Perhaps a loan officer/lender perspective can help! I have been writing loans for nearly 11 years and I can say that I will not work with a buyer who does not have representation. Not in this day and age...not in this lending environment. When I am approached by a non-represented buyer, I am pretty bold in my reasons why he/she NEEDS representation:
Buyer representation is at NO COST to you...why would you not take advantage of this?
Sellers may not take you as seriously as a buyer who is represented by a licensed agent.
When negotiating best terms, who is going to assist you? Yes you can go to a RE attorney, but that is going to cost dearly.
Address discrepencies, title issues, outstanding utility bills/special assessments can commonly come up during the transaction that the lender will REQUIRE these issues be addressed. Will you know how to handle these obstacles? Will you know how to negotiate?
Will you know how to negotiate price and seller paid closing costs to ensure that you are getting the best terms possible for you?
I hope some of this helps!
Some buyers see the agreement as nothing more than a way for the agent to lock them in to working only with them. What is most important is that the agent is locked in to performing the fiduciary responsibilities that do not exist without the agreement.
Some people just decide to go it alone - there are probably dozens of reasons and in the case of buyer agency a lot of those reasons can be addressed and cleared but some just will always want to do their own thing.
There was a time that I would not set an appointment without it. However, since the housing crisis, I find more and more that people are just uneasy and some mistrusting of RE agents. I understand why.
So......now, I will develop a relationship with the buyer before asking them to sign anything, but I do let them know early on that in order for me to represent them properly, we need to get it signed. I have never had anyone say no.
In the State of Wisconsin, if we do not have a contract with the buyer, we automatically represent the seller and I am not comfortable with that while working with a buyer.
I think once we earn their trust, then they are more than happy to go forward.
There can be a number of reasons I suppose. I think a certain population of buyers figure they can search for a home easily enough on their own and don't need a Realtor, in the beginning part of the process anyway. Perhaps they think what we do is easy? I suppose some of that's true but there are likely enough hungry agents who push to hard to get that buyer rep signed, nobody wants a pushy salesperson especially with a large purchase like a home.
Another possibly reason is your approach? We all need to polish our approach with potential clients, and continue to improve on it. I've had issues with that in the past because I didn't see value in my service compared to any number of other agents out there, which is a joke and a lie to think about yourself. Be confident in your approach and be ready to explain the value of YOUR service, it comes through in conversation, trust me :) Best of luck. Feel free to reach out anytime. God bless :)
And, yes, Agency should be signed at "First substantive contact" (determined by each agent, unfortunately) and I ALWAYS have a signed contract before I start showing people. Even though it can be easily canceled, I want the buyers to know that we are making a commitment to each other, not just one sided. The point of the contract is to start moving toward buyers understanding of their responsibility to see to it that we (their agents) get paid. Make sense?
Good luck, Brenda!
Remember "Night Court?" Harry Anderson was a magician turned actor - he played the judge, but in interviews he often spoke about the magic business and said something to the effect of: the easiest people to fool were those most afraid of being fooled.
Extrapolate that to real estate, and the people who are most afraid of being fooled are conned by those on the Internet who promise that all they ever need to know, about anything in general, but specifically about real estate, can be reduced to the information that "we" just happen to provide. And you can all talk it out in the blogs we provide, too.
Convinced that all of their time "researching" is worth half, or more, of a buyer's agent commission, they go forth, armed with faulty knowledge and the same lack of experience that they had before, only mistakenly confident about it.
"A little knowledge is a dangerous thing" is a time-tested truism, and we're seeing it play out again in residential real estate, as people who should know better are relying on "the cloud" to look out for their better interests.
I appreciate the information. It is nice to know that I can come here for information and suggestions.
Sherri, I also appreciate your input! I will be checking out your website this afternoon as well.
buyer's broker agreement from a buyer before performing any acts as a buyer's representative
and before a purchase agreement is signed.
As "Mike" said, when presented properly, few buyers choose not ot accept representation in a real estate transaction. I have never had a problem with a buyer once they understand what representation means and what the cost is to them.
Not sure of MN laws, but in Wisconsin signing agency disclosure up front is required and is sufficient. The problem I run into is when I set up a showing and the listing agent asks if I am a buyer or seller's agent. The reason is, if I do not have a buyer agency, then I am representing the seller. And if after that we then sign a buyer agency, I am then required to get permission from the seller to do so.
It just seems much easier to do it all in the beginning.
The first being that they think it is going to cost them money. They don't realize who pays for the services. They assume that they are going to have to pay for the Realtor to represent them.
Second it comes down to trust, many of the buyers I talk to don't trust Realtors (much less Mortgage Brokers) because they think we are all just in it for a quick buck. They all have storied of some"friend, family member. someone they heard about through a friend of a friend" who was screwed over by their Realtor or mortgage person. Who "put them or made them" get a loan or buy a house they shouldn't have.
While I do receive many referrals from my Realtors I also generate a lot of my own purchase leads from referrals and other ways so I get to talk to them before they are already represented, that's how I have found out these concerns.
The one thing that does bother me is when Realtors say "it won't cost you anything to have buyers representation its all paid by the seller" and then we have a $425 broker fee at close that adds to the settlement charges. I always like it when that is disclosed right up front and the borrower knows.
I always try to turn around the situation with FSBO's and those who don't want representation as if I was trying to do their job without the knowledge and experience that they have. They almost always agree with me that they are much better and will do a better job and everyone would be happier.
If you would like to talk more feel free to email or call me.
I am mainly referring to comments from potential Renters and Buyers. It seems that many of them feel that they do not need an agent. Generally after I explain the win-win situation and that they do not have to pay for the many benefits of having representation, I have new clients.
My question is more of a search for wording. I truly feel that I (and other agents as well) bring many benefits and much information to buyers and renters - sellers and landlords too. It just does not feel like people think they need us.
Are you an agent for a "Buyers Only" agency and wondering why buyers are shy to sign an agency agreement?
I believe it is education of Realtor show value of our services.
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors