More on Legal Documents, Representation and Compensation

Real Estate Agent with Homebuyer Representation, Inc. DRE# 5467433

Legal DocumentsOur company NEVER lists homes or represents sellers. We only work for buyers and stay 100% loyal to the buyer throughout the transaction. Some things in this industry bother me.

One thing that bothers me A LOT, is to hear that a consumer has been given a legal document that says one thing in writing, but the person with the training and the license to present that document for a legally binding signature says something completely different when explaining the document to the consumer. (Read the first half of this blog entry for some additional background as to why I'm using compensation as the example below.)

It was that issue (incorrect explanation of documents placed before buyers or sellers) that ultimately caused me to pen the following in the middle of a heated debate between two other agents:

My buyer-clients are ultimately responsible for my fee. We agree to it up-front before any representation starts.

To be clear, we will credit toward what the buyer owes: anything that comes to us via a seller, builder, listing brokerage... well, anyone or anything else.

If compensation from other parties covers the brokerage fee a the buyer and I have agreed to, the buyer owes us nothing.

If it falls short of what we agreed to, the buyer knows (and I know) that the buyer will make us whole at settlement. (Yes, some of our buyer-clients happily pay the difference out of their pocket).

If we get more from a third party than the agreed upon amount in our contract with the buyer, we give it back to the buyer, where it came from. (Since that money ultimately came into the transaction via the buyer's purchase of the home, as has been noted by others.)

This agreement allows me to give the same superior level of representation on any home the buyer wants to buy, regardless of the compensation being offered by the seller or the company representing the seller. (And even if there is NO compensation being offered.)

The standard Utah Exclusive Buyer Brokerage Agreement contains this language, so I'm certain that a large majority of buyers and traditional brokerages enter into this agreement. Strangely, however, I may be one of a very small number of agents who explain this document to buyers as it is written. I say this because I know many agents tell buyers that their services are free and/or that they get paid by the seller or listing brokerage. This is technically false according to the legal document they place in front of the buyer to sign.

In addition to knowing the Purchase Contract thoroughly, agents should know, intimately, all of the contracts they place before buyers (and sellers). They should explain to the consumer EXACTLY what the contract says, not some dumbed-down version that is crafted merely to get the buyer (or seller) to sign.

Our clients WANT to sign our agreement and are happy to pay us what they agreed to pay us when compensation from other sources falls short.

I believe that agents who respect their clients enough to explain exactly what is happening, who do what is best for the CLIENT, and who remain fully loyal to the client at all stages of the transaction (even before a home is identified), ultimately earn loyalty, respect, and goodwill from their clients that most other agents will never have.

If you are planning to buy a home, answer the following questions:

  • Do you have excellent credit?
  • Do you plan to purchase a $300,000-$800,000 home within 90 days?
  • Do you have a good down payment, or are you paying cash for your next home?

Homebuyer Representation, Inc. - Exclusive Buyer Agents

Get an agent that respects you enough to clearly explain the documents you are asked to sign and will take the time to address any questions you have!

Get an agent who is truly on YOUR side!

Call us at (801) 969-8989 or contact us today via the link on this page for a free consultation.

©2012 Homebuyer Representation, Inc. - "The Real Estate Agents on the Buyer's Side" TM

Salt Lake City, UT - Exclusive Buyer Agents (EBA)

All Rights Reserved

For more information, or if you are relocating to another state, visit



Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ginger Harper 10/01/2012 08:25 AM
Home Buying
Utah Salt Lake County Salt Lake City
Exclusive Buyer Agents
Exclusive Buyer's Agents (EBAs)
Buying A Home

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County
I've heard of the concept of company's only representing buyers a few times. This is a comprehensive list of great reasons for good representation.
Oct 01, 2012 12:41 PM #7
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Thank you Bryan!

Oct 01, 2012 12:58 PM #8
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Karen Anne -  I wrote this blog entry due to the comments section of another agent's blog where agents were discussing how they do business. This was one of the topics that came up. I do think that most professional agents do take the time to properly explain the documents they ask clients to sign. 

Still, I know of many agents who tell consumers that their services as their buyer's agent are free. I know very well that many of these agents have the buyers sign legal contracts that state otherwise. Whether the agent or broker holds the consumer to what they sign or not is irrelevant. 

And while some agents say that agents should not explain a legal document they are asking a consumer to sign, I disagree. I believe it is our responsibility to explain the documents in detail as they are written. To say a document says something, when the agent knows (or worse, doesn't know) that it says something else, is irresponsible and wrong.

Oct 01, 2012 01:09 PM #9
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

The way I look at it nothing is free. When I hear, this is free, a red flag goes up. Adults signing contracts must realize that nothing is free -- someone is paying for it. Unfortunately buyer broker agreements are just not customary practice in my market area. They are difficult to explain and unless the broker is going to go to bat for their licensee they are not worth the paper they are written on.

Oct 01, 2012 01:15 PM #10
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Also, when I say something like "a seller's agent is not going to act in the best interest of a buyer", this does not mean that I'm casting doubt on their professionalism. In fact, I firmly believe otherwise. I just want a buyer to understand that some agents are hired by a sellers to represent the seller's best interests. There is absolutely nothing wrong with this. That is what they were hired to do. But some seller's agents tell buyers that they can "help them buy the house". While true, this type of statement leads many buyers to believe that they will be getting true representation in the transaction. In fact, they may be asked to agree to limited representation, or worse, be merely a customer in the transaction.

Again, there is nothing wrong with any of this, if the buyer is informed and understands what is going on.

My target audience is buyers. And buyers need to know that there are things they can do to assure that they hire an agent who will represent them and stay true to them throughout their transaction.

Oct 01, 2012 01:24 PM #11
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Thank you for your comments Pamela! I fully agree with the first half of your post. It is sad that there are agents out there who either do not use a representation agreement at all, or, who tell the consumer that the agreement says something that it doesn't, merely to get the signature.

Oct 01, 2012 01:27 PM #12
Nancy Frimann
Eagle Ridge Realty/Signature Homes & Estates - Gilroy, CA
California Real Estate Broker

Any additional compensation, such as a bonus, I will usually give back to the buyer, or have the buyer recieve a credit.  Does Utah allow dual agency or allow an agent to double end a transaction?

Oct 01, 2012 02:12 PM #13
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Nancy, and Benjamin:  The terms "double end" or "double dip" really, really irritate me.  It makes it sound like you are getting DOUBLE the commission, when you really are not.

If you work with both the buyer and the seller on a sale of ONE particular house... you have both sides of the sale.  You could also represent the seller, and then take that same buyer and not have them buy that same house, but a different house.  Two houses... but still TWO sides.  No difference in the commission.

Whether the TWO sides are on the same house, or on different houses... it is still TWO sides.  To make it sound like an agent is making a "killing" is, in my opinion, extremely disingenuous.

Oct 01, 2012 02:36 PM #14
Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

I agree with what you are saying and do also feel that agents do not explain the contracts/documents, because they do not understand it themselves.  Explaining to a buyer what they are signing is not giving legal is an agent doing the job that they are licensed for.

If "explaining a contract" were part of a test that agents must pass for getting a license, that would eliminate most agents.


Eve in Orlando

Oct 01, 2012 09:07 PM #15
CCIM, MRICS, Serving Mexico-USA Border
Excellent point Benjamin, We see this type of attitude every single day in our market, specially agents who do not have a good handle of the English language.
Oct 01, 2012 09:09 PM #16
Erika Naegelin
LoansByErika - San Antonio, TX
I love the part where you talk about when the commission exceeds the previously agreed upon price, too many times I have seen a buyers agent take clients to new homes just to gain a bonus out of the sale. Your thought process is highly ethical and doesn't risk steering.
Oct 01, 2012 09:19 PM #17
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

You make some valid points, but like Bryant's #4 comment, I would think you need to be careful explaining a legal document unless youar are an attorney and acting in that capacity. It could be taken as legal advice.

Oct 01, 2012 10:22 PM #18
Lucas Taylor
Keller Williams Miami Beach - Miami Beach, FL
Thank you for the great education. I learned so much from your post.
Oct 01, 2012 10:23 PM #19
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I would also like to comment in response to Erika's #17 remark about agents taking clients to new homes.  I am "guilty" of that.  I don't usually take clients to new homes first, but ultimately out of frustration.  I recall one client, who I showed approximately a dozen homes that were either foreclosed, or otherwise in need of some repair.  I could see the single mother wasn't feeling the properties were fullfilling her needs.  It was absolutely refreshing to drive her to a new home development, where she was able to select her colors, materials and floor plan.  Add to it, a new home warranty, and builder incentives.  I certainly wouldn't label taking a buyer to a new home developent steering.  In the resale world, where buyers often are provided little or no disclosures on a bank foreclosure, or have to wait on a short-sale to see if they have actually bought a house, or just attended a crap-shoot, I often feel buyers are more protected in the new home arena.

Oct 01, 2012 10:36 PM #20
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I would not navigate these waters without a good person at the helm....My son is attorney for over 1200 Real Estate agents and in today's litigious society or where things come up often after the fact, having a professional eye peruse something for a few dollars that can even get paid out of escrow is probably a move with no regrets attached to it..Good post to keep in the awareness banks of us all...thank you

Oct 01, 2012 10:44 PM #21
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Benjamin, I believe we should be familiar with the standard forms we use in our business. Explaining what is in a paragraph is not giving legal advice; however, giving advice, direction and changing the terms requires a law degree.

Oct 01, 2012 11:02 PM #22
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Absolutely! I do not want 'fee, who pays it and who gets what when' to be the 600 lb elephant in the room when what we are SUPPOSED to be focusing on is helping the client.

An added bonus in all of this is having this interactive exchange with a client at the onset of the relationship, sealed with a document everyone understands, will separate serious buyers from time-wasters.

Oct 02, 2012 02:24 AM #23
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

It is best to represent one party in the transaction. This is just my personal belief in my business practices.

Oct 02, 2012 03:05 AM #24
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Completely agree.  It is absolutely imperative that agents be able to explain the details of the forms, distinguish sections from others and be able to accurately answer questions.  

Oct 02, 2012 03:06 AM #25
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

We have dual agency in California and that is what some clients want. As long as the right forms are signed by both buyer and seller, we proceed. This further to Karen Anne's #14 comment.

Oct 02, 2012 10:22 AM #26
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Benjamin Clark

Buyer's Agent - Certified Negotiation Expert
Contact me now to get started or to ask any questions you have
Spam prevention

Additional Information