Bitter Lesson Learned: Always Get A Buyer's Representation Agreement !

Real Estate Agent with Berkshire Hathaway

Bitter Lesson Learned:  Always Always Always Get A Buyer's Representation Agreement !


My wife and I are a husband and wife team and have been in the real estate business for the past 10 years. Prior to our real estate years, I spent 23 years on active duty in the Navy and retired as a Navy Commander, Public Affairs Officer.  I am also a former radio announcer and Master of Ceremonies for more than 1,000 wedding receptions and other events. My wife, Judy, is a former Executive Recruiter and Deputy Sheriff/Bailiff in the Atlanta, GA, court system. And, we are both former business owners. 


We have been blessed with many years of professional experiences and know how to very successfully interact with people from all walks of life.  Honesty and integrity are the foundations of our lives and business.  We love our careers in real estate and helping nice people find or sell a home.  We have a plethora of testimonials of very happy clients and many new friends as a result of our real estate business.


In that time we've learned many things through real estate classes, getting licensed, hundreds of hours of Continuing Education, reading Active Rain articles, broker guidance, real estate magazines, etc., and, of course, through experience.


But, one thing we've always had a problem with was to request, or require, buyers to sign an Exclusive Buyer's Representation Agreement.  It felt awkward to us for fearing of losing a buyer even before we began a relationship.  We were afraid buyers would object or refrain from signing it and go to another Realtor.   I suppose, when you are struggling at first, or when you begin your business in a brand new area or state, you tend to grasp at straws and not want to let anyone slip through the cracks without getting them as a client.


However, shame on us!  We have been burned several times over the years by not having a Buyer's Representation Agreement costing us hundreds or thousands of dollars and man-hours.  What will it take or when will we ever learn?  Well, we have   .   .   .   this past week!


My wife and I have now sworn an oath to each other that we will never  .   .   .  ever  .   .   .  work with another buyer without having an Exclusive Buyer Representation Agreement signed . . .  in blood!!!


We pass this story on (at the cost of embarrassing ourselves), hopefully, to encourage all Realtors to always get a Buyer's Agreement signed before spending hours and dollars on a buyer pursuing a new home.


Two weeks ago a woman from the Columbus, Ohio area called from one of our websites to ask if we would assist her in finding just the perfect new home in the Williamson county area in Tennessee.  We, of course, fell all over ourselves in providing her with all the answers to her questions and much more. 


She was the wife of a retired Air Force Lieutenant Colonel, and me being a retired Navy Commander (similar ranks), we struck up the typical good faith relationship almost immediately on the first phone call through our military brotherhood, or so I thought.  You know, being honest and trustworthy and accepting the other at their good word.  Usually, in military circles this is something to be expected above the normal civilian standards.


She knew exactly what she wanted in a new home in the $400,000 to $500,000 price range with a 3-car garage, basement, four to five bedrooms and maybe a bonus room, etc.  She said if we found what appeared to be the perfect house, she would fly right down and make an offer on it.


So, my wife and I spent several hours during most of a weekend searching through the MLS for brand new homes with all her criteria and sent those up to her by email.  We also decided to spend a Saturday afternoon driving around different areas and neighborhoods searching out just the perfect house for her.  We figured for a $12,000 to $15,000 commission, nothing is too much, too hard or too time consuming in the pursuit of success.


We found several homes that fit the picture and relayed the information.  Our new "client" saw one she particularly liked and got excited about, called us, and said she was flying down Monday night to stay at her daughter's house.  She asked is we could pick her up there on Tuesday morning to tour houses as she wouldn't have wheels to drive herself while in town.  Of course, no problem.


Tuesday morning, bright and early, we met our new "best friend," (as she said) and held a quick impromptu introduction meeting in our car.  We explained how we work and what our schedule was for the day.  We also explained our Buyer's Loyalty Agreement and she responded with "Yes, yes, I'm familiar with all that having bought many houses while traveling around with the Air Force and I understand."  Okay.  So, we took her at her word and off we went.


She really liked the first house we toured and went back to it three different times.  But we also, over the next two days, drove nearly 250 miles through the County back and forth to see neighborhood after neighborhood of new homes.  She was very particular and very demanding.


While enjoying lunch on the second day (at our expense of course), she mentioned several things. 


She mentioned that she really liked the one house and that if the builder wanted to sell it he would accept her offer.  She repeatedly mentioned that she was going to get "a good deal."  We did try mentioning to her (although we're not sure she ever listened to anything) that our local real estate market locally has been really hot this year and inventories are now very low.  And sales prices have risen substantially over last year.


Although we know it not to be true and we tried persuading her otherwise when she insisted that builders did not like dealing with Realtors as that drives up their costs by having to pay out unnecessary sales commissions.  She was convinced buyers would get better deals if they came in without a Realtor. (Another red flag).


But at the end of two full days she decided she was "90%" in favor of the first house so we went back again and visited the sales office and introduced her to the two sales agents in the office, and then back to the house for another walk through.  While we were all walking out of the house, the woman said she wanted to come back in the morning to see the house again and to show her adult daughter, BUT, that it wasn't necessary for us to be there.  (Hmm-m-m?  Warning flags!)  Three times we said that we would, of course, come back to assist in any way we could and to prepare an offer if she decided to do that.  She insisted not.


Obviously, we began getting very suspicious of her "loyalty" but called it a day and hoped for the best.  Surely, no one would do an end run around us after all the time we've spent researching for her and showing houses throughout the County and miles driven.  Who would do that?  Certainly not a senior Air Force Lieutenant Colonel's wife!


The next day we did have prior commitments in the morning and would have changed or adjusted those to give her our typical full support.  But responding to her latest insistence that we did not to be at the house with her and her daughter the following morning and not knowing the time she would be there, we kept our morning appointments.


At midnight of that second day, she sent us an email stating that she wanted make an offer the next morning and to meet her at the sales office at 10 a.m.  Unfortunately, we did not get her email read until about 9 a.m., that next morning and we were both at different commitments and could not be there at 10.  We could at noon.


But now the plot thickens.  We received a call from the sales representative at the builder's sales office advising us that our buyer was in that morning stating that since we were not there and did not provide an offer right then that she was done with us and that she would be making her offer directly to the builder. 


The builder's sales agent also mentioned to us that the offer was so ridiculous she was certain the builder would not even begin to consider it but it would be presented.  We learned her offer was for $40,000 less than the list price and she wanted extra features to be "thrown in" like a backyard fence, underground water sprinkler system, an attic storeroom finished off with sealed walls to keep the critters out, plus a few other miscellaneous items).  


 We did everything she asked us to do and more and dedicated our time and provided the necessary expenses to achieve her goal in the time frame she set.  She was served with the highest level of professionalism and service.  BUT, we did not have a signed Exclusive Buyer's Representation Agreement.  


Never . . . never . . . ever again!


Comments (14)

Helen and Larry Prier- Re-Max Gateway - Residential Real Estate
RE-MAX Gateway- Residential Real Estate Sales - Anacortes, WA
Anacortes & surrounding Skagit & Island Counties

Judy and Jerry, Did she get the house?? We have had the same experience however, not as time consuming as this gal. We have always said, "When it comes to money you do not know anyone". Good luck for a rewarding future and hang in there.

Nov 27, 2013 07:31 AM
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS
I'm with Helen & Larry - did she ever get it? It's a wise system to meet your buyers in the office first, and go over the Buyer Agency Agreement - although I understand, many buyers jump the gun and want to see the's bitter pill to swallow, that's for sure.
Nov 27, 2013 07:59 AM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Is the Builder a member of your Board of Realtors?  Can you go for "Procuring Cause"? 

Nov 27, 2013 08:07 AM
Eve Alexander
Buyers Broker of Florida - Tampa, FL
Exclusively Representing ONLY Tampa Home Buyers

I have been representing only buyers for more than 20 years, work under an EBA agreement and I trust no one, however there are 2 things I think that you could have done better.  I have been there and done that, so please forgive yourself...this is just a learning experience.

1.  You said:  Tuesday morning, bright and early, we met our new "best friend," (as she said) and held a quick impromptu introduction meeting in our car.  We explained how we work and what our schedule was for the day

I say: That should have been a sit down-look her in the face meeting.  You could have sat down at a coffee shop, picked her up at her hotel lobby...and then explained how you work.  You glossed over it, she nodded and you hoped she got it.  If you had her undivided attention, you would have had the stage to address the  agreement and the red me, there would have been red flags.

2.  You took her to the new constrction sales office 3x and never signed her in...during your first visit, you needed to get a commission agreeement from the builder for this wonderful military "user".  In south florida, it was common central florida most builder sales people think I am crazy when I ask them to write me one, or give me a  copy of the sign in registration...Crazy is OK, getting paid is not.  At least you could have gotten paid.

The biggest problen is that you assumed that because you had some things in common and because you are professional and because you worked your ass off, that she would appreciate your took you almost 3 days to understand that you were working with a snake.

I once worked with a professional "looker" for 3 years and when he found the perfect home at an open houses, he told the listing agent he could not remember my I get your pain.

Nov 28, 2013 01:51 AM
Judy & Jerry Ryan
Berkshire Hathaway - Fairfield Glade, TN
"Sellin' or Buyin' ~ Call the Ryans!"

Thank you all for your concern, interest and support.

Would it be wrong and a sin if we are happy that her offer was NOT accepted?  It wasn't! 

We will go to our Board of Realtors' Grievance Committee if a deal is struck later on and if the builder does not recognize us as the procuring cause.  But, our broker feels we don't have much of a chance without an Exclusive Buyers Representation Agreement.

Fortunately, and hopefully, we believe this particular builder and his sales rep have the integrity to do what is right.

We have already begun requiring a Buyer's Agreement in writing and discovered it was a piece of cake to get it signed by another buyer.

Speaking of cake (and pie) . .  HAPPY THANKSGIVING TO YOU ALL!  We are blessed.

Nov 28, 2013 01:57 AM
Kerry Lucasse
eXp Realty - Urban Nest Real Estate Group - Atlanta, GA
Your Urban Nest Atlanta Real Estate Consultant

I'm so sorry this happened!  An agent friend had something similar happen recently and in this case the buyer was a friend of a good friend, so she didn't push the Buyer Brokerage agreement.  Lesson learned!

Nov 28, 2013 01:57 AM
Eve Alexander
Buyers Broker of Florida - Tampa, FL
Exclusively Representing ONLY Tampa Home Buyers

The Buyer Broker agreement and Procuring cause are two seperate issues...the Buyer agreement does not help a PC claim.  (I co-authored a book on Procuring Cause).

In order to even have a PC case, the builder would have had to have his properties listed in the MLS, advertising a commission and been a memeber of the board...which is why you need something in writing from the builder when you bring in the buyer.  Then there is no debate.


Nov 28, 2013 02:09 AM
Jay & Michelle Lieberman
Keller Williams World Class - Agoura Hills, CA
Creating Calm in the Buying and Selling Chaos

Real bummer.  Hate when that happens.  I have also learned this the hard way a few times.  If a buyer will not agree to sign a rep agreement at our first in person meeting, unfortunately we make it a policy not to continue with that client.  You can get very excited about that chance to help a client but you have to put that emotion aside and run it like any business.

Nov 28, 2013 02:12 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

Jerry, I show a lot of new construction to buyers. I think most of the local builders would honor you as procuring cause even without a signed buyer's agreement. Jones Co. may be the exception. Anyhow, I've been burned one too many times from people who didn't sign an agreement. Now, if they don't sign they don't get my guidance. That system has worked quite well for me.

Nov 28, 2013 04:49 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I probably lost a "buyer" due to them not wanting to sign a buyer rep agreement prior to me doing anything for them.  The ironic thing is, when they want my services they are all too eager to have me explain the drill and offer my experience and knowledge in their benefit.  Yet, when I want a little assurance from the buyer, there is none.  In some states, I forget which, the Buyer Rep Agreement are mandatory.  A buyer would understand that.

Nov 28, 2013 07:42 AM
Cheryl Ritchie
RE/MAX Leading Edge - Huntingtown, MD
Southern Maryland 301-980-7566
When you realize it is in essence an employment agreement you see it a different way.
Nov 28, 2013 07:44 AM
Andrea Peters
The Andrea Peters Group powered by United Home Group @ Keller Williams Realty - College Station, TX
SOLD with Andrea!

I went through this recently with clients that I had been working together with for MONTHS. I'd even listed and sold their current home. I'd shown them many homes, interviewed with multiple builders, sat through multiple builder meetings, then got cut out of the process - after the builder told me it wasn't necessary to sit through the floor plan design meetings. Sucks when it happens.

Nov 28, 2013 11:29 AM
Nina Rogoff
Boston, MA
Wix Websites for Real Estate Agents

Hi, Jerry...hope you had a good Thanksgiving! I have always said up front to buyers that if they feel comfortable and want to work with me that I would give them the Buyer's Representation Agreement to sign. I explain that this is the permission for me to represent them in a transaction. There's nothing uncomfortable about making sure the client gives you permission to act on their authority. I have never had anyone question or refuse to sign. Your time is worth money and if someone isn't going to agree to give you permission to act on their behalf then why spend time trying to work for them?

Nov 28, 2013 01:19 PM
Jill Watts
Realty Pro, Inc. - Vancouver, WA
A Luxury Experience at Every Price Point!

Great blog and we've all been there. I've been in real estate for eight years and am totally amazed at how some people conveniently "forget" your hard work when it comes to saving themselves a little commission price such as a FSBO. Dishonest is what it really is. And it's unorganized on our part...or just trusting too much. Sheesh.

Dec 01, 2013 02:11 PM