I Hope I Didn't "Steal" Your Buyer!! I was just doing my job.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

Marshmellow manHi folks. Today I want to talk a little bit about our responsibility to ask Buyers and Sellers if they are working with another REALTOR®. Is this something we are obligated to do by our Code of Ethics, or not? What do you think? 

Here's an example: Recently, a Buyer contacted me by phone to get some information on a couple of my listings. I asked him if he was working with another REALTOR®. He said that he had gone out looking at properties with a REALTOR® the previous week. I then asked him if he had signed an agreement with them, he said "No".

What would you have done next? 

What I did was make an appointment to meet with him to go over his situation AND to get a Buyer's Broker Agreement (BBA) signed....since I felt I could help him.

The fact that he had told me he had been working with another REALTOR®, the week before, meant absolutely nothing to me. Would it have mattered to you? Would you have missed out on an opportunity to work with a qualified Buyer because you are not familiar with our CoE? 

If so, let's clear up this misconception of having to ask the "Are you working with another REALTOR®?" question. 

This is what our CoE states:

Standard of Practice 16-9

  • REALTORS®, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Amended 1/04)

What this means is, that as a REALTOR®, I am under absolutely no ethical obligation to ask the question, unless I am in the process of entering into an agreement. Now, of course, it would make good business sense to ask the question prior to writing a contract to purchase, to avoid a procuring cause dispute, although we are not obligated to. 

This also means, that if you are working with Buyers, without a BBA, then they are NOT your Buyers. They are open territory. And chances are that if they bump into me they may very well be my Buyers from that point on. 

Could there be any better reason to learn how to present a BBA to your potential Buyers and to get it signed before you start spending much time working for them? Here are a few posts that will help with this.

Here's another way to look at it. If a Seller invited you over to see about listing their property and they told you they had already met with a REALTOR® and had another one coming over in the morning would you hesitate getting them to sign an agreement? Of course not. Buyers are no different. Until they have agreed to work with someone in writing......they are just a lead. What say you?

***This article was originally posted in June 2008. The 97 comments back then are awesome and well worth a read!!

***Please remember, your State's real esate laws trump the REALTOR(R) Code of Ethics.

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

 

 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Fran Gatti 11/24/2010 05:34 PM
  2. Fran Gatti 11/24/2010 05:35 PM
  3. Tony and Suzanne Marriott, Associate Brokers 11/26/2010 02:07 AM
  4. Fred Griffin, on leave of absence from ActiveRain 11/27/2010 02:48 PM
Topic:
Real Estate Sales and Marketing
Location:
Florida Osceola County Kissimmee Poinciana
Groups:
Real Estate Rookie
Tags:
code of ethics
buyers broker agreement

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Rainmaker
403,659
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

These are some very interesting comments showing that, once again, all real estate is local. And, practices are so varied.

My first two transactions, years ago, were without buyer agency agreements.  After that I started using them and have never worked with a buyer without having an agreement signed. But I market myself as a buyer broker so I think people actually expect to sign an agreement.

With regard to the buyer in question, he called you and you asked the appropriate questions. You are fine working with him under an agreement with the exception of the properties he has already seen with another agent. You might, in fact, have a procurement issue with those.

 

Nov 25, 2010 12:07 AM #43
Rainmaker
2,189,769
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I use a two-step process, generally. I first give buyers an agency disclosure, which is required by California Civil Code. I tell them it's just a disclosure, not an agreement. How they handle signing that sets the tone for our entire relationship.

I had a guy email me several days ago about wanting to work with me to look at homes in East Sacramento. Then, a couple of days later, he called and left me a voice mail, saying he had gone out to look at homes with another agent his wife had located, and he really liked the guy. He had not signed an agreement. I called him anyway; we talked, and now he's back working with me. Did I "steal" him? I dunno. Will I sign him to a BBA? Probably not until he writes an offer.

Can you really steal a client?

Nov 25, 2010 12:47 AM #44
Rainer
137,004
Brent & Deb Wells
LivingWell Properties - Prosper, TX
Prosper TX

Bryant,

Until they sign, they are not your client. It amazes me why some REALTORS don't simply get the document signed. Once this simple act is done, they are YOURS. Would you list a house without a signed exclusive listing agreement?

...and to your question about pursuing them as a client, heck yes. They are interviewing REALTORS until they sign...

-Brent

Nov 25, 2010 01:00 AM #45
Rainmaker
427,033
June Tassillo
Owner/Broker RE/MAX Elite Realty - Franklin, NC
Let me help you with the next phase of your life!

BB ~ I too like Elizabeth first go over the agency disclosure and highlight where it says its NOT a contract.  This way I can see how they handle that and move on from there.  I don't have them sign a BBA at that point.  I build a relationship first.  If I was in Elizabeth's shoes I would get one signed because they already strayed. 

I recently asked a email client if they were working with a agent because all the sudden they were in town on Friday night and if I could get some answers on a piece of land by Sunday they would like to see it.  I didn't have a good feeling with this couple and they didn't respond to my question so I take that as Yes they were working with another agent so I won't be wasting my time scrambling to get answers so quickly for another agent.  I think you can weed out most of them by asking simple questions. 

Then again, YES I have been burned... haven't we all. 

Nov 25, 2010 01:31 AM #47
Rainer
56,837
Lissa Uder
RE/MAX Next Generation, LLC - Lebanon, MO
Your Lebanon MO Real Estate Agent

We see this all the time in this market area.

I look at the BBA from a different angle. The way the law reads in MO, unless there is a relationship agreed upon between buyer and broker in writing, the broker is considered to be working as a sub agent to the seller. If I am working WITH a buyer I fully intend to be working FOR the buyer.

I don't have them sign it at first contact, but certainly before I start running them all over the county showing properties. In this area, several agents won't get them signed because of the responsibility of the agent that goes along with it.

Great thought provoking post BB.

Nov 25, 2010 01:59 AM #48
Rainmaker
545,663
Lori Cain
eXp Realty - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

Why ARE we still having to explain this?

BTW, I thought BBA stood for Broker Bryant's Agreement.  :=)

Nov 25, 2010 02:16 AM #50
Ambassador
1,639,323
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Helping you find your way home.

Alan #25. If a buyer won't at least sign an agency disclosure, I will not proceed. To me, it's not enough for them to shake their head, and say, "I understand." I need to be covered. It's only an acknowledgment that I explained agency, it is not a commitment to purchase with me.
~~~~~~~~

@ Mike (sorry for the mini-hijack BB), since all Illinois requires is the acknowledgement ("I understand"), I'm not going to jeopardize a potential client, by insisting on something that's not required by the state.  Consumers are so gunshy, these days, that we're asking them to "sign some unknown rights away", and I understand that.

Nov 25, 2010 02:38 AM #51
Rainmaker
171,564
Mary Jo Quay
Remax Results - Edina, MN
I Move You Home

Buyers don't always care about our contracts.  I've had several people who told me that they were not working with anyone, but had signed Exclusive Right to Represent.

Last year a past client who I've known for 7 years and worked with frequently, wanted to downsize. She wanted a town home, and would rent her house.  I got her approved for the loan. Then, she told me that she was busy with her church work for a the next six weeks.  After that we looked at about 15 properties and finally wrote an offer on one.

When I submitted the accepted purchase agreement to the loan officer, I got a surprising response. 

"We already have an accepted offer submitted a couple weeks ago with another agent."  Wow!  Not only did she lie to me, she lied to the other agent, and had signed two Exclusive Right to Represent contracts.  So much for her taking time for church work. 

Nov 25, 2010 03:01 AM #52
Rainer
393,282
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

The sad truth is that agents work in a finite market.  Regardless of all the advertising and prodding we do, those darn buyers and sellers just go off and do whatever they want (the nerve!).  We can only nominally grow or shrink the market, the best we can do is fight for our piece of the pie, which means that the bigger our slice, the smaller another agent's slice is going to be.  There will be winners and losers.  In my market, a recent report said there are only enough local transactions to provide a reasonable living for about 20% of the active agents.  Knowing that, I'm amazed that agents continue to share their most effective sales secrets with other agents at office sales meetings.  Is there a rule that two or more agents in the same office can't go after the same clients?  I think not.  I often see two agents from the same office competing with each other - and me - for the same listing.  ANYWAY... When I receive an offer as a listing agent, I now ask for a copy of the selling agent's exclusive buyer rep agreement so that my seller won't be drawn into a commission battle that could hold up closing.

Nov 25, 2010 04:49 AM #53
Rainer
31,793
Martin MacFarlane
Sutton Group Heritage Realty Inc., Brokerage - Markham, ON

I believe that we should all be getting our clients/customers to sign buyer agreements before showing them homes.  Sure, it may not be the easiest thing to do sometimes, but it's the professional thing to do.  Unless you want to have potential clients stolen from you.  We need to make sure that we educate our buyers so that they understand the advantages of having a good Realtor represent them when viewing homes.  They agreement is there to protect all parties involved.  If they still don't want to sign it after they understand it's benefits, they you probably don't want to work with that buyer anyways!

Nov 25, 2010 02:28 PM #55
Rainer
87,527
Amber Boyd
Novus Real Estate - Wylie, TX

this is a great post!! keep them coming!

Nov 25, 2010 04:23 PM #56
Rainer
87,527
Amber Boyd
Novus Real Estate - Wylie, TX

this is a great post!! keep them coming!

Nov 25, 2010 04:23 PM #57
Rainmaker
3,053,038
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Yet another excellent post highlighting the sound business decision of getting an exclusive Buyer Broker Agreement if you are going to work with Buyers.  If you choose not to - that's your call - and also potentially your loss!

Nov 26, 2010 02:07 AM #58
Ambassador
525,439
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

BB,

I agree with your basic premise. However, even a signed BRA does not insure the broker will be paid or is it in itself proof of procuring cause. I also think there are other things to consider.

If a buyer enters into two agreements, the "losing" broker has to file suit against the buyer for breech of contract and attempt to recover the loss in court. This is not often done as the bad PR usually creates more damage than the commission IMHO. It's a far better business decision to simply let it go.

I can't speak for Florida but Texas acknowledges that while written is the best way to go, an agency relationship can be created verbally. Given your scenario it will be hard to prove you violated the COE unless the client is willing to testify.

I don't try to poach clients from other agents when they call in on my listings. I always try to send them back to the other agent first. If that relationship is not working out and they tell me they have not signed a BRA, I hand them off to one of my buyer's agents.

As a heavy listing broker, I don't want a bad reputation with the selling agents just to pick up a couple of extra sides a year. 

Tom

 

 

Nov 26, 2010 02:34 AM #59
Ambassador
525,439
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

John #53,

There should be no commission battle with the seller that would hold up closing. Are you willing to provide the selling agent a copy of your listing agreement?

Tom

Nov 26, 2010 02:56 AM #60
Rainmaker
597,961
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

I have to agree with the other New Yorkers.  BBA's are not used here, although I think some brokers will eventually start using them. I have had out-of-town buyers offer to sign a BBA. As others have mentioned we have agency disclosure. I disclose and have them sign BA. Beginning Jan 2011 it becomes the law in multi-family apartments even though I have already been doing it for the past year. I've always disclosed but now it has to be in writing.

There seems to be a misconception on activerain (all states are different) that a buyer is not a client but only a customer and there is no fiduciary without an exclusive contract. They are two different issues. On our state agency disclosure form it clearly states This Is Not A Contract.

I represent the buyers interest and have a fiduciary duty to them, but it is per transaction and not an exclusive contract. In fact, my agency relationship can change during the course of finding a buyer a home depending on the properties I show. It may become a dual agency with designated agents if another agent from my brokerage is the exclusive listing agent on a property I show.

In Manhattan, we are not members of NAR. We have our own powerful local real estate board (REBNY) The real estate board of New York. REBNY is not affilliated with any national trade association. REBNY has it's own COE and very specific rules that apply to NYC real estate and our very unique housing market.

Our board rule is that the consumer has the right to work with or have any agent they choose represent them. For example, If a buyer goes to an open house on Sunday on their own without an agent and they call me Monday morning that they want me to represent them, I will. Consumers have the right in New York state to have buyer representation. If they have not started negotiating with the listing agent, I gladly will represent them. It's irrelevant how they found the property. I've also had buyers come to my open houses, un represented, I disclose I represent the seller but I treat everyone fair and honestly. They often have come back 2 or 3 times unrepresented and then bring in an agent because they have that right.

On the other hand, as you point out, state laws trump board rules, so procuring cause is the bottom line. However contrary to popular belief, showing a property or a buyer finding the property is not procuring cause. It is series of events without a break.

A wise agent several years ago told me: "you want loyalty? get a dog, You will never get it in this business"  IMHO loyalty is earned it can't be forced on someone with a piece of paper.

Nov 26, 2010 04:08 AM #61
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Hi guys. I hope ya'll had a good Thanksgiving.

Ok let me see if I can expand on this a little.

  • A BBA is NOT just to guarantee that we get paid. In fact this is probably it's least important purpose.
  • A BBA is NOT designed to replace taking the time to bulld a lasting relationship with your buyer.
  • A BBA does NOT have to create a fiduciary relationship. In fact we can work under a BBA and still not be an agent for the buyer.
  • Getting a BBA signed is NOT giving us a license to steal another agents buyer.
  • You can choose to work under a BBA in ANY State. I can't imagine any State law prohibitting you from working under a contract.
  • A BBA and an agency disclosure are NOT the same thing nor do they serve the same purpose.

In my opinion, the BBA should be required in all States.

  • The BBA eliminates confussion.
  • The BBA lets buyers know that we are serious about our profession.
  • The BBA lets buyers know that we take them serious too.
  • The BBA outlines the entire transaction and make sures we and our buyers are on the same page.
  • The BBA forces us to become better at what we do.
  • The BBA spells out what the buyer can expect from us.
  • The BBA spells out what we expect from the buyer.

I will never understand why so many Realtors(r) consider the BBA unecessary. Yet none of you would ever consider working with a seller without an agreement. Why is that?

Nov 27, 2010 01:12 AM #62
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Bryant, this is so funny. I had this happen to me, where I was already working with a lead and about to sign a BBA with them, when they called my office and the floor agent promply presumed that the caller was exclusively "their" lead. I don't think so...she got over it after awhile.

Nov 27, 2010 02:54 PM #63
Rainer
432,184
Margaret C. Taylor
Century 21 New Millennium MD - Mechanicsville, MD
St Marys/Calvert/Charles MD Real Estate Agent

I like the comparison to the Exclusive Seller's Agreement.  I hadn't had it prese ted to me like that before.  It makes perfect sense.  Thanks  margaret C.

Nov 27, 2010 06:00 PM #64
Rainer
199,711
Jeani Codrey
The Learning Jeani - New Braunfels, TX
If you're not learning, you're not living!

This is GOOD stuff!  Thank you for the new perspective on the BBA!  I agree 110%!!

Nov 28, 2010 02:40 AM #65
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