Question Details

Deborah, Real Estate Pro in Chicago, IL

Exclusive Buyer's Agreements. How many of you use them routinely.?

Asked by Deborah, Chicago, IL Sun Feb 24, 2008

My manager strongly recommends that we use them, but I have trouble justifying their use. Thoughts?

Help the community by answering this question:

Answers

22
BEST ANSWER
I guess it depends on the state. I understand that in some states, as Julie mentions, it's a requirement, because otherwise you represent the seller.

In Illinois, we have buyer's agency, and the agent is presumed to be working with the person he/she is working with (in other words... if you're working with the buyer, you're a buyer's agent... with or without an exclusive buyer's agreement).

We get a lot of resistance to buyers signing "anything" let alone a document that basically spells out that if they buy a house, the agent gets paid, and if the listing doesn't "co-op" the buyer's agency fee, it makes our buyer client responsible for that payment.

While I agree, that the EBA offers a great opportunity to sit down with the client, and spell out exactly how things work and who's responsible for what... you don't actually NEED the EBA in order to sit down and have that conversation. I feel that if I explain things upfront, and if I treat my buyer clients well... they will stick with me, they will buy with me, and I will get paid. I don't feel comfortable having my client (whom I'm supposed to represent) sign a document that, for the most part, protects ME (not them), and binds them to me, and makes them responsible for my commission.

I feel if I do my job properly, we'll have no problems. If they end up buying from a FSBO, or new construction, without me, and I don't end up getting paid, then I've not educated them well enough to understand that they need to include me at the first showing... and shame on me, not on them.

I'm not going to enforce the EBA so that they now have to pay me out of their pocket.
2 votes Thank Flag Link Sun Feb 24, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Yet another EXCELLENT answer by the king himself. I ditto everything said by Elv!s. Here in Western New York it works the same way. If you are not the listing agent, and you don't work for the same brokerage as the listing agent, then it is presumed you are representing the buyer. I use exclusive buyer's agreements, but not routinely. If I feel like this piece of paper is going to scare them off then I don't bother. If I keep it casual and friendly they stay loyal to me anyway which is better than scaring them away at the first or second meeting with a "contract". Other clients of mine say "ok, what do I need to sign?" and then of course I use the exclusive agreement with them. Like almost everything I do in this business, it has to be determined on a case by case basis.
Web Reference: http://wnyhomevoice.com/
2 votes Thank Flag Link Sun Feb 24, 2008
Hi Elvis,

I would think that undisclosed dual agency is illegal in all states (I can't imagine it would not be) but I don't ever profess knowledge of state laws where I don't hold a license. :-)
2 votes Thank Flag Link Sun Feb 24, 2008
So that someone is working in YOUR best interest! It isn't FAIR to have both agents working for the seller, is it? :)
_________________________

shouldn't be doing that anyway... ? are you really saying that if they don't sign the EBA you won't be working in their best interest?

and I'm not including those states where it's a requirement, because otherwise you represent the seller, as I stated below. In those states I understand the need.
1 vote Thank Flag Link Wed Feb 27, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
all good reasons why the AGENT might want to have the EBA signed, including Jed's liability issue...

but not a decent reason why the CLIENT should want to sign one.
1 vote Thank Flag Link Wed Feb 27, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Yes, I have used them here on Cape Cod,Ma. for over 10 years.
After two commission disputes with ,otherwise, very loyal & happy Buyer Clients .
I generally wait until the second personal meeting or until we are sure I can assist to sign the B.A. Agreement.
The description & paperwork regarding the mandated Agency Disclosure form are intimidating enough @ the first substantive meeting. I assume nothing and realize that laws regarding Agency are ever evolving.
1 vote Thank Flag Link Tue Feb 26, 2008
Julie, fair enough..

While I don't have a license in the other 49, I'm willing to take a leap on this one... :-)
1 vote Thank Flag Link Sun Feb 24, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Julie, I think "undisclosed" dual agency is illegal in all states.
1 vote Thank Flag Link Sun Feb 24, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi Deborah. In CA, using a buyer-broker is optional. We do not have a rule that says that we represent the seller unless we have a buyer-broker agreement. We have three different buyer-broker agreements (non-exclusive, exclusive and non-exclusive/no compensation). In CA, most buyers are reluctant to sign an exclusive buyer-broker agreement. My company requires that the buyers sign an exclusive buyer-broker agreement when we write up an offer for a buyer. I personally require buyers to sign an exclusive buyer-broker agreement after a few showings as I think that I should give the potential client a chance to get to know me. I also tell my buyers that they need to communicate with me if they feel that I don't meet their needs and that they can cancel the exclusive buyer-broker if I don't meet their expectations. They have to cancel in writing so that there are no misunderstandings. So far I have not had anybody who refused to sign the exclusive buyer-broker or who cancelled it later. I think communication is key. Most people understand the need for a written agreement (i.e., setting forth mutual expectations and getting a mutual commitment) once I explain the reasons for it. I also make sure that they understand that the compensation comes from the seller unless they buy from a FSBO or through another agent during the term of the agreement.

I understand your reluctance to ask for the exclusive buyer-broker agreement. I used to feel the same way, but have come to the conclusion that my time is valuable and I don't feel like spending my time with buyers who consider me dispensible is a good use of time. I believe buyers should explore their options and interview several agents and then settle on an agent who is a good fit. If they are not willing to commit for at least 3 months, I am not willing to commit either. While we work in a service industry, I don't see why I should work for free. No accountant, doctor, attorney or other service professionals are expected to do free work. I am not sure why people think that real estate agents should work without ensuring that they'll get paid in the end.
1 vote Thank Flag Link Sun Feb 24, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
I was at our CRS Northern California Chapter quarterly meeting Friday and one of RE/MAX's top producers in the State of California, when asked if he used Buyer Broker Agreements said NO! He does in excess of 100 transactions a year with $2.2Million in GSI and DOES NOT use a Buyer Brokers Agreement! That being said, I met another top producer, same GSI but double the transactions (it's the market they work in! Ohio versus Southern California coastal community!) And he insists on two things; a buyer’s agent on his team cannot allow any BUYER INTO THEIR CAR!! AND insists on a signed Buyer Broker Agreement and a $500.00 retainer!!
What I'm getting at is it all depends on how you work! I do believe a Buyer Broker Agreement explains the whole process to the Buyer. It is a great tool to explain to them what YOUR duties to them consists of and what THEIR duties to themselves consist of! In the greatest state of California we have THREE (3) different Buyer Broker Agreements in various stages of exclusivity. But if you EXPLAIN to your buyers what everyone's duties are up front and during the whole process some Realtor/Agents feel Buyer Broker Agreemens are superfluous while others feel they are an absolute required document to begin a relationship. You pays your money—you takes your choice!
1 vote Thank Flag Link Sun Feb 24, 2008
It is a requirement to have a Buyer Agency Agreement in Georgia if you represent the Buyer. It enables
you to negotiate the best price, etc., for the buyer and you are actually working for the buyer. Otherwise,
you are doing a transaction without representation of either buyer or seller. (Unless, of course, you
are the listing agent and you represent the Seller.)
0 votes Thank Flag Link Thu Feb 28, 2008
but not a decent reason why the CLIENT should want to sign one.
~~~~~~~~~~~~~~~
So that someone is working in YOUR best interest! It isn't FAIR to have both agents working for the seller, is it? :)
0 votes Thank Flag Link Wed Feb 27, 2008
When I got my GRI we were told that one very good reason to use the Buyers contract is that it limits your liability to a term of 2 years and binds the parties to mediation and possible arbitration. Without it you are liable for much longer. I'm in San Francisco and it is not very widespread although one broker I worked with insisted on them and I never had any more problem getting it signed than I do getting agency disclosures signed.
I do it now and count it as a step in the productivity cycle. Get the appointment - do the presentation - get the signature.
I've learned allot from this thread.
Web Reference: http://www.jedlane.com
0 votes Thank Flag Link Wed Feb 27, 2008
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
Contact
I am in the Hampton Roads area of Virginia. I take a buyer out one day to look at no more than 3 homes without an agreement. This allows me to see if we work well together. I explain to them I can not say anything about the home, because at this point, they are a customer not a client.

If they want to continue working with me they must sign a buyer agreement and all the mandatory disclosures (we have a lot in VA) before I will work with them.
I've been burned too many times by buyers I have spent time with to have them buy a fsbo or a 'friends house'. Honestly, if they don't want to sign one, I explain that this is how I conduct my business , my time and knowledge is valuable, and it is to protect both of us. If they still say no, I thank them for the opportunity to show them houses, wish them luck, and send them on their way.

Angie
0 votes Thank Flag Link Wed Feb 27, 2008
Deborah.....

I am in California and we have three different kinds that our California Association of Realtors provide. Personally I do not use them. Most of my business comes from referrals and our relationship may be different.
0 votes Thank Flag Link Wed Feb 27, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Good for you, Carol! Hopefully this will spread. :)
0 votes Thank Flag Link Sun Feb 24, 2008
Hi, I'm a REMAX agent in Massapequa NY (Long Island) and a buyer does not get into our car without signing an exclusive Buyer broker agreement. 95% of the buyers we give a buyer presentation too sign our exclusive agreement, we will not work with the other 5%
0 votes Thank Flag Link Sun Feb 24, 2008
In NY you also need both parties to sign a dual agency agreement, and you are required to treat both sides fairly and offer neither advice. I have handled both sides of many of my transactions, never as a dual agent, always representing the seller.
0 votes Thank Flag Link Sun Feb 24, 2008
Yes, most of the time I use and Exclusive Right to Buy agreement - in our state that means that means that the Buyer buys the property, even FSBO's, through me. The agreement benefits both the buyer and me - they only people I find objecting to them are people who don't understand the process. I don't sign every buying prospect up on a buyer's agency agreement - some I treat as customers until they decide they are serious buyers for Hilton Head Island and the surrounding area.

Also in our state of SC, you must have a written buyer's agency agreement in order to represent the buyer, otherwise you may find yourself in undisclosed dual agency and that's against the law in SC.
0 votes Thank Flag Link Sun Feb 24, 2008
Julie, is your buyer agency agreement and exclusive agency agreement?
0 votes Thank Flag Link Sun Feb 24, 2008
Hi Deborah,

I use a Buyer's Agency Agreement with every buyer client I have. Unless they sign a buyer's agency agreement, I work for the Seller and treat the buyer as a customer. If they want representation, they sign the agreement. It's really a a matter of education and the buyer understanding the benefits of buyer agency.

There have been many times that a buyer has started out as a customer and then decided they wanted me to represent them and then signed the agreement - I have found that they just need to get to know me, trust me and see me in action before they hire me.

A Buyer's Agency Agreement is only different from a listing agreement in that the purpose of the employment is different.

Hope that helps.
0 votes Thank Flag Link Sun Feb 24, 2008
I'm anticipating reading answers from other parts of the country, because it's near to impossible to get a New Yorker to sign a buyer agency agreement, although I understand in some parts of the country they are SOP.
0 votes Thank Flag Link Sun Feb 24, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer