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Buyers Agency Agreement's Help you of Hurt you?

This blog is inspired by Randy Prothero's blog titled A good case for buyers agency agreements. Now I know there are some who insist on having these agreements pre-signed before they take up with any buyers, however if I did that in my market I would have no one to work with.

The buyers of Luzerne County are not someone who can easily be swayed into signing anything much less a contract that will make you the beneficiary of their house purchase commission.

That is the local mentality and it's the proverbial hard nut to crack. It's like handing someone a prenup, that says trust ME while I look out for ME. Can this be a self inflicting sabotage on your relationship?

I have learned that in my market folks need to be comfortable with their business relationship first before they sign anything. Once you have them comfortable their loyalty is pretty much guaranteed. I said pretty much. Yes there will be those that burn you, but had I held out a contract initially I would not have the successful relationships established.

There are a few things I have done to protect myself from those who are time wasters and Realtor hoppers. In Randy's case his client was lost to an Open House. Getting people to use my sign in sheet is a constant effort and unless they do, they WILL NOT VIEW THE PROPERTY. Believe it or not there have been some folks who have refused to sign in! I have bluntly told them, you are waisting both of our time, and off they went.

When I conduct my open house I have a Sign In Sheet that will ask specifically if you are working with an agent. If they have an agent, I will happily answer all their questions, show them the property, and tell them to HAVE THEIR AGENT CALL ME period.No other real estate questions are asked on my end, like are you prequalified, did you sign a broker agreement ect...

I was recently at a Rich Dad Poor Dad seminar, and through out the meeting the speaker would say The Early Bird Catches the Worm....

Web Site owners this means YOU! When I get a response to my web site I WAIST NO TIME. Call the number, e-mail back promptly, do not wait! I could guarantee that they have several other web site owners e-mailed and usually the one who responds first gets the deal.

This is how I know if they are jerking me around, when I ask how soon they would like to start viewing properties and they respond ASAP, I know I'm in the running...

My web site usually takes the worry of are they prequalified off my hands, and they typically have that information out of the way and have the prequalification in order, so I want to jump right in and show properties and build the relationship.

The Consumer Notice is the first paper they sign and that is with me reasuring them that it is NOT A CONTRACT.... I could tell by the body movements, the facial expressions, the down right soon to loose interest in you, if I persisit with a Buyer's Agency Agreement.

So for my Real Estate practice, I go by my gut instinct and know when to not loose a client. After a few visits in their company, I think it is a comfortable time to bring up the contract and know by now how well the two of us can work together.

Just my opinion, and experience from Luzerne County

By Diane Velikis The Luzerne County House Hunter

www.luzernecountyhousehunter.com

Posted by Diane Velikis Luzerne County Real Estate on 10/05/2007 11:32 AM

Comments (53)

luzerne county buyers real estate contracts

53 Comments on Buyers Agency Agreement's Help you of Hurt you?

OCT

2007

I agree 100% Diane,

I din,t think anyonein our office could find a buyers agency agreement if they had to, Not sure we even have any.

At the end of the day you will have somebody burn you but that may be the price of doing business in your area

Hugh, I guess it depends on your area. I'm sure some places are a little more aggressive with the buyers agency agreements, and people will sign just about anything. My neck of the woods does not work that way.

Charlie, As I said there are few times that you can get burned... But doesn't that happen when soliciting the FSBO? Doesn't that happen when your helping anyone?

Diane, we will take people out once. Then they need to sign and be as committed to us as we are to them.

Missy, That sounds like a great idea. My area might require a few meetings, and if by then I am getting no where I cut them loose. Most of the time though it is a comfortable signing with no pressures and the knowledge of whether or not you can work well.

Diane, I agree with Missy - I present the Buyer's Agency Agreement at the first meeting (in office), and explain the search could potentially take a lot of time and energy, and I want to be as committed to them as they are to me; I use it more as a tool to build a partnership, vs. a "binding legal document" - our agreement even has a valid until line, so I can put in one day or 6 months, and I'm protected for any properties I show them during that time frame.

Different parts of the country are just that, however, so you may need to follow your region's customs to make buyers feel comfortable. For me, I've learned not to put people in my car, or just "show" them a house with having more of a conversation with them first...

Diane, I love the post. It may be different all over and that I'm not familiar with but as a consumer I would like to meet with and speak to my Realtor a few times to make sure that is absolutely the person for me to work with. I read recently that a Realor would only show a prospective buyer a total of 6 homes and then they're done; I know it took far more than 6 before I purchased my house, but I DID purchase and my Agent did not seem to mind at all. Just my 2 cents as a consumer.

Carol, I agree with not putting people in my car, and for saftey reasons rarely have them ride with me. I think the folks in my neck of the woods are just a different breed then most. Not to many computer savy folks where I'm at, and gaining their trust could be a bit more of a task.

Carole, I can understand where you are coming from! If by the time you are ready to sign my agreement we have a good relationship and should make the house hunting enjoyable on both of our ends. Very few consumers want to commit to someone they don't know.

Diane, I agree. You have to leave a little room for relationship building. I try to discuss the agreement on the first meeting, but I don't go very long before I require an agreement.

Perhaps I'm just a tired old dog who can't learn new tricks, but I too disfavor buyer agency agreements. I've considered them and for for a time even tried them, but found them to be more of a hindrance and obstacle to my real job of finding these folks a home. I've never bothered to count all of my buyer tranactions, but there's a lot of them - and I can say that over the years, only three went south via FSBO's. Even armed with a Buyer's Agency - in a small market like ours, if I were to make a public "to-do" about getting my money, I would be seen as the "heavy." No, i still prefer to build customer loyalty the old fashioned way. Thanks for letting me know I'm not the only one.

Al, Relationship building is the ultimate success of your business. In my case that takes time.

Jack, Your proof to yourself that Old Fashioned is the way to go! We are a people business, and people have to feel comfortable with us! I don't know of too many people who see this Buyers Agency Agreement and feel very comfortable at the first meeting. If someone isn't happy with you, you should be able to set them free and not wave a contract under their nose! I know of someone who deliberately HELD OFF buying their house until a contract time was up!

There are 444 agents belonging to our MLS... we are not a large area actually a rural, agricultural area. I know of only a handful that use buyers agency agreement for probably the same reasons you state. However I am one of the handful.

My experience is you need to sell value added to get the job done. I provide my customers/clients the choice. If they want full representation with me literally turning over every rock and providing a very high level of service then they select the agency agreement. If they don't then they select the non-agency agreement. Both spell out my duties and obligations. Give people a clear choice, don't be pushy and work your hinney off and let the chips fall where they may. If they elect the non-agency (only 2 in about 50 this year have). I give them basic information...may even take some time if I have it then available and show. But that is it. If they choose to contact me later then I provide basic information unless they want to enter into agency. I have been doing this for almost two years now. Everything is in writing and I have had customers upgrade from customers to client on occasion. I have had some sales to the the customers and have closed about 87% of those that took the agency. By the way I also tell my proposed clients that I limit the number of people I keep under agency for level of service reasons (and I do). On any give day I have about 8-12 clients under agreement.

Hi Diane,
I say agents just have to know their area and what works there. In my area, we do get Buyer's Agency agreements signed prior to showing properties. It works, because everyone does it. I have had a buyer refuse to sign it and in that case after questioning and learning they were not working with another agent, I showed them properties. They signed the agreement at the end of the showings. Bottom line, is I think, we have to use our best judgment of what to do in given situations.

Diane - I understand what you are saying completely.

Perrin, That is a great system you have working for you, and I am really glad that you shared it with us! I too limit my buyers for the very reason you do. Perhaps you should write a blog about your system?

Cynthia, Thats just it. Different area's may need to be worked differently. I think that your bottom line is the right answer!

Jason, It's like asking for a commitment on the first date around here LOL

Diane, I've always operated this way. In my market, there are many agents who don't show a property without a buyers agency agreement. I just prefer to build loyalty by showing that I am loyal. I've only lost a few, and I think I would have lost a lot more if I had insisted on the BAA! Blessings!

Elizabeth, I know that I would loose more if I insisted on having the BAA signed! And I think you are right, I perfer to show my loyalty and build a relationship first. Thanks for the comment :)

Diane...

As you know this topic (BBA's) has been the source of many heated debates on AR.

Way back...When I did work with Buyer's...I insisted on the BBA.

In our market not having a BBA puts us in the 'chauffeur' position.

To this very day we get many calls from vacationers who want to look at houses on their last day in town.

That particular point reminds me real estate is local. What works for you or for me may not work for other's.

P.S. No BBA ... No taxi cab :)

TLW...ROAR!

Our market is different as well......11,000 agents JUST on our island alone....ha! Good luck with a BBA getting signed. As long as I have been with our office ONLY ONE was signed and it was suggested by the BUYER...who was a walk in....and it turned out he just wanted an agents full attention....and was a nice guy too.

I think you've got to have good rapport & trust with the buyer before they commit to a BBA.

Absent that, in our current market, with so few buyers and so many hungry agents they may not be so agreeable to it.

IMO BBAs work better in a seller's market than in our present market.

Getting a BA agreement signed here (so far) has been fairly easy- in NY, it's just starting to become visible. It's definitely a local thing- it would be much harder to create that agency if all agents provide buyer protection. Here, few do, and fewer do with regularity. When they all understand and offer it, we'll likely see that it takes more in the way of a few meetings. An interesting twist- we are showing two properties today that indicate in the mls that BA is not compensated (also not uncommon) so if they like one of these, what I wonder is will the seller decline an offer of an agent representing the buyer? I highly doubt it, if it's within reason.

There are many strong advocates of using the buyers agency agreement on AR. Not that I'm against the concept...I just find that buyers, though loyal if I do a good job, don't want to sign that piece of paper! C'est la vie...

It's interesting that it's easier for a new agent to get a buyer's agency agreement signed than for experienced agents - because they don't know that they can't or don't know that it's hard.

That being said, I generally present the agreement at our first meeting, then explain that we'll have one search trip before WE decide whether we want to continue working together or not.

Diane... I appreciated your post, and agree with the way you choose to run your business. I'm from the old school, and we must earn the trust and respect of our clients. That cannot be done at the first meeting.

I understand the rational for the BA and must admit that I have spun my wheels, been abused, and been dissapointed more than once, but am satisfied to get paid when I do my job.

Bingo...

A star fell on Diane.

Do you need a band aid? :)

TLW...ROAR!

I have had quite a bit of people that wouldn't sign the document at my previous company but when I switched companies I noticed a huge difference. I sit down with the client prior to showing them houses and go through the paperwork. I ask them to please read it over and if they are comfortable with me by the end of our appointment to please sign it. That way they don't have it forced down their throat right at the beginning and are much more receptive to it. I haven't had a single client refuse when I handled it this way.

Wow, I had to step out and show a property, and I didn't think I would have so many responses!

TLW, I sincerely think as you said "Real Estate is local", and to Sally, I think your a good follower of gut instinct and that too plays a huge role in how soon a client will warm up to you. Stacy, Corie, Sharon, Laurie, Armando,

Just reading your responses is proof that what might work out well for one, does not for the other, getting back to gut instinct and real estate being local. For me, my way of keeping clients and growing relationships has to be the way it is.If I loose some, thats OK, because the odds that we would have worked well together were not very good.

Thanks all for commenting on my post :)

TLW what do I need a bandaid for?

Wow, I had to step out and show a property, and I didn't think I would have so many responses!

Thanks all for commenting on my post :)

TLW what do I need a bandaid for?

I've never used one in the past, but am considering it. I will definitely be taking your soft approach. Take them out once, and if they like working with me, they'll be much more likely so sign upon our second outing.

Thanks!

Rebaters are exactly why you would want it signed. I seriously doubt enough people buy homes on line to keep them in business. Somebody is opening those doors.

Diane, In my area we are kind of old fashioned, however, the BAA is mandatory by LAW here. We are not allowed to represent a buyer and have a buyer sign an Agreement of Purchase and Sale without a BAA in place.

I usually get one signed just prior to the offer being done since I don't feel I need, nor want, a piece of paper binding someone to me nor me to them. I work with people on faith and they work with me on faith.
I know my brokers prefer that we get one signed as soon as we meet a buyer and begin to work with them, however to me that is almost like saying 'I don't trust you and in order to trust you, I need you sign this.' I do trust people, and if I get burned the odd time (which has never happened ), then I just as soon it happened that way because I do not want to work with someone who does not want to work with me.

thanks for another great post...

Mary, Makes since to have one, however if it costs you a client who needs time (and most of them do) your better off taking the slow approach

Amanda, I never really gave thought to online purchases, you raise a good point!

Jo Thats what I do too! By the time the offer is in place I have the BAA. Thanks for stopping by!

LOL...

If a star hit you and hurt you in the process ...

I thought perhaps a band aid would be needed :)

TLW...ROAR!

I am adding Buyer's Agency Agreements in my business, but will not use them in all cases. I agree you have to go with your gut.

Interesting perspective on Buyer Agency Agreements. My market is a little different, being a resort market, if I don't have a Buyer Agency Agreement signed, I usually won't hear from them again when they leave town. It's always fun to run into someone who you had spent the weekend with showing homes a year earlier telling you about a house they just bought. I find that when I have this agreement signed, my now clients are very loyal to me.

I have learned that to make buyers comfortable with this process, you don't just stick an agreement in front of them and ask them to sign it, you have to detail what you will do for them. On top of the typical agreement, I sign one that I designed that explains previewing homes, negotiating contracts, buyer protection, CMA's, etc.......everything we already do that buyers aren't aware of. The biggest point I make is that they can have all my services and expertise at no cost to them.

We have the same situation here. Our buyers get suspicious as soon as they see the agency documents! And ditto on the web site. They've already signed in and/or e-mailed other agents. You have to respond ASAP!

Diane,

You know I love you, but I have to say that I have had a buyer's agency agreement with every client I have. I guess it's just the way I learned to do things. I might not have them sign it before we get started, but since I give them the consumer notice right away and tell them it's not a contract, I do let them know that I will require them to sign a buyer agency agreement with me. Throughout the course of the day we get to know each other much better and we can determine if the relationship is a good match. By the end of the day, I have a buyer agency agreement signed.

Another note. I always write on the contract that the client can fire me upon written notice. This gives them an out if they're not satisfied and assures them that I will work very hard for them. In the end, I've never been fired and I have extremely loyal clients. Just my two cents worth.

Congrats on the feature, by the way.

TLW, Thanks again for the honor of chosing me to be the administator for the Spiritual Rain group. I will do my very best!

Randy I think you are right. Go with your gut! You will know the ones who are skiddish...

Tim Very interesting on resort selling. I suppose you need to make a huge impact real fast to get the sale!

Lisa I'm all for warming up the relationship first.

Andrew, That is very INTERESTING! I have found people much more reluctant to sign! I have also been one to go with my gut. I have had people who signed BAA's stop looking for houses because they were not happy! Later they look me up and we search hassle free for a few days before I ask them to sign. Oh well I guess you have that way about you! :) BTW I didn't know I was featured until you told me LOL

I compleatly agree. It is the same way in my market. Good post!

Chris, Thanks! It's all about keeping your customer comfortable and building that relationship!

I require my buyer's agent to use a Buyer agency contract. The first time out is a freebie but after that they need to sign a contract. I always explain I would not take a listing without a contract and I cannot take out a buyer without one. If for no other reason than that they have read in our contract that:

We are not:

Attorneys

Home inspctors

and so on. There is alot of responsibility attached to being a buyer's agent and I need to make sure I have spelled out clearly what we will and won't do.

Diane......

Just as many have said...what works for one might not work for another.... central Florida is so spread out that you NEED a Buyers Agreement before you put all those miles on your car.....

It also separates the serious buyers from the wanna be-s.......

=-)

Alex, I would imagine Florida is full of gazey eyed tourists that make a BAA necessary!

OCT

2007

Diane - First of all, congratulations on getting your first "featured" post! I agree with your points here - I wrote a post about how to present and use buyer's rep agreements awhile back, but I do not actually use them myself. Good stuff!

Jason, Thanks! I was not even aware of it making featured until Adnrew Trevino told me! I have had some local features before but this is a milestone!

however if I did that in my market I would have no one to work with.

Same here, I have had several buyers who would not sign, the ones who will can not buy a house, example can not get a loan, or just want to look

Daniel, Oh I have met the over eager also! Good point!

I totally agree with you, Diane! Before buyers wil sign anything, they need to build trust and a relationship with you. They need to know who they are working with before trusting them, especially when it comes to signing something.

Brigita, I know thats how I would feel and I respect my clients and place myself in their shoes. Thanks for commenting on my post!

OCT

2007