Buyer Broker Agreements-Its Not Always About The Deposit!

By
Services for Real Estate Pros with Talk 2 Midori, LLC BK645709

There always seems to be a great debate on buyer broker agreements. Do you provide a buyer's consultation?  If not you should!  Why would you make the assumption that a buyer knows every step of the process.  Even if they say they do...often times they do not!  Funny thing, we never do this to a real estate seller and on many occasions buyers get shortchanged and we wonder why so many dislike real estate agents.

 

Through out the years I have learned many lessons when it comes to buyers and their commitment to buy real estate. 

Don't assume because you know someone well that it is not necessary to use this vital document. 

I have seen it and experienced it..sometimes friendships don't mean a thing. 

Buying a home is business..a very large investment..friendships do not matter...when money comes into play.

Often times associates strive to get the buyer broker agreement signed with no avail..often times that is the reason they are not used and at the end...

No commission check for you and sometimes the buyer walks away or works with someone else.

A couple of things you should know about Buyer Broker Agreements.

It's not about the deposit..or escrow received!  A retainer fee not necessary..if I have your word..in writing..via an agreement..a buyer broker agreement.....the escrow will be collected once we find a buyer a home.

Keep in mind for me its a commitment from the buyer to work with me...and only me..whether it is one house...get it signed...spending a day with the same buyer on several properties...get it signed...or for a longer commitment. 

 

Plain and simple use it and get it signed.

When I hear agents complain about the price of gas...get a buyer broker agreement signed.  When I hear agents upset because they feel used....get a buyer broker agreement signed. 

We as real estate agents are expected to protect the public from harm...we protect buyers...we protect sellers...

But whose responsibility is it to protect ourselves?  You and only you.

I guess it really comes down to this. 

As a profession imagine if we raised the standard and used some of these legal and binding documents to ensure our compensation. 

Is this charity or are you trying earn a living? I said it before and I will say it again...Real Estate is not my charity of choice!  What about you?  Do you use a buyer broker agreement and is it difficult for you to have a customer sign it?

Disclaimer: The opinions expressed by The Activerain Network and it's members and those providing comments are theirs alone, and do not reflect the opinions of Midori Miller AKA Daytona Real Estate Trainer and CENTURY 21 Sundance Realty. Midori Miller and CENTURY 21 Sundance Realty are not responsible for the accuracy or content provided by The Community.

 
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Rainer
3,517
Edward Berenbaum
Century 21 Redwood Realty - Arlington, VA

 

My practice is actually in Virginia.  We are required to have a Disclosure of Brokerage Relationship signed, but not a Buyers Broker Agreement (aka Exclusive Right to Represent Buyer Agreement).  It is my opinion that a conversation is simply more powerful and effective than asking a buyer to sign a document that I would never enforce.  If my agents are out there taking good care of our clients and thoroughly explaining the process, they are likely not going to taken advantage of.  

When an agent comes to me complaining that they feel a client (buying or selling) has "done them wrong", we sit down and analyze everything that has happened and think of things that we could have done differently that may have caused the buyer not to have "done us wrong".  Many time, our instincts tell us that we did everything perfect, but upon in depth analysis we see the picture more clearly.  While this isn't fun- I believe that it is much more constructive and healthy than discussing- "how can we go get our money"!  As I stated before, these conversations rarely ever have to happen (good job, guys).  

As for requiring pre-qualification before getting in the car, see my above response.  In my opinion that policy leads to many qualified, but understandably nervous buyers slipping through the cracks.  

BTW- This is Edward Berenbaum (again)- I just created an account, but my name isn't showing.

 

 

Jul 24, 2008 02:43 AM #43
Anonymous
Joseph Beauvais Buyer's Agent

Whew! After reading this post and many comments I am concerned in the lack of understanding of agents and agency relationships.

I am further disenchanted by the fact that FREC and all the agencies of Realtors are not promoting buyer agency.
Recently in Florida they removed transactional agency notice. No warning to the public.

Are all concerned about losing half of the commission?

IN the future, I predict, Listing agents will represent sellers interest only and Buyer's agents will represent Buyers only.

I will not even attempt to enlighten those that have little concern about agency. "you just want to get paid".
I have seen many professional agents doing things right and representing their clients properly. I also have see a lot of irresponsible agents.

Policing these rogue agents is not my job, many say. It is our job. If they bring the industry down, it will bring you down.

My opinion for what is worth.

Joseph Beauvais Owner/agent  
SunnySpotRealty.net
239-770-0686

Jul 24, 2008 03:09 AM #44
Rainer
11,701
Cyd Weeks
Palmcoasting.com Real Estate Corp - Palm Coast, FL
Realtor Palm Coast, Fl

"Third, it really doesn't hold much water anyway as the buyer can dissolve the agreement at any time."

And there it is.  If it doesn't hold much water, what is the purpose of it?  If you are explaining agency, the differences, qualifying them and yourself, then I don't see the point of getting a piece of paper signed, except to protect the agent by making the consumer feel that they have signed some official 'contract' and they need to only work with that one agent...be it for one house, one area, whatever.  I'm talking about sales associates practicing as transaction brokers.   

Jul 24, 2008 03:53 AM #45
Rainmaker
224,127
Laurie Mindnich
Centennial, CO

I don't like the buyer agency contract (fiduciary to the buyer here) because the whole concept is too new on Long Island. There are too many agents that view it simply as a conduit for a paycheck. Let them learn the nuances of buyer representation by following the fiduciary requirements inherent in the representation first; when they demonstrate the ability to put the paycheck on the back burner without making buyers feel "stuck, and achieve success with buyers that choose them for the right reasons,  maybe I'll view it differently. Until then, the buyer agency agreements are doing more harm than good in NY. Particularly with some that feel that, absent  the contract, no representation will be offered. Clearly, a bad real estate candidate to practice buyer agency.

Besides, BA never required a contract in my previous experience (diff. state)- why not just earn the money by locating the right property at the right price for the buyer?

Jul 24, 2008 08:54 AM #46
Anonymous
Terri Jackson

I just want to say that I was burned once by not having buyers sign a Buyers Brokerage.  I listed their home then sold their home, we had not found them a home so they moved into temporary housing while we looked.  I showed them a custom $420,000 home that the builder had not listed yet but was known to work with Realtors and pay commissions.  Because of working with the couple for almost a year, selling their home took 8 months, the market was just beginning to slow and the builder was desperate.  Needless to say after showing my buyers the home I had to go out of town for a ouple of days.  The buyers went back to walk around the home the builder happened to be there and told them if they cut me out of the deal she would drop the price of the house by the amount of the commission.  They took the deal.  Needless to say I learned my lesson.  I will require a Buyers Brokerage with all buyers.  By the way the builder has now gone under and the buyers found out the house had flooded prior to them buying it and the builder did not disclose, no home inspection was done, no seller's disclosure was given.  Great example to use for buyers who don't want to sign one.  With that we as Real Estate agents want to protest our buyers.

Jul 24, 2008 09:57 AM #47
Anonymous
Terri Jackson-Realtor: Americom Realty

I meant we want to protect our buyers.

Jul 24, 2008 10:01 AM #48
Rainmaker
128,557
Kristina Pratt
St. Louis' Illinois Suburbs - RE/MAX Preferred Partners - Edwardsville, IL
REALTOR - SFR - GoshenRealtyGroup.com

Midori- for a while I didn't like working with buyers because I was doing it all wrong.  It's posts like yours that have led me to test the "buyer waters" again.  Thanks for sharing it.

Jul 24, 2008 10:19 AM #49
Rainer
11,701
Cyd Weeks
Palmcoasting.com Real Estate Corp - Palm Coast, FL
Realtor Palm Coast, Fl

Terri:  Your complaint about not having a BA was about your commission and had nothing to do with protecting the buyers.  You were the one that introduced them to a builder who eventually went under.   Having signed a BA with you would have done nothing to change that.

 

 

Jul 24, 2008 10:33 AM #50
Rainmaker
467,867
Midori Miller
Talk 2 Midori, LLC - Daytona Beach, FL
Online Marketing For Real Estate Professionals

Edward-great thoughts...I take the prequalification process very serious and usually they have mortgage letter in hand before we even meet.  It happens via the phone and with a great conversation.  I think that a disclosure is pretty effective especially if you do not encourage a buyer broker agreement.  It's a great thing we are all independent contractors its quite clear...there are a few that do not agree! 

Thanks so much for answering my questions!

Jul 24, 2008 11:05 AM #51
Rainmaker
467,867
Midori Miller
Talk 2 Midori, LLC - Daytona Beach, FL
Online Marketing For Real Estate Professionals

Terri- Thanks for you input and I agree we should protect ourselves.  I appreciate your honesty and you know what...in life...what goes around comes around..life happens! :)  Did those buyers call you for assistance?

Jul 24, 2008 11:09 AM #52
Rainmaker
467,867
Midori Miller
Talk 2 Midori, LLC - Daytona Beach, FL
Online Marketing For Real Estate Professionals

Joseph-I cannot agree with you enough..pulling the transaction broker notice..it will be back I am sure.  I think its strange..FREC believes that the general public understands and knows the various ways of representation! We are still using them for now but The Daytona Area Association of REALTORS is working on a different type of disclosure!  I think for us it will help. 

Jul 24, 2008 11:11 AM #53
Rainmaker
1,317,757
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I always work with a contract -- end of story -lots of good advice here - and I agree with your points 100%.  I always have a consultation, have the buyer get pre-approved before going to see properties, and they must sign a written agreement (which they can cancel). 

Jul 24, 2008 11:14 AM #54
Rainmaker
4,432,726
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Great post.  I try to get them to sign but dont succeed all the time.

Jul 24, 2008 12:18 PM #55
Rainmaker
317,819
Monika McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH
Southern NH & the Seacoast Area

It amazes me the amount of agents who don't use them. I know laws are different depending on your state but I would not work beyond a few days/meetings without one. Usually around our second or third time out we enter into an exclusive buyer agency agreement.

Jul 24, 2008 02:03 PM #56
Rainer
34,960
Bo Buchanan
Kettley Realtors - Oswego, IL

Midori - I've explained to my buyers that I want to work hard to find their dream home.  But I don't want to show them houses for weeks - then find out they bought a house from someone else.  If we committ to each other - we each have expectations. I expect they will buy a house with me and only me.  They expect that I will "jump" when they need me and I do.  Any buyer who has felt disappointed from past experiences will understand this and see the value. 

Jul 24, 2008 05:52 PM #57
Rainer
3,653
Lucy Doroshenko Slobidsky
NP DODGE Real Estate - Omaha, NE

Midori,

I enjoyed reading your excellent post and believe and agree with your  statement : 

As a profession imagine if we raised the standard and used some of these legal and binding documents to ensure our compensation. 

Is this charity or are you trying earn a living? I said it before and I will say it again...Real Estate is not my charity of choice!  What about you?  Do you use a buyer broker agreement and is it difficult for you to have a customer sign it?

Jul 25, 2008 12:58 AM #58
Rainer
8,605
Gloria Bumanglag
CENTURY 21 Superstars - Rancho Santa Margarita, CA
GRI

I received an email from an interested buyer on a listing I have that is an hour away on non commute time.  She wanted to meet me at the property and possibly show her other properties.  While she kept confirming our appointment, I brought up that I will ask her to sign the buyer broker agreement after our meeting.  After continually stalling, she finally admitted that she is working with two other agents and cannot commit.  Wow, it saved me from wasting my energy and my gas since the mention of the agreement revealed her other associations.  She probably would have let me chauffeur her around and have one of the other agents write the offer. 

 

Aug 16, 2008 04:46 PM #59
Rainmaker
564,409
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Great post Midori -- I can definitely see the pros and cons of each side, of which there are many.  I personally don't use them and have been raked over the coals a few times, but I think overall, the fact that I tell buyers I want to earn their trust, that usually works.

Also, at least in Ohio, procuring cause trumps bba, so apart from a court suit, it doesn't mean much.

Aug 05, 2009 03:16 PM #60
Rainmaker
479,930
Sandra Mathewson
RE/MAX 4000 - Grand Junction, CO
CRS,ABR,SRES,GRI,CDPE RE/MAX

I agree with you...and the ones that don't appear to be sales people always on the prowl.  I am a professional, I have earned my designations, invested my money in technology and my time researching to be the best I can be. 

For the commentor who keeps mentioning what is in it for the buyer?  This is what it is:  I have invested in myself, expertise in my market, understanding disclosures, knowledge about the community and strategy about negotiating, servicing the buyer with other like minded professionals. I attend the premier real estate conferences with MY money and time.  If all you are about is putting someone in your car and if they buy ok, if not well I'll go home at wait for the next one, you are not a professional.

You get what you pay for is also true in real estate

There is a difference.

Sep 17, 2009 03:45 PM #61
Anonymous
Joseph Beauvais

Hmmm! interesting views. Unfortunately some of the public views agents with little respect and appreciation regardless of designations, experience and dedication. Loyalty and appreciation for the work you have done is conveyed by a few in our society. Why? Because they feel we need them not the other way around. They only need us for information on homes available and to drive them around sometimes.

When you have a buyer wanting you to assist them as a buyers agent, then it is your job to explain the advantages of doing so in the same energy and enthusiasm as when an agent list a home. No less. This should come automatically.

Why?
With my exclusive buyer broker agreement, they are allowed and encouraged to get the best deal they can whether it be a foreclosure, short sale, auction, for sale by owner or any other type of available homes. You see my agreement is a contract between buyer and Buyers exclusive agent. If they purchase any home I receive a minimum of 3%. They are told before making an offer which ones they will have to contribute to. I agree to give them 100% loyalty and in return I expect no less.

No tricks only gains for the buyer and they are fully aware of all terms of the agreement. I keep them busy but also give them a copy to present to any agent or developer upon meeting them at an open house or while viewing any home for sale.

You must have some sales training and believe in yourself and your value as a practitioner of real estate to present an agreement that is agreeable. I hate to see how many try this by saying, "I need you to sign this".

"All information in the mls is deemed reliable but not guaranteed." As well as any form of advertisement. I, in my 28 years of serving the public have found countless costly errors in print. Should the buyers not have been working with me "Exclusive buyers agent", they would have only found out the expensive way. When explaining the agency form, I give the buyers a couple of examples.

After so many years doing this, I am not jaded and still get excited when my buyer finds a beautiful home at a great price. They now will be my source of future business.
Not to brag too much, but, I just had an attorney purchase a home and gave me a very high complement on my knowledge of contractual law. It is a testimonial on my website.

Words used to present anything is critical in the outcome. Failure to convince the buyers to have an agreement can so easily be blamed on the agreement or the lack of the publics awareness. That is your job. Do it well.
I have only had one person this year that did not want to sign. I walked. After explaining all of the advantages of working with me as an Exclusive buyers broker and they did not agree means they either did not believe me or they had intentions of sticking it to me. Trust me! This is 95% of the time not a good buyer if you did your job. Walk!

If you would like to see a high tech website, with a lot of bells and whistles including most any information a buyer could dream of, visit my website.

Cape Coral Real Estate Search thousands of Cape Coral, Bonita Springs, Naples & Ft Myers homes for sale with our Free MLS Search. We have the Largest list of homes for sale in Lee County.

 

 

Oct 09, 2009 02:41 AM #62
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