Should I really sign that Buyer's Brokerage Agreement?

Real Estate Broker/Owner with Paradise Sharks BK3087579


You can, but do you really want to.......

We sat at a closing table a few days ago where we represented the seller on the successful sale of their home. We had carefully reviewed the closing statement and wondered how the buyer would react to the $1,770 being charged to them on Line 704 of the closing statement simply titled "Buyers Broker's Commission". This wasn't my first rodeo and I always enjoy watching the reaction of those paying a charge like this as the statement is reviewed at the closing table. More often than not, while the buyer remembers signing this Buyer's Brokerage Agreement, they don't recall it being fully explained to them how it may end up costing them money.

In this case, the buyer was a very nice family, retiring and moving to Jupiter from a larger metropolitan area. They were excited about their new home which they said was the first property they had ever owned with a garage. While the sales price was the 2nd highest ever in the neighborhood it still was a full 23% below the median priced home for the month of August in the area. I am thinking that the $1,770 represented a sizable sum to the buyer as it certainly would to me. The husband was an exceptionally nice man and as the closing agent reached that line he was most polite but stated that charge seemed "highly unusual". The closing agent explained that the seller was paying the commission shown on Line 703 but he would need to ask his Realtor® about that sum as it was included on the statement at his direction. His agent was present but sat eerily silent. After a few uneasy moments the buyer spoke up and said again that it seemed highly unusual but it's OK. I think I would have wanted an explanation but like I said the buyer was exceptionally polite and I truly felt bad for him.

I do not like to use the word never, but I will say it would be "highly unusual" for me to ever ask a client to sign a Buyer's Brokerage Agreement. In my opinion, it is nothing more than a very one sided agreement that favors one side; the broker at the expense of the other side; the customer. There are a number of ways that the document, in my opinion, is not in the best interest of the buyer. To me the relationship between the broker and the client should be one built on trust. If you really love your broker and want to pay them a commission if you decide to purchase a property through another broker, or additional compensation even when they have been paid a commission then by all means get out your pen and sign the Buyer's Brokerage Agreement. However, please read it completely and fully understand what you are agreeing to. If you don't, be prepared for a "highly unusual" charge on closing day.

You will hear some brokers refer to the document as a "loyalty agreement" or a "partnership agreement" but make sure you know what that means. If you went to a doctor and the first thing they asked you to sign was an agreement stating you would be "loyal" to them or you would pay them anyway what would you do. I would be running for the exit and finding myself another doctor. If your broker wants you to sign a Buyers Brokerage Agreement you certainly can, but do you really want to?

In this transaction a buyer ended up paying what he called a "highly unusual" charge of $1,770 while his loyal partner negotiated for his client to pay the 2nd highest price anyone had ever paid in the neighborhood. The lone exception was one home that sold after 334 days through the height of the real estate bubble. I am not convinced his "loyal partner" earned the money but if it's OK with you it's OK with me. Just another reason why Paradise Sharks is design.

Fins up..... 

Tom Priester
Principal Broker

Paradise Sharks Real Estate


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Tom Priester

Paradise Sharks
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