I'm not a huge fan of the Buyer-Broker agreement.  Most savvy buyers aren't going to sign this document, because they don't want to feel like they have to be tied down to a particular agent if the relationship turns sour or they think can get a "better deal" elsewhere (working directly with a For Sale Buy Owner).  And to be honest if we spent half our time getting bitter everytime a buyer decided to not work with us, I can only imagine the reputation one would create, especially in a small community.

However I am realizing the importance of explaining the buying process to all potential buyers.  Many, especially first time home buyers have no idea the intricacies that go into making a real estate deal happen and then close successfully.  There is a lot of behind the scenes work and it really benefits when we as agents have not only built a trusting realtionship with our buyer, but also a working relationships with other agents in the community.  Sometimes those relationships can make the deal go much more smoothly.

You can't expect someone right off the bat to agree to a buyer-agent relationship (ie: using the buyer broker agreement) especially if they don't really know how you operate.  So I feel it's important to get to know the buyer a little better and yes, even show him or her a couple of houses first.  Worst case scenario, they don' choose to hire you, but at least you had a chance to build your market knowledge up a bit.

A collegue in my office, who is a big fan and support system of mine and vice versa, meets with every potential buyer regardless of the buyer's experience in real estate (ie: buyer who has bought and sold real estate before) and explains the buying process from showing houses, to putting in an offer, negotiating and renegoiating the deal and the after closing services that he provides.  In the end he gives them a choice to hire him or not and yes most of the time he is able to get them to sign a buyer-broker agreement.  Because he explains what it is and the benefits behind it.  And he always reminds the buyer that if the relationship isn't working either party can cancel the agreement, no questions asked.

This week my buyers wrote an offer on a home that just fell out of escrow with another buyer.  This home never went back on the MLS as active.  A close friend tipped them off about this house and they went for it.  It was quick, they were overwhelmed and the listing agent got the deal.  Just so we're all clear.  This stuff happens to all of us, and in no way do I blame my buyers for this scenario.  However, I blame myself for not explaining the full benefits of hiring a buyer's agent to 100% fully represent their interests.

What my buyers didn't realize is that the listing agent gets paid by the seller and has an agreed percentage.  Regardless of whether that agent share's his commission with a buyer's agent or keeps the whole enchilada for himself that percentage usually doesn't change.   The listing agent is working for the seller and the so called deal he's giving them may not be a deal at all.  It usually doesn't cost the buyer a dime to use a buyer's agent and they get full representation from beginning to end.  So if there's a problem during inspections the buyer may have compromised their negotiated position because the leverage they may have had working with a buyer's agent who's representing their best interests is gone.

So if you're working with a buyer, make sure they understand the benefits of hiring a buyer's agent and explain the downsides to them contacting a FSBO or listing agent directly.  Usually what appears to be a great deal at the front end, may not be a deal at all. Nine times out of Ten the buyer's agent can negotiate the same deal and possibly a better one for their buyer, plus when it comes to renegotiating or problems that may arise during escrow, the buyer's agent is 100% behind their buyer to make the deal work for their buyer...not the seller.

Copyright 2009 Jessica Bigger.  All Rights Reserved. *Make Sure Your Buyers Understand the Buyer-Agent Relationship and the Benefits or You'll Lose Them*

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