I cam across a very interesting article regarding agents requiring buyers to sign loyalty contract.

Home sellers don't complain when a realty agent pushes a heap of papers in front of them to sigh  when they list their home. The agent after all, will be bearing the upfront expenses of advertising, printing fliers, mailers, holding open houses and arrange showing all hours of the day, who would do all that without a signed contract guaranteeing commissions, if they sell the house.

But what about the buyers? they get a free ride. Any given day buyers drop in to virtually any realty office, and an agent doing floor time will  drive them around, showing them what's for sale, There is nothing to stop those buyers from turning around and make an offer on one of these houses through, their sister in low who just got her real estate license. The agent who spent half a day with them wont get as much as a thank you note.

That is gradually changing. Agents are stopping to present sellers altogether and begin to ask would-be buyers to sign loyalty agreements, documents stating that in exchange for their time and services in finding them a home, they will make all offers through him or pay him a commission anyway. Today 10% of California Assn. of Realtors use loyalty contracts.

The effect on buyers is two folds: They are represented by an agent who wont try to steer them toward his or her listings, and they have signed a contract connected them to one agent for a fixed period of time.

California has a strong dual agency disclosure policy, which requires agents to tell their buyer,  if they or another agent in the same firm represent the seller.

 A first - time home buyer likes knowing that an agent just works for him. Clients who call them-self skeptic, may seem an unlikely type to sign a loyalty agreement. But if a client needs to understand the home-buying and financing process, who is unwilling to blindly trust some one else to protect his interest in what in most cases is "the biggest purchase" of their life. needs to have an agent who will put in the time and knowledge to do a good job, why would'nt the agent be entitled to compensation.

There are a small but growing minority in this regard. For many California buyers, the idea of being asked to sign a loyalty agreement before an agent opens his car door is a novel concept.

Buyers loyalty contracts are common place in other state and are most prevalent along the East Coast and in the Midwest.