I have always been reticent to use an Exclusive Buyer Agency Agreement with my clients. These agreements are similar to listing agreements, but used for a buyer. They outline the duties of the agent and is a commitment from the buyer to work with a particular agent. Recently, my wife and I decided to shop for a second home in Arkansas. I always learn something when I become a client again. This transaction was no different. Here are a few thoughts regarding my experience with an Exclusive Buyer Agency Agreement as a client and Arkansas real estate novice.
Finding an Agent:
Our first item of business was to find an agent. We were referred to an agent that my wife interviewed and that committed to helping us. We never saw or heard from her again. She immediately handed us off to another agent. The new, unknown agent showed us about six homes in two days and actually provided pretty good service. We decided to make an offer!
Making an Offer:
The agent sent us a contract and other documents to sign electronically. The very first document was an Exclusive Buyer Agency Agreement. This made it seem like it was a standard document and the agent first told us that it was an office requirement to establish agency. I pointed out that it did establish agency, but it did other things as well and that we had signed at least two other documents establishing agency. He then said it was a state requirement. A quick call to the Arkansas Real Estate Commission found that to be false. Not a good start.
Duration of Agency:
The agent chose the length of the agency to be six months. We thought that was way too long to commit to someone that we knew little about their background.
This agreement committed the buyer to a 3% commission. The problem, the seller pays the buyer's commission in Arkansas. It might be common practice for the buyer's agent to collect their fee from the seller, but that is not what this agreement stated. It committed us to paying the commission. It even sounded like the agent could get paid by the seller and us both. The agent said it was an unfortunate wording in the contract. We agreed. Also at issue, commissions are negotiable. We should have had the option to negotiate for a better rate.
Cancellation of Agreement:
The agreement states, "Buyer shall be liable to Selling Firm (firm representing buyer) for a cancellation fee equal to the liquidated sum of $500" and maybe subject to "sums due Selling Firm pursuant to Paragraph 8 (aka-the commission)." It also says the real estate agent can cancel at any time, for any reason, without any penalty. This seemed one sided to us.
Would I Ever Sign an Exclusive Buyer Agency Agreement?
Buying a home can be a long process. I can understand agents wanting to protect themselves when working diligently for buyers. Heck, I have done work for buyers only to find out that they have purchased a home using a listing agent or some other buyer's agent and it is frustrating. I would not sign this Agreement, though. It was written up mostly to protect the agent and it was presented with no explanation in a poor manner. I worry, in our world of electronic signatures, that we are signing documents without reading or understanding them. Ask questions. Consult trusted sources. Good agents will be happy to help answer your questions. And sometimes you can say no. We refused to sign the Buyer Agency Agreement and were still represented by the agent.
Would I ever sign one of these agreements? Yes, if I knew the agent's background well and the agreement was written fairly. In that case, is the agreement really needed?
As an agent, I find it difficult enough to build trust. I will not use a Buyer's Agency Agreement in my business. Maybe I have been lucky, but I have found most of my clients to be very trustworthy and loyal. And if they feel someone else will do a better job for them, I am fine with that. Free to choose or...
"If you love something set it free, if it returns its yours. If not, it was never meant to be."