Real Estate Blog - Buyer Objects to a Buyer Brokerage Agreement

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Buyer Objects to a Buyer Brokerage Agreement

I believe that Buyer Brokerage Agreements are beneficial to buyers and in many cases, they sign up without thinking twice. For those who have never heard of them before, there can be some hesitation. I ran into an objection recently that is fairly common for those who don't fully understand them.

handshake In Florida, a Buyer Brokerage Agreement is a contract between a buyer and a Realtor that spells out the responsibilities of each and formalizes a commitment to work together. There are variations of the details and requirements in different states, but the main idea is to set expectations and agree on compensation for services rendered.

My new clients were first time homebuyers and counting every penny. They had saved just enough to cover their out of pocket expenses and were uncomfortable with the clause in the Buyer Brokerage Agreement that makes the buyer responsible for paying the full Realtor fee, if the commission offered by the seller doesn't cover all of it.

The benefit to the buyer in guaranteeing the fee is that the Realtor will make ALL inventory available to the buyer, including FSBO's, which usually require significantly more time and effort on the Realtor's part.

When I explained that the commission offered by the seller usually covers the fee and in the few cases where it doesn't, we would write up the contract with the fee as a buyer closing cost to be paid by the seller. That seemed to satisfy them.

What objections do you run into with Buyer Brokerage Agreements and how do you handle them?

Posted by Colleen McConnell, Tallahassee Realtor on 01/28/2009 06:45 AM

Comments (17)

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17 Comments on Buyer Objects to a Buyer Brokerage Agreement

JAN

After a long presentatiion and I give them my Buyer's Book . .around ($5.00 total expense)

the last page is the buyers agency agreement. . .

" And finally this is a buyer's agency agrement. .in a nut shell. . by you signing this it will assure me that I get a commsion from the seller when I find you a home. .

You do want me to get paid. . don't you?"

It works every time!

In general people don't like to sign anything or make a commitment. I always turn the tables by saying that the agreement puts my feet to the fire and requires me to represent them as a fiduciary. After that people might need a little more time, but most sign on.

I see buyers agents that don't put anything in for the fee. Thus avoiding the fee questions. I guess they don't plan on showing homes the seller has not already agreed to pay the commission. In my opinion, not good customer service.

People get reluctant to sign agreements. We have an exclusive and a non exclusive agreement here. But when they object I point to the top of the form that quotes Georgia law saying in order to work with them I have to haveon eof these.

You're right, people are hesitant to make a formal commitment and when we help them see how it benefits them, they usually agree. Great idea to have a buyer's book.

Some agents are only into listing buyers for the commissiion. Once on paper, they can buy anywhere, from anyone - fisbo, MLS, relative - and the "listing" agent gets paid regardless of their ability or activity.

Are you talking about Buyer Agency ? The biggest reason for a buyer to do it is loyalty and service...you will be loyal to them and them to you.

The benefits of buyer representation should make it a no-brainer for the buyer. I've had several buyers who were hesitant about signing an agreement. Most want to leave their options open and not commit. It all boils down to educating the buyer. Although, I have found the clause for the fee is one of the main issues for refusing to sign an agreement.Buyers are reluctant to paying a fee. Good Post!

Hi Colleen - I have used "buyers' agreements" with some clients (I worked for a brokerage that required them) and have not used them with others. The primary objection I've seen is that buyer's do not want to make that kind of commitment. I work hard to give the best customer service I can and have not lost a client (agreement or no agreement).

They say they want to be represented, then when it comes to actually signing on the dotted line, they freeze!

We use the buyers agreement mainly to spell out the expectations of the relationship. I tell them about the work that I put in on my end to find them a home, such as previewing, calling FSBOS's, etc... and how the agreement protects them as well. I will run through walls for my clients but I expect loyalty in return. I also let them know they can fire me at any time if they are not happy. If a buyer is going to have a problem working exclusively with me, I rather know up front so it can be addressed. If there is anything in the clause that makes them uncomfortable, we address it to make it a win-win for everyone. Thanks for the great post.

JAN

It's all in the explanation. Mostly I let bueyrs know I don't show property without one and that we can make the bueyr agency agreement valid for only one and/or only one property.

JAN

Colleen - Believe it or not, I have never used the Buyer Agency agreement. I've discussed it, but it doesn't seem to go over very well....and I can't say it's mattered.

Uh-oh. They sound like the type who will skimp on the home inspection, maybe even deciding to skip the home inspection altogether.

JAN

Colleen, usually the biggest objection to a Buyer Rep agreement is commitment. If you can let them out of it excluding houses you've worked on, THAT is a more win-win sometimes for everyone.

Colleen, nice job...I've always wondered how to handle that objection!

FEB

Nice post Colleen. I agree with most of the answers above in that it is an education process. Once a buyer understands that it places them in a position of strength, they will sign. If they do not want to sign, it is almost always because they do not understand the benefits to them. Rarely, but occasionally, buyers with no intentions of working with you through sale will not sign it. That is why it saves you so much time, because the buyers with bad intentions are weeded away.

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