer" and not a "client" than all we need is a written agency disclosure stating that we either #1 representing the seller or #2 are acting as a non agent...representing no one.

In Hawaii we do not have sub-agency or transaction brokers. We have buyers agency, sellers agency, dual agency or no agency (FSBO, etc. who is not represented by a Realtor).

I have seen where some agents in the area have in their buyer's representation agreement that they are guaranteed a specific commission percentage. If the listing is less than that amount the buyer has to make up the difference. That is the one David referred to.

I see where local laws can really impact our point of view on this subject.

"preferred REALTOR" taking a deal away, with a tie to a lender that gives a better loan deal? Sounds like an ethical breach to take up with NAR, not to mention a civil case of tortous interference with a business relationship. I think it might even be illegal in some states, but I'm not certain (as it effectively is collusion and something like an undisclosed fee sharing agreement). If you showed the buyer the property, you are procuring cause.

I like the short-term agreement, and/or one that both parties can cancel. It's in the buyer's best interest anyway - few would list their home without an exclusive agreement (or the MLS wouldn't even allow it in), why would they do the same for buying - do they really want to tell all their confidential personal, family, financial, etc. details to a whole bunch of agents, only to have all of them working essentially for the sellers whose properties they respectively took the buyer to, instead of whichever one is in the buyer's best interest?

Randy, I agree with everything you say. I do use the form once in a while. Really depends on the situation. Good old clients, never!!! New one's that wasn't a referral and just got placed in my lap somehow, Yes! I keep the dates fairly short, about 90 days or so. This helps with creating a mindset that I'm not here to show you homes forever and it also allows the opportunity to get out of the contract if needed. Plus I don't ever see myself really acting on these contracts legally, it's there more to help set precedence.

Great write though.

NOV

2006

I agree with Gabriel. I do think justice has been served. I have had three different clients since who were considering that lender. During the process they somehow decided against them.

I like you approach Michael. I am planning to dust off that buyer agreement and keep it for those situations.

Thank you for your input.

NOV

2006

I've always used one here in Idaho, but across the river in Washington, it isn't used at all. This past week I went to a class in Washington, and the instructor had a really good BRA for Washington that I think I will start using. Up until the class, I didn't know that one existed for Washington. I will run it by my broker first.

Shari, good luck with that. I have spoken to a couplke of local agents from other companies who are strongly advocating the use of them. I am going to spend some time studying what they use to try and come up with a plan.

When I first started in the business I was surprised that no one in my office used them. After a few weeks and a bum buyer I decided no to use them. I think the idea of going to them for some clients may be a good idea.

This blog does not allow anonymous comments

Randy L. Prothero - Hawaii REALTOR® (808) 384-5645

Mililani, HI

More about me…

Century 21 Liberty Homes

Address: 95-221 Kipapa Dr., E3, Mililani, HI, 96789

Cell Phone: (808) 384-5645

Email Me

Listings

Links

Archives

Find HI real estate agents and Mililani real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.