Question Details

Gina, Home Buyer in Elgin, IL

I recently found a new realtor and th wants me to sign a contract. I am not sure whether I should or

Asked by Gina, Elgin, IL Tue Apr 29, 2008

not because of my experience with my last realtor. I feel that if I do a lot of the property research myself and I actually find a home, why should I give credit to someone else?

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I personally do not use these types of agreements. I totally agree with Elvis loyalty is earned. We all have a sixth sense and are able to pick up on things unsaid. When I meet a prospective buyer I prequalify them by asking lots of questions including "Are you currently working with a Realtor?" I can usually tell right away if someone if someone is going to be loyal or not.
2 votes Thank Flag Link Tue Apr 29, 2008
Finding the home is just one aspect of the whole transaction.

Providing a market analysis on the property you are interested in.

Negotiating the contract.

Not only on price but terms like possession, down, financing contingencies,
Inspection contingencies, title contingencies, disclosure contingencies, neighborhood review, lead based paint if built before 1979. Septic if applicable. The list goes on and on at least here in Washington.

Making sure all the i's are dotted and t's are crossed.

Referring a good inspector, negotiating the inspection items.

Reviewing the disclosure statement.

Setting up escrow and title.

Reviewing the title report.

Giving you access to a great lender.

Making sure all lender docs get to escrow.

Answering a myriad of questions during and after the transaction.

And most importantly representing you and your interests thru the transaction.
1 vote Thank Flag Link Tue Apr 29, 2008
I can tell you how it is in in North Carolina. If you don't sign the buyer agent agreement the agent can show you the house but that agent is working for the seller.
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Not trying to be redundant, but... how does how it works in North Carolina help Gina? If you've read the prior responses, you'd know she lives in Illinois.

In Illinois, we are a designated agency state. You are presumed to be working for the person you're working WITH! So if you're working with the buyer, you're presumed to be working as the buyer's agent. Period.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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I am sorry that you had an unplesant experience with your last real estate agent. I do not know how it works in your state but I can tell you how it is in in North Carolina. We have buyer agency here and you can determine if the agent is going to represent you on a particular house or for a particular time frame whether it is for one day, one week or one year. If you don't sign the buyer agent agreement the agent can show you the house but that agent is working for the seller. If you don't have and agency agreement signed you do not have representation. Also, there is much more that the agent does in the background to see the transaction to close than the buyer and seller are ever aware of. It is more than just finding the house. I would interview several agents and if there is buyer agency make sure the agent explains it to you until you fully understand what your options are.
1 vote Thank Flag Link Tue Apr 29, 2008
Elvis is correct. In IL the seller has one agent working for them--the listing agent and all others are working for their buyers. Used to be in the old days subagency was the norm here too.
1 vote Thank Flag Link Tue Apr 29, 2008
If you do not have a signed "Buyer's Agreement" the Realtor technically is a subagent of the seller
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This is NOT correct in Illinois... the state the person who asked the question, lives in.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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I agree that the buyer representative agreement is a concern. A Realtor is there to help you and to protect you. His main concern is that even if you find the home yourself, that your contracts are legal and negotiated in your best interest. He has the experience to get you the best deal. Remember you can always fire him if you feel he is not doing what you expect. Yes he will get credit and get paid even if you find the house. If you don't have a Realtor, the sellers Realtor will have do do both sides of the contract and he will get to keep both sides of the commission. So as a buyer, your Realtor's services are free to you.
1 vote Thank Flag Link Tue Apr 29, 2008
I completely understand your question. About 90% of all buyers and sellers are doing research online prior to hiring a professional to represent them. But, a Realtor doesn't just drive you around and open doors to houses. It's not that simple. We spend hours doing research for our clients. Even to make an offer on a house we research the neighborhood stats, talk with other agents, view other listings, etc. so that we can better advise our clients on an offer price. Plus proper representation protects you. If you do not have a signed "Buyer's Agreement" the Realtor technically is a subagent of the seller, thus can share all infor about the buyer, solves problems for the seller, can only give facts with no advice, has no duty to keep looking for more property and gives comps only if it supports seller's price. Keep in mind that you, the buyer, does not typically pay commissions, the seller does. And, it's OK to sign the agreement for the length of time that is comfortable for you. It is up to us to earn your business.
1 vote Thank Flag Link Tue Apr 29, 2008
First of all you didn't state what kind of contract your REALTOR(R) wants you to sign. In NC we have a brochure which we must have signed at first point of substantial contact. Even though it is NOT a contract I sometimes have a hard time explaining that to a buyer. A buyer agency contract can be signed and if for any reason you change your mind about your REALTOR(R) it only takes a one sentence e-mail or letter to the Broker-In-Charge saying you no longer wish to work with the company and you are out of the binding agreement.
1 vote Thank Flag Link Tue Apr 29, 2008
Chris, agreed.

My arguments against EBA's fall completely flat in those states where it's a requirement, otherwise your agent represents the seller.

I left that part of the argument out of my original post. It's difficult to represent all 50 states, but I figured that since Gina was in Illinois it was okay to respond in Illinois-ese.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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in many, if not most, states works, if you are working with an agent as a buyer and do not have a buyer agency agreement, the agent may legally represent the seller.
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Again, not the case in Illinois (please see Barb Krueger's valid explanation of designated agency below), where Gina, who asked the question, is from.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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Gina, keep in mind that the way agency law in many, if not most, states works, if you are working with an agent as a buyer and do not have a buyer agency agreement, the agent may legally represent the seller. If you are worried that your agent will not be a good fit, ask him or her to put a clause in the contract that allows you to cancel it in writing at any time. Also, remember that your agent should be doing a lot more than just sending you properties. Sending listings is just a small part of our job. You hire an agent to help you find a house, figure out the right price to offer, negotiate the contract, help you find a reputable lender who will get the loan done, coordinate between all the various parties involved in the deal to make sure everything goes as smoothly as possible, just to name a few.
1 vote Thank Flag Link Tue Apr 29, 2008
Here in Illinois we are a designated agency state one of many around the country although we were one of the first back in the 90s. That basically means that if you are in the car with that buyer's agent unless you have signed something to the contrary they are your agent designated by their broker.....happens all the time with no disclosure. I feel it is better to have the chat with the agent before seeing homes and interview agents to get someone that you feel comfortable with and sign for a short period of time with them if you feel comfortable; if not sign that they are not your agent and go see the house if they will do that.....I tell people it is just like when you list a home you list with one agent and when you buy a home you buy with one agent. Don't just go with the listing agent as they are representing the seller not you and then you could get in a dual agency situation undisclosed oftentimes. So try to get comfortable with someone who you feel is working hard for you; sign for whatever and as mentioned previously some agents put a 24 hour out for you in case they do not perform and be as candid as you can with that agent so they can help you find your new home. Don't let that last realtor that you had taint your view on all of the realtors....and like mentioned before they start really earning their money helping after the house is located. Hope you find the best home!
1 vote Thank Flag Link Tue Apr 29, 2008
There are some states (New York, for example) where a buyer's agency agreement is important and required. And under those circumstances, I understand the necessity, although I would still want a short-term cancellable contract.

Illinois, where Gina is from, is not one of those states.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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A buyer agreement is a good thing and in some parts of the USA it is a must before you get into the agents car. You just want to make sure that not only is the agent interviewing you, but you interview them because it needs to be a good fit together. House buying is a very emotional experience and you want to make sure it's a good one.
1 vote Thank Flag Link Tue Apr 29, 2008
Gina;
I believe that your Realtor© wants you to sign a Buyer's Representation Agreement. In doing so that Realtor© is making themselves responsable for you through the entire process of finding and selling you a home. Ask the Realtor© to let you have a copy of " Understanding Buyer's Agency" so that you will know how you are to be represented.
Finding the home is sometimes the easy part, if you have a good Realtor©; he or she will help you with the decision to buy and then represent you during the contract process making sure that you don't miss any of the steps, filling out the contract so that you are protected through the due dilligence process,inspections, financial contingencies and finially the closing. Locating the property is just the begining of the job .... the real work begins after the Buyer signs the contract.
1 vote Thank Flag Link Tue Apr 29, 2008
Chris, as you can tell from my response, I don't believe that EBA's are a good idea, and they're definitely not a good idea for the buyer (whom I'm claiming to represent, and represent their interests, and yet I'm willing to have them sign a document that makes them solely responsible to see that I get paid!... which represents MY interests, not theirs!)

I agree, a contract that's cancellable on 24 hour notice, is basically NO contract. Loyalty is earned, not written in a document. If I'm doing my job correctly, my clients are loyal. If they're not loyal, then I've done something wrong. Either I haven't serviced them in the fashion they were looking for, or I haven't educated them properly (if they end up buying a FSBO without my representation). The fault is mine, not theirs.

I agree, that clients like Gina scare me a bit, because, as you say "she's ready to throw us under the bus" already, in her opening statement. All the more reason to decline to work with her, rather than sign her to an agreement that locks us together interminably.

Loyalty breeds loyalty. Work hard for your client, they'll work hard for you. Offer value, dedication, trust, and it will be returned in spades. Yes, occasionally there will be an anomaly where a client you worked hard for, buys with someone else.

I had a buyer client who loved and adored me (okay maybe a stretch there), call me very excited to tell me "Guess what we've done!??"... and then went on to tell me that they'd written an offer on a FSBO, and now wanted me to assist with the balance. The FSBO seller, of course, refused to pay a commission of any kind, and I can't blame him. My clients were beside themselves... they didn't understand what had happened... they were prepared to walk away from the home they loved. I did not allow that... I stepped aside and let them purchase the house (and helped them in the background with the balance of the transaction)... no pay!

It was my fault! I hadn't educated them well enough about the process. And yet, now, I have one of the most loyal clients in Chicagoland. I saw them over the weekend, she's pregnant and they're getting ready to move and will want me to list their home. They've referred business to me from 4 of their friends.

No Agreement Necessary. The EBA is strictly a document that protects the pay of the buyer's agent. Loyalty, hardwork and dedication do it better. (IMHO)
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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I am not a fan of the "exclusive buyer's agreement". It is not de regueur, here in Illinois, although it is becoming more popular.

Basically the agreement ties you to your buyer's agent, and guarantees that if you buy anything (listed or FSBO) you will pay his commission, if he cannot collect from the seller. I don't see any advantage for you (the buyer) to sign such an agreement.

If the buyer's agent is doing a great job and adding value to your search, you'll stick with him and buy through him. If he's not doing the job you'd hoped, you have the freedom to walk away. That's a great deal of incentive for the agent to do a great job!! No agreement necessary.

If you do decide to sign the agreement, make sure that it contains a "no-fault" 24-hour written cancellation clause, that allows you to cancel for no reason, and you owe the agent nothing.
1 vote Thank Flag Link Tue Apr 29, 2008
Alan May, Real Estate Pro in 60201
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It is not so much about finding the house...it is finding, negotiating a price, terms and conditions, and actually being able to get a loan, insurance and more to actually close in a timely manner.
Web Reference: http://iansellsnola.com
0 votes Thank Flag Link Tue Nov 18, 2008
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