Buyer Rep Agreements . . . It's NOT ABOUT US -- It's About THE CLIENT!

By
Industry Observer with RETIRED / State License is Inactive Inactive License Oregon
https://activerain.com/droplet/m6M

I've been reading a lot of posts, and they seem to come in waves here on the Rain, regarding using (or not) the Buyer Rep Agreements.

Good posts.  Good perspectives.

Many agents don't use them, and are insulted at the mere mention . . .

I've been using Buyers Rep Agreements for years.  Don't leave home without it!  The ability to have several issues covered by obtaining the signatures from buyers is huge. 

But THE MOST IMPORTANT REASON I USE A CONTRACT IS THIS:  The Buyers, upon signing, have now made me (via Buyers Agent Portland, LLC) THEIR FIDUCIARY

In order TO STIPULATE THE LEGAL AGENCY RELATIONSHIP, a signed contract is needed ~ otherwise the buyer/seller are not represented.  The agent owes no duty to customers/consumers/or the general public.  

When Buyers engage the services of Buyers Agent Portland, LLC to represent them, i.e., establish a FIDUCIARY RELATIONSHIP is legally formed and I become duty bound by the Fiduciary Duties of the Real Estate Agent, which are:

  • Loyalty: To act at all times in the best interest of the principal and to put those interests above all others, including yourself.
  • Obedience: To obey promptly all lawful instructions of the principal.
  • Disclosure: To disclose all known, relevant facts to the principal.
  • Confidentiality:To safeguard the principal's secrets, unless keeping the confidence would violate disclosure requirements about the property's condition.
  • Reasonable care and diligence:To diligently use real estate skills and knowledge when pursing the principal's affairs.
  • Accounting: To account for all funds and property entrusted by the principal

No getting around MY DUTIES TO THE BUYERS!!  They signed me up.  They engaged me.  I'm now under contract to provide THE BUYERS FIDUCIARY DUTIES!

Do Buyers have a FIDUCIARY relationship with the agent when they call the listing agent off a FOR SALE SIGN -- NO!

Do Buyers have a FIDUCIARY relationship when they call the office and speak with the floor agent -- NO!

Do Buyers have a FIDUCIARY relationship when they meet the listing agent at the property to tour -- NO!

Do Buyers have a FIDUCIARY relationship when they email the listing agent for more information about a listed property -- NO!

Do Buyers have a FIDUCIARY relationship when they go to an OPEN HOUSE and talk with the listing agent -- NO!

Do Buyers have a FIDUCIARY relationship if a BUYERS AGENT shows them 10 houses -- NO!  

Without a signed Buyers Rep Agreement -- there is no binding FIDUCIARY relationship and/or FIDUCIARY DUTY established.

PERIOD.

When I talk with a customer, I talk to them about FIDUCIARY DUTIES, and why signing a Buyer Rep Agreement with Buyers Agent Portland, LLC is a good thing.

Here's what happens when a Buyer signs Buyers Agent Portland, LLC's Exclusive Buyer Agent Agreement:

The BUYERS become CLIENTS and I become their FIDUCIARY

Posted by

 

 

Carla Muss-Jacobs has RETIRED effective May 1, 2018

Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner ~~ INACTIVE

Carla Muss-Jacobs' retirement became effective May 1, 2018

Direct: 503-810-7192 

 

All Rights Reserved © 

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Tony and Suzanne Marriott, Associate Brokers 12/05/2010 11:27 PM
  2. Brigita McKelvie, Associate Broker 12/06/2010 12:56 AM
  3. Joetta Fort 12/06/2010 02:49 AM
  4. Anja Kerstens 12/06/2010 03:07 AM
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Rainer
4,283
John Kalinowski
Strongsville, OH

Carla,

I'm not an attorney, and I'm speaking from the rules we follow in Ohio, but I think you have this whole concept of Fiduciary duty, and how it relates to EBAs, a bit mixed-up. All an EBA does is guarantee that you receive a commission if a buyer purchases a home during the EBA contract period, regardless of whether it is paid by the seller or buy your buyer. If they purchase a FSBO, for example, and the FSBO does not want to pay a commission, then your buyer would be required to pay you the commission stipulated in your EBA.

Whether or not you have an EBA in place has nothing to do with your requirement to provide Fiduciary duties to a buyer. Even if you don't have an EBA, you are still required to provide loyalty, obedience, disclosure, etc., unless you are exclusively representing the seller and have disclosed this up front to the buyer. Again, speaking from Ohio law, but I'm sure yours is similar.

At least in Ohio, this statement you made is false: "Without a signed Buyers Rep Agreement -- there is no binding FIDUCIARY and/or FIDUCIARY DUTY established."  Wrong!! You do not need an EBA to be required to provide Fiduciary Duties to a buyer if you are working with them as a buyer's agent. You may not be entitled to payment if they purchase a home that's not paying a commission, but you sure better provide fiduciary duties! 

They do not need an EBA to make you their Fiduciary.  If you show them 10 houses and say you will act as their buyer's agent, you are required to provide all the necessary fiduciary duties, and act as their Fiduciary. Now, if you show them 50 homes and they call you the next day to say they purchased a FSBO without you, then you will not get paid, and you are not entitled to payment. An EBA would prevent that from happening, and you could effectively sue your own buyer for payment as required in your EBA, and they would likely have to pay it. That's all an EBA does. Your Fiduciary duties are required anyway!

Again, speaking from Ohio, so check your own state's rules.

Dec 06, 2010 01:09 PM #52
Rainmaker
222,058
Jirius Isaac
Isaac Real Estate &TriStar Mortgage - Kenmore, WA
Real Estate & loans in Kenmore, WA

A buyer's agency agreement commits the buyer & their agent to each other in a written form.  If the buyer is not willing to sign it, then you probably do not want to work with them.  It is just all about a 2 way committment.

Dec 06, 2010 01:40 PM #53
Rainmaker
1,558,046
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Hi Wanda . . . thanks for your comment.  And I agree with you 100% :-)

Hey Kristen -- Maine seems to "get it" Buyers are customers.  They become clients when they engage the services of the agent.  Great comment, and the second paragraph sums it up nicely.

Hi Mike . . . At offer time, we do have the agency clearly spelled out, but in the meantime, as Kristen explains, merely customers.  No fiduciary.

Hey George -- I've heard of agents that require a retainer.  I will do that if the buyer wants to go after short sales or foreclosures -- where offers can be for naught. 

Hi Cathy . . . That's a good addition to the post!  Thanks. 

Hey Jane in L.A. (nice signature) -- I'll be working on the hypnotize into submission . . . maybe a little self-hypnotizing is needed for me ;-)

Hi Matt . . . Unfortunately, many buyers don't understand fiduciary.  Heck, from reading some of these comments (#33) agents don't either!

Hey Nina -- thanks for adding your link!  Great post too. 

Hi Fernando . . . It's really interesting when I ask potential clients if they are familiar with the term.  Most are not.

Hey Val -- Amazing how each state is different.  We also have to an Agency Disclosure, but it does not obligate the agent to the buyer/seller, or vice versa.  Implied can mean a lot of things.  I like to get the agency relationship in writing.

Hi Dawn . . . The on site agent works for the seller, and the verbal is something I've never fully been able to wrap my head around. 

Hey Tony & Suzanne -- Thanks for the Re-Blog!  That's one of the examples I use, e.g., the seller wouldn't list without a contract.

Hi Lorraine and/or Loretta . . . Thank you so much for your comments.  I understanding what you're saying:  1)  Even with the showing of only one property, you get the agreement signed.  2)  When you get a call on a sign you ask if they are being represented, and they tell you they're not.  3)  Many buyers say they aren't working with any agent and don't want to at this time.

Hey Brent -- many agents don't and some believe is for the insecure . . . #33

Hi Kathryn . . . "I think that some agents just don't understand Buyer Agency and the importance of establishing a fiduciary relationship."  You said it!!  :-)

Hey Aaron -- Why wouldn't a buyer want a fiduciary relationship established?  It's in their best interest, and there's a cancellation clause, so if unhappy with the agent, they may cancel.  No harm, no foul.

Hi Claudette . . . YES we are on the same page.  I think they understand it when we practice EBA, absolutely.

Hey Brian -- I've heard that said too.  There's always a cancellation clause in the form I use if they're unhappy, or if I am . . . :-)

Hi Matthew . . . your comments are exactly of the same mind set I have.  They can cancel if unhappy.

Hey Gay -- We have to disclosure the three types of agency here, upon first discourse.  But, that's merely a "disclosure"and not a buyer rep agreement or a listing agreement.  Because there is the potential for "dual agency" (and it's evil twin undisclosed dual agency), the disclosure is merely that here.  Not a buyer contract.

Hi Mary . . . Thank you!

Hey Alan -- thanks for clarification, because as we all know . . . each state is different.  We don't have to have a signed buyer agreement to work with a buyer.  But, they are only "customers" under NAR definitions, and not "clients" and then I wouldn't be their fiduciary.

Hi Ralph . . . thanks!!  Feel free my friend -- only paying it forward!!  :-)

Hey Brigita -- THANKS FOR THE RE-BLOG.  I used to volunteer on the Grievance Committee.  There were complaints made that agents didn't do thus or so.  But there was no offer, no buyer rep agreement, so whatever the agent did or didn't do, there was no real recourse -- nothing in writing, no fiduciary duties.

Hi Charita . . . I know EXACTLY what you mean!!

Hey Leslie -- yes, it's interesting indeed.  Thanks for the comments, since I learn a lot. 

Hi Buyer Broker in FL . . .  yes, there is that confusion here because our buyer agency forms are entitled Exclusive Buyer Agency . . . and that DOES NOT an EBA make of the agent.  It's confusing, and I've tried to bring it up with the Oregon Real Estate Agency.  Call it a Buyer Agency Agreement, or a Buyer Rep Agreement . . . but EBA?!?  No wonder consumers get SO confused!!  And the agents too -- they think they're practicing EBA with that form.  They're NOT!!

Hey Jay -- yes, to each their own.  I've sold tons of houses sans a Buyer Rep Agreement, then I began to realize that without one, I'm really not bound by any fiduciary duties.

Hi Richard . . . Right, they do confuse the disclosure.  In Oregon, we would have the disclosure signed off, and that was REALLY confusing.  Not it's just a "pamphlet" and no signatures necessary -- on the disclosure.  And you're right -- both literally and figuretively: If they walk without signing, they are not your client . . .

Hey Ric -- I think you said it well "business transaction, all agreements in writing."  It's the same when someone "retains" a lawyer.  They have an agreement, and that allows the attorney to "represent" their client.  It's no different on how I approach my real estate practice.  I'm

Hmmmm . . . Conor . . . you are really missing the point.  This post is not about "trusting" my clients to not walk away.  It's about them engaging the services of a professional real estate agent as they representative and fiduciary.  A pre-nup isn't about "cheating" either.  It's about what to do with assets and equity in the event of a divorce.  Granted the divorce may arise from cheating, but the pre-nup isn't about that.  It's clear you don't have a clue about pre-nups OR Buyer Rep Agreements.

Hi Kelsey -- That's a great word 'o the day!!  And for every day we represent our clients!

Hey Joetta . . . THANKS for the Re-Blog!  Conor didn't read the post.  And he doesn't quite seem to understand your comment either.  I do think Washington State (our immediate neighbor t the north) is similiar with agency relationships.  There is no fidicuary/agency relationships established without it in writing.  There is no "implied" representation there, I believe.  Conor dumbs it all down to "cheating" HA HA HA  Maybe it's easier for him to wrap his head around that.  But, we know the difference.  More importantly, the value of having a fiduciary under contract.  Maybe Conor could write a post about the similiarities between a pre-nup and a Buyer Rep Agreement and how it all boils down to "cheating" . . . HA HA HA

Hi Anja -- THANKS for the Re-Blog!  They sign their life away when the make the offer . . . sorry, couldn't resist!  LOL :-)

Hey Margaret . . .EXACTLY, it can be for the duration of time the clients wants, and whatever they are comfortable with.

Hi Patricia -- clients first!

Hey Pamela . . . Yes, the Buyer Rep Agreement does set up fiduciary responsibility.  The Agency Disclosure is merely that -- a disclosure.  Nothing more, nothing less.  It simply is a disclosure the that sets out legal definition, i.e., agency relationships allowed/recognized in the state.  It doesn't set up a listing agreement or a Buyer Rep Agreement.  In Oregon there are 3 types of real estate agency relationships:  Buyer Agent, Seller Agent, or Limited Dual Agent.  A dual agent is "limited" because they CAN NOT perform the same duties as the Buyer Agent, or the Seller Agent. 

Hi Carra -- I've often used that same example of having a listing agreement in place, no agent would take a listing without one. 

Hey Cynthia . . . Most people don't get "fiduciary"  An attorney, a CPA, an insurance agent are all fiduciaries.  As a real estate ageent "representing" a client -- I want to be contractual in my fiduciary duties to my clients.  Only in writing -- or the State of Illinois :-)

Hi Donne -- You get it!!  :-)

Hey Dennis & Terri . . . exaclty!!

Hi Consumer -- thank you for your comments.  I read #13 as well, and I think they mean: 1) Even when showing only one property to a buyer, they will get the form signed, 2) They do ask a person who calls on a sign if they are being represented, and they hear "Oh, we aren't interested in working with an agent,"   I'm a little confused by the last sentence too.  You're right, it's impossible to be a fiduciary to both buyer and seller. 

Hey Lucille . . . You're welcome.  The buyers engage our services, just as a seller would.  I always explain it that bumps up the level of service to "client" level (per NAR), AND puts me in the capacity as their fiduciary!  It does work for us both.  Nothing wrong with that.

Hi Lyn -- Guess the same is true with listing presentations, and that's a good analogy.

Hey Gene . . . if you have "implied" agency relationship (and keep in mind real estate agency relationship are defined by statutes in your state), you very well may be the buyers agent when acting . . . but few states go with implied.

Hi Kathie -- good rephrase!  Rather then "employ" (since that would imply the buyer is the employer and knows more than me), same thing, but I use "engages the services of EBA Portland, LLC" or similiar.  But you're right on all accounts.  You say tomato . . . :-)

Hey Stacey . . . Kansas seems to have their "fiduciary" together!  :-)

Hi John -- The Buyer Rep Agreement might be worded to read that in your state.  I also add verbiage to the form, since it doesn't exactly cover all the things I want it to, or think it should.  Our form clearly puts forth the duties of the Buyers Agent to the client.  If you're a Realtor, you may want to check out NAR duties to the public regarding customer level an client level services.  We are not "implied" here.

Hey Jirius . . . I would work with the buyer who doesn't want to sign the Buyer Rep Agreement, but I would tell them that my "clients" come first.  If they want to rely on me -- fine!  But, clients will take priority.

Dec 06, 2010 01:55 PM #54
Rainmaker
242,046
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

It is so uncommon to use these in my market that many agents fear if they ask a buyer to sign one, the buyer will simply find another agent to work with who isn't going to try to lock them into anything.

Dec 06, 2010 01:58 PM #55
Rainmaker
1,558,046
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Hi Jenny -- a buyer rep agreement isn't about "locking in" the buyer any more or any less than a listing contract "locks" in a seller.  Each can be cancelled, or expire.  I wonder if anyone else reads the NAR duties to the public other than me?

Dec 06, 2010 02:07 PM #56
Rainmaker
644,939
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

Carla, what a great way to put it.  I usually don't have one signed until we are under contract because our company does require it but the way you described it makes great sense! 

Dec 06, 2010 02:17 PM #57
Ambassador
3,937,765
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

This is excellent, Carla, and you have generated some interesting, and useful, dialog. The value to the buyers is the best selling point and one they will understand.

Jeff

Dec 06, 2010 03:11 PM #58
Rainmaker
433,470
Larry Estabrooks
Independent Real Estate Agent - Moncton, NB
100% representation means NEVER DUAL AGENCY !

indeed Carla, representing one's client with undivided loyalty in single agency.

Dec 06, 2010 03:25 PM #59
Rainmaker
1,469,176
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

You make a great point about it being about the buyers and not about us!  Well done.

Dec 06, 2010 03:42 PM #60
Rainmaker
377,586
Bandele Oguntomilade, Top REALTOR
Bogun Realty and Luxury Homes - Woodland Hills, CA
Your Woodland Hills Real Estate Agent 818-825-6996

I 100% support getting a Buyer Representation Agreement in place as soon as possible.  It is the best thing to do for the buyer and the agent in clarifying the relationship and our obligations to each other. 

Dec 06, 2010 03:59 PM #61
Rainer
19,033
Erika C. Harris
First United Realty - Douglasville, GA

Carla, did you step inside of my head and pick my brain?-couldn't have said it better.

Also, for Jay #28 and John #52, I think the confusion may be with state regs. In GA, and probabably the other states that require BBA (or similiar), no fiduciary responsibility is required from the agent outside of a signed contract. Without the contract, the buyer is just a "customer" and is only provided ministrial acts.

Why is the BBA(or similiar) required to establish fiduciary? Because in the past, all agents involved in the transaction represented the seller. Yes- the listing agent AND the selling agent "worked" for the seller. Even though the "selling" agent may have been driving the buyer around and showing the buyer properties, since the seller paid the commission, ALL the agents gave "fiduciary" to the seller.

Eventually, buyers began complaining & suing. As a result, buyer protections were put in place (BBA) so that ALL agents involved would know who represented who and buyers would get fair representation. So, even though many agents here may require buyers to sign a BBA- either by law or choice- the buyer (or agent) does have the option to rescind the agreement. However, it is an agreement for their benefit.

Although I'm sure the agents posting here on this blog would treat any buyer (contract or not) "fiduciarilly", there are a large number of agents who withoith the agreement would not honestly and fairly represent their buyer. They didn't here in GA.

Hence- the birth of the BBA.

Hope this helps:)

Dec 06, 2010 05:46 PM #62
Rainer
49,087
Alex Morris - Austin Real Estate Agent
Austin, TX

Carla - great points.  Always a lively debate.  I guess when it boils down to it, the human element kicks in for good agents who look out for everyone they represent, and thus the need for the fiduciary-inducing document is viewed as "redundant".  I am not stating this to be the case, but this is my conclusion from past discussions on this very matter.

Dec 06, 2010 06:10 PM #63
Rainmaker
1,522,583
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

When I quit real estate buyer agency was just beginning to be used here - and I got several buyers because other agents had insisted that they sign the agreement.

I can certainly understand being unwilling to sign until you've gotten acquainted and know that the agent isn't going to just "tie you them" and then let you go find your own home. And unfortunately, that's how a lot of agents here were using it.

In other words, the agreement was for the benefit of the agent and no one was talking about the benefit to the buyers. Even the way our State disclosure brochure was written didn't clarify the benefits to the buyer the way you did in this post.

I should get in touch with some of the local agents and see if they've learned to use buyer agency the way it was intended.

Dec 06, 2010 06:38 PM #64
Rainer
26,996
Leah Henderson
Asset Realty, Inc - Columbia, SC
Carla, Nice bulleted points for requiring our buyers to sign a buyers agreement.
Dec 07, 2010 12:44 AM #65
Rainmaker
642,506
Dawn A Fabiszak
Private Label Realty ( Denver metro area, Colorado - Aurora, CO
The Dawn of a New Real Estate Experience!

Carla ~ we have had buyer agency in Colorado since the early 90's.  When I got in real estate in early '93, that is all I have done.  It's basically a listing agreement, but for the buyer.  It's the only way to sell.

Dec 07, 2010 09:27 AM #67
Rainmaker
362,792
TODD PICCONI 909.908.7376 GROW WHERE YOU'RE PLANTED
TODD PICCONI REAL ESTATE - Rancho Cucamonga, CA
Your #1 Choice for Southern California Real Estate

Carla,

I have never used this document and all the time and energy I spend with clients in today's market, coupled with the conversation and dialogue about this very same subject, is making me wonder if I should somehow incorporate it in.. Thanks for a great post with thought provoking comments...Carla and Everyone!

 

Dec 07, 2010 10:29 AM #68
Rainmaker
527,906
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

My company and really the association, does not use exclusive buyer agreements, we have appointed agency, which must be signed and turned in with an offer.  However, I explain agency and have it signed and in my file after the initial consultation.  I do not see any reason that it would be an issue to get one signed if that were my policy.  Besides, if they won't sign it, do you really want to waste your time and resources on them anyway?  Great post!

Dec 07, 2010 02:11 PM #69
Rainer
432,184
Margaret C. Taylor
Century 21 New Millennium MD - Mechanicsville, MD
St Marys/Calvert/Charles MD Real Estate Agent

After you present it this way to a buyer how can they refuse you as their Buyer Agent.  Margaret C.

Dec 07, 2010 02:53 PM #70
Rainmaker
241,988
Roger Johnson
Hickory Real Estate Group - Hickory, NC
Realtor - Hickory NC Real Estate

Great post, Carla.  Makes perfect sense to anyone that truly understands agency.  What amazes me is some of these comments, on a public post no less, showing without a doubt just how many agents out there don't understand the real meaning of fiduciary, don't understand their duties under their state laws, and don't particularly care it seems.  That's scary.

I won't even pretend to know any other state laws concerning agency, but I'd guess that most (FL being an exception I'm aware) you legally have fiduciary with at least one party at all times.  In NC, for example, if I do not have a buyer agency agreement in place, then I represent the seller, even if it's not my or my company's listing, and I have a fiduciary to the seller.  So if you don't have one signed (or verbally stated clearly) and you're giving fiduciary to a buyer, you're actually in violation.

Dec 08, 2010 08:21 AM #71
Anonymous
Peter Michelbach

Carla, sorry I'm late to the party, and thank you for sharing...

This time I will respectfully pass - there are terminologies and parameters which I have not had yet experienced...

However, the only comment I can make is that lately I do not run with buyers, because here in W.Australia, the majority of agents are not conjuncting, and if, it's only peanuts, and I have found that buyers are not loyal if you just shake hands as in the good ol days,  and it is not common  here yet to sign buyer agreements..

It is always a pleasure Carla to read your informative blogs...unfortunately I can't open all of them, and, oh o boy, is that frustrating...but it helps me reducing some weight, as I then  just dash down to the beach to jogging to calm me down...Thank You. GREAT POST. Peter 'down under'.

P/S. my graph reads: kumquat...they are healthy, loads of antioxidants, selenium and the jam is yammi...

Dec 12, 2010 12:33 AM #72
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Carla Muss-Jacobs, RETIRED

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