WHEN ARE BUYERS GOING TO "WANT" TO SIGN A BUYER'S AGENCY AGREEMENT?

I spoke with a nice young lady a few days ago who had not been able to find a Maryland buyers agent who would help her find a home that she could buy using VA financing.  Not a problem.  I assured we were experienced with VA loans and VA buyers, which we are.  Not many have been written in the past 3-4 years for homes in Maryland because of the strong seller's market.  The MLS listing would even state:  "No VA or FHA Buyers".  But, times have changed and we have settled a few VA buyers in the past few months.  In Maryland and Northern Virginia home sellers declined to entertain VA loans because:

1.  VA appraisals are often low in a rapidly appreciating market with no other government appraisals

2.  VA orders repairs pursuant to the Va appraisal/inspection that wouldn't be a problem with conventional loans.

3.  Sellers don't want to pay the lender fees and the VA buyer cannot.  Not a problem because we recommend  a lender that will waive them for our buyers or I'll pay them.

So, our agent spoke with the buyer, arranged a tour for yesterday.  At the end of their tour, our agent gave the buyer a copy of the Buyer's Agency Agreement required by Maryland license law.  The buyer had been provided with the Agency Disclosure "UNDERSTANDING WHOM THE AGENT REPRESENTS" at the beginning of their tour.  We can tour with a buyer as a "presumed buyer's agent" but after the first tour, if the buyer wants us to represent them, we must have a written agency agreement.  That's a combination of Maryland license law that describes the different types of agency and Lenn's law which says, we'll tour once, but then we MUST have a written agreement if we are expected to fully represent our buyer.  It shows the agent that the buyer is going to be serious and work exclusively with that agent and it permits the agent to:

•                            1.  Evaluate Property (Condition or Price).
•                            2.  Negotiate for a buyer.
•                            3.  Write a contract.

SOME HOMEFINDERS.COM DEDICATED BUYERS AGENTS

This evening we got e-mail from the buyer advising that she "didn't want to sign anything" and that she had found an agent who would be her buyer's agent and she wouldn't have to "sign anything".  So be it.  The buyer even went so far as to quote the part of the Agency Disclosure that says that an agent is a buyer's agent with a WRITTEN AGREEMENT.  She actually read the form and still wanted a buyer's agent but didn't want to sign anything.  I wrote her a note wishing her well and because I wanted her to understand the facts.  It won't make any difference because when it's over, it's over.  But, it is just sad when sellers are anxious to sign and buyer's would rather take medicine. 

====================== LETTER TO BUYER ========================================

Hi [BUYER].

I understand from your mail to Joyce that you are going to select another agent to assist you in your home purchase.  We wish you well and hope you have a successful settlement.

However, you are incorrect in your interpretation of Maryland agency law.  As evidenced by your own copy of the Agency Notice UNDERSTANDING WHOM THE AGENT REPRESENTS, an agent is NOT a buyer's agent without a written agreement.  We understand why buyers are reluctant to sign anything, but the law is the law and
we follow it to the letter, even if it means losing a buyer. 

Three things an agent cannot do without a written agreement are:

1.  Evaluate Property. 
We would be negligent in our duty to our buyers if we showed and sold properties with visible defects.  However, without a written agreement, an agent cannot evaluate property for condition, price or anything that would cause harm to the buyer.  We will not sell property without using our experience in evaluating property for condition and value. 

2.  Write A Contract.
An agent cannot legally write a contract as a Buyer's Agent without a written buyer's agency agreement.  That is the law.  If there is a dispute about price, condition or anything following the contract presentation, an agent who does not have a written agreement with the buyer cannot represent that buyer in any dispute.

3.  Negotiate for the Buyer.
An agent cannot legally negotiate for a buyer without a written Buyer's Agency Agreement.  Negotiating for a buyer begins when writing the terms and conditions, in addition to the offering price, closing help and includes negotiating for repairs, possession and any matter in which there is an advantage for either buyer or seller and the buyer's agent presents the buyer's position. 

So, while we do require a written agreement, in order to follow license law in the State of Maryland it is the only way we can do our job for our buyers with the experience, skill and vigor that we pride ourselves in doing.  Further, full representation by a Buyer's Agent is not dependant on who pays the agency fee.  We are ALWAYS paid by a percentage of the listing agent.  We do not accept fees from our buyers.  Further, we pay for the Home Warranty and the Home Inspection to make sure that our buyers have peace of mind following settlement.  There really isn't any more that we could do to help folks in their home buying adventure.

But, we often find buyers who lose the advantage of a REAL buyers agent, one who follows the law in order to represent the buyer/client fully, simply because they "don't want to sign anything".  You're not the first and I'm sure you won't be the last.  But, we won't mislead anyone into thinking that they can have a buyer's agent by uttering the words.  We know the difference.  The explanation is clearly described in your own quote below.

Good luck to you.

Lenn Harley
Broker
Homefinders.com


          Quote from buyer's e-mail dismissing our agent.

3.        Buyer's Agent

A buyer's agent is a licensed real estate broker, associate broker, or
salesperson.  The buyer's agent exclusively represents the buyer (or
tenant), but may also assist a seller.  The agent's fee can be paid by
either the buyer or the seller as specified in a written agreement.

*          A buyer's agent evaluates the property, prepares an offer, and
negotiates in the best interest of the buyer.

*          Before a buyer's agent can represent the buyer, the buyer and the
buyer's agent must sign a written agreement.

[BUYER]

Source:  Maryland Agency Disclosure, required disclosure AT FIRST SCHEDULED FACE TO FACE MEETING.