Buyer agency agreements help consumers

By
Industry Observer

A prospect contacted me yesterday with a question about a listing I had sent her.  At her request, our previous contacts were only by email.  Our conversation revealed that she had been dealing with a brother of a friend who is a real estate agent and also an investor.  She indicated that the agent was not particularly responsive, and that she felt that he and she may be searching for similar property for himself.  She does not have a buyer agency agreement with this agent.

I asked her if he had asked her to enter into an agency agreement with her, and the answer was no.  That is not surprising given the possibility that they both may be looking for the same house.  My suggestion to her was that, if she wanted to continue to work with the other agent that she ask him to sign a buyer agency agreement.  Without the agreement, he owed her nothing but to not lie to her.  He was free to put his own interests ahead of hers, and he had no responsibility to show her any property, even property she specifically asked to see.

If the information this prospect provided me about the other agent is correct, it presents a good reason why it is not always in the agent's best interest to enter into a buyer agency agreement with a customer.  However, the buyer agency agreement is of great benefit to consumers who expect an agent to perform on their behalf. 

If you're shopping for a home, having a buyer agency agreement in place will obligate the agent to diligently work on your behalf to find the best property, determine its value, and negotiate the best price and terms in its purchase.  Without a buyer agency agreement, the agent has no responsibility to the customer other than to be truthful.  He s free to pursue his own interests, even when they conflict with the interests of a potential customer.

Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
Minnesota Dakota County Lakeville
Groups:
Realtors®
Keller Williams 'Rainers
Bananatude
Minnesota Real Estate
Tags:
buyer agency agreement

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Rainmaker
507,232
Cal Yoder
Keller Williams Elite - Lititz, PA
Homes For Sale in Lancaster PA - 717.413.0744

Mike, exceptionally great post. Too many agents and consumers believe that only an agent benefits the agent. You post shines a glaring light on this fallacy.

Cal

Mar 25, 2012 03:54 AM #5
Rainmaker
684,281
Brenda Mayette
Miranda Real Estate Group, Inc. - Glenville, NY
Getting results w/ knowledge & know-how!
Great post Chris! Congrats on the feature
Mar 25, 2012 04:36 AM #6
Rainmaker
1,561,695
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Without a contract there is nothing that the consumer / customer has and they do not have any fiduciary duty from the agent.  Period.

Mar 25, 2012 06:12 AM #7
Rainmaker
1,157,329
FN LN
Toronto, ON

Hi Mike - The local real estate board in my area does extensive advertising regarding Buyer Representation Agreements from time to time.

Mar 25, 2012 07:05 AM #8
Rainmaker
1,550,841
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Mike,

The BAA can eliminate some conflicts of interest. Clearly, the other agent was not that anxious.

Brian

Mar 25, 2012 07:22 AM #9
Rainmaker
623,224
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

That example where the agent is looking for the same type of houses really would be a good example of a conflicted relationship. 

Mar 25, 2012 07:24 AM #10
Rainmaker
733,403
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

After the experience with that last agent, your approach to that buyer I'm sure is much appreciated and the role of the buyer agency agreement makes a lot of sense.

Mar 25, 2012 07:38 AM #11
Rainer
94,133
Vince McEveety
Gilleran Griffin Realty - Sherman Oaks, CA

good point - it benefits the consumer in too many ways that they know not... and it's our job to educate them and let them make the call

if they want to work with me... there's gonna be ink prior to showings

Mar 25, 2012 07:41 AM #12
Rainmaker
3,985,513
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Another factor of the Buyers Agreement is that you better stay up on you duties.  A years back when things were hoping, an agent got sued when a house came on the market and sold right away before the agent even saw it.  The buyers sued him in court for breach of contract because the house was just what they had been looking for.

The agent explained that he was out with another client and the house sold even before he could see it the same day.

The court sided with the buyer and the agent was ordered to pay the buyer.

Just another side of the coin.

Mar 25, 2012 08:17 AM #13
Ambassador
1,377,728
Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents

There are more benefits to buyers agreement than what the consumer fear. I wished everyone was more educated about it.

Mar 25, 2012 09:15 AM #14
Rainmaker
1,317,757
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I don't know any listing agent that would list a property without a contract... so I am at a loss why one would not want a contract with a buyer "listing".

Mar 25, 2012 12:16 PM #15
Rainmaker
325,281
Christina Sanchez Hood
Palo Alto, CA
#SiliconValleyHOODS | Inspired Living

Mike, I like the post, so much so, I am going to re-blog it to my readers.  I find the Buyer Broker Agreement brings a level of commitment to my buyers.  It allows me to see who is serious.  Coincidentally, once I brought the BBA into my business, I had two that did not sign and also did not end up buying... at all.  Thanks for the great post.

BTW, I'm in the other Apple Valley!  lol

Mar 25, 2012 02:47 PM #16
Rainmaker
769,740
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Mike,

After viewing your blog and other blogs on this topic, I'm for certain that I'll use BBAs.

Mar 25, 2012 04:43 PM #17
Rainer
61,616
Ron Cooks
The Real Estate Marketplace - Killeen, TX
Texas Real Estate, Ft Hood/Killeen Homes for Sale

Mike, what an interesting perspective.  Although the BAA, protects both parties most times I view it as protecting my interest.

Mar 25, 2012 05:22 PM #18
Rainmaker
1,403,027
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Mike, more good reasons for representing a buyer with a Buyer Agency Agreement. Buyers who assume they are represented may be in for a surprise.

 

Mar 25, 2012 10:40 PM #19
Rainer
208,817
Cheryl Thomson REALTOR Army Ret
United Real Estate (703.216.5635) cheryltee47@gmail.com - Prince William, VA
Associate Broker in Northern Virginia

I do not conduct my business without one...after first working without it, made me a strong believer in it now.  No one is held responsible until you put it in writing.

Mar 25, 2012 10:51 PM #20
Rainmaker
522,422
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Stacia, Thank you for your comment.  Minnesota requires a written agreement prior to any representation as an agent can take place.  That law was certainly not enacted to protect real estate agents, but consumers often try to avoid allowing an agent to commit to them.

Cal, absolutely correct.  Many agents look at a BAA as commission insurance, which it is not. 

Brenda, thank you, glad you found my post.

Carla, absolutely correct.  It does make one wonder who should be trying to lock in whom.

Marc, your board is a cut above many, esprcially the national association which often seems more interested in banking than real estate professionals.  Thanks for your comment.

Brian, there are times when it is not in an agent's interest to make the commitment to serve a consumer, and this seems to have been one of them.  So far, the agent has done what was right.  He did not make a commitment to advocate on behalf of someone whose intentions could interfere with his investment objectives.

Morgan, yes it is a conflict with the intentions of the buyer.  However, the agent owes the customer nothing other than to not lie to her. 

Eileen, I hope that the information provided to the buyer will help her reach her objectives.  As someone who has chosen to invest only in assets more liquid than real estate, I don't think I'll ever have to make the decision that the other agent appears to have made. 

Vince, absolutely the best way to serve the buying public.  Thanks for your comment.

Bill, it comes with the territory, and your example illustrates the importance of the commitment.  You have to fulfill that commitment, even when it's not convenient.  If an agent can't personally honor his written commitments, he needs to find someone to act in his place.

Loreena, wishing won't make it so.  Educating buyers about our commitment and the benefits to them is our responsibility.  It would be nice if our professional associations would give a little more specific assistance. The task will continue to fall on you and me and our professional bretheren.

Joan, there is a simple answer.  The agent does not want to take on a responsibility that would create a conflict with his investment goals. 

Christina, thank you for the recognition and re-blog.  Apple Valley, MN was named by the first mayor of the city after Apple Valley, CA, which he had visited.  I think he actually relocated to AV CA after he retired.

Pete, properly explaining buyer agency and convincing a prospect to allow you to make a written commitment to advocate on their behalf is one of the best things any agent can do for a buyer. 

 

 

Mar 25, 2012 11:36 PM #21
Rainmaker
522,422
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Ron, the BAA does much more for the buyer than the representing agent.  Many of us look at the BAA as commission insurance.  Prevailing cause trumps commission insurance unless you want to support the salary of your favorite attorney.  True, the BAA requires the buyer to work with you, but the governing body will do a lot more to you if you violate its terms. 

Michael, most states have an agency relationships disclosure requirement, and most consumers never fully digest the import of the disclosure.

Cheryl, the highest level of service to a buyer is only possible when we make a written commitment to advocate on their behalf.  Not all consumers are ready to accept, willing to accept, or worthy of our commitment to them.  All we can do for those poor souls is to wish them the best and move on. 

Mar 25, 2012 11:49 PM #22
Rainmaker
2,191,320
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Have you no shame, Mike? Using that dog to pull in viewers?  You know, I would buy a a home from that dog. Yes, I would. Oh, you bet I would. Yes, yes, yes. What a good dog.

Mar 26, 2012 12:02 AM #23
Rainmaker
522,422
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Elizabeth, I had no choice but to include him in the photo.  He is my office assistant, and the pic was part of the employment contract.  Although he hasn't eaten any of my files in weeks, he did devour a 1099 that was laying on my desk, which could temporarily help the 2011 tax situation.  He must be a TEA Party dog))

Mar 26, 2012 12:26 AM #24
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Rainmaker
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Mike Carlier

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