Home Buying in 07030>Question Details

Luchi, Home Buyer in 07030

My broker wants me to sign an Exclusive Right to buy Buyer agency contract. Can I get out of this type of contract if I ended up not liking the agent?

Asked by Luchi, 07030 Thu Feb 9, 2012

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51
Probably, but.

A contract is supposed to be the written evidence of an agreement between the parties. It's not supposed to be a "gotcha" document.

However. Agents really don't like to give free lessons, which means, show buyers a bunch of properties, explain the differences, do all the things that agents do to help buyers learn enough about the market so they feel comfortable when they decide to make their move - only to have them make that move at an open house with the listing agent. Or with a "friend's" house.

So, if you don't feel like committing, don't. Don't look for an "escape clause," don't commit. Simple as that. Tell the agent, "Margot, I'm not ready to commit to you as an agent." End of story.

And, yes, in progressive states like California, and even possibly in Washington, there is a concept called "ostensible agency," where a licensee acted like an agent, and as such as full agency obligation (and liability) toward the client / customer / member of the viewing public.

So even those of us who believe that we should earn your loyalty every day and wouldn't ask you to sign an Exclusive with us WILL ask you to sign an agency agreement with us that clarifies our agency relationship.
5 votes Thank Flag Link Thu Feb 9, 2012
Do not sign any such document. Never. No circumstances, no way. Walk away and find another agent. As Mack states, it is not supposed to be a "gotcha" document.. but agents that use it, use it as such.

Does not mean go to every house with a different agent? No. Find an agent you are comfortable with and you trust and then buy your house. Be a regular loyal person in the world.

The agent that asked you to sign that.. say, no thank you. Find another agent leave that relationship totally, do not even go back without signing it.
4 votes Thank Flag Link Thu Feb 9, 2012
In the same breath, do you also disclose to the buyer that without a buyer'a AGENCY agreement, the agent working with them owes him NO fiduciary responsibility ?
Flag Sun Jan 12, 2014
Its the law in Virginia as of July 2012 John. Not every state is the same and you should know that before handing out advice.
Flag Tue May 21, 2013
"understand the value and the drawbacks for both in working with or without a contract."

Donna, I do not know why you think I am glossing over agency relations ships. Agency relationships are very important and are discussed. I expertly perform within all three categories.

The buyer’s agency thing was never in question. Sure, work with a buyer’s agent.. We are all buyers agents! Just by working with an agent that is declared to be your buyer’s agent you get all that great buyers agent support and so on...

As to your note above, exactly my point. Drawback - You sign this document and the agent KNOWS they are getting paid.. Gets lazy.. Whatever.. That agent will get paid. This is EXACTLY what Luchi is saying. If you get a lunkhead Realtor and stuck with her.. Then what?

You and I both know that NOT ONE Realtor is going to have a client sign that document and let them walk away. If you say that, it is a bunch of baloney. When the buyer goes out and buys a $2.6 million dollar home. with another Realtor that signed piece of paper is a large payday and to 90% of all Realtors out there is going to be a claim, with the agent waving that piece of paper like a flag at a parade.

As Debbie notes, a buyer works with me because they want to....period.
2 votes Thank Flag Link Wed Feb 15, 2012
Well, apparently, I am a little late to this party!
Poor Luchi! Asked a relatively simple qestion, and got way too much information! Your head must be spinning!

All this "stuff" about the CIS -" to sign or not to sign" - is it a law now, or will it be a law next year? geesh!!!!
(imo any reputable company is already requiring signatures on that form..how can you prove you handed it out otherwise?.)

Anyway....to stay on topic, and to add my 2 cents.......Luchi - for the record........an exclusive buyer broker agreement is NOT common or usual in my area......maybe it is in Hoboken......but not in the suburbs near me...........a buyer works with me because they want to....period.

I have nothing in writing other than the signed CIS form which acknowledges I am working as a buyer's agent or disclosed dual agent if the opportunity arises.........that's it...nothing binds them to me in any way (well, as long as you don't count my seatbelts that require a passcode to unlock)

:)

That being said...........If you are concerned about being tied to an agent you aren't happy with...if you sign the agreement..make sure there is an ESCAPE clause to cover that.........no one can force you to work with someone you don't like .

At the very least.........I don't think it is at all unreasonable to look at a few homes first, before signing on the dotted line.

Good luck, and let us know how it turns out!

Debbie Rose
Prudential NJ Properties
2 votes Thank Flag Link Tue Feb 14, 2012
Again - This is not about agency relationships .. This is about Luchi not wanting to sign an exclusive buyer agency agreement and being stuck with an agent that stinks.

What you are doing is confusing people and baffling them with BS with lawsuits and stuff that has nothing to do with the question asked. The buyer’s agency thing was never in question. Sure, work with a buyer’s agent.. We are all buyers agents!

Just by working with an agent that is declared to be your buyers agent you get all that great buyers agent support and so on...

The answer is and will be.. No. Never sign the exclusive buyer’s agency agreement.

But of course, work with a buyer’s agent!
2 votes Thank Flag Link Sat Feb 11, 2012
This is not about agency relationing ships.. this is about Luchi not wanting to sign an exclusive buyer agency agreemeent and being stuck with an agent that stinks.

And Luchi is right.

Never, ever sign that agreement as the agent may stink. There are a lot of bad agents out there and you do not want to get stuck with one and watch have to pay them a commission for stinking.
2 votes Thank Flag Link Sat Feb 11, 2012
Scott - it does not read this at all.. "and is the strongest form of relationships offered"

I think you added that comment. Lets stick with what the document reads.. the document explains agency relationships. the added part is your statement.
2 votes Thank Flag Link Sat Feb 11, 2012
Note that I am most recently writing about the CIS (consumer information statement) - which we are required to present to incoming clients.

-NOT- an exclusive buyers agreement, which I would never ask a client to sign and a buyer should never, ever sign.
2 votes Thank Flag Link Sat Feb 11, 2012
I do not ask buyers to sign this agreement on the first outing - I'm of a mind that I have to earn your business and confidence. In my mind it reinforces the "gentleman's agreement" that I have with my buyer, and as that relationship strengthens it seems less and less necessary.

Here is my suggestion - if you are being pressured then agree to sign only for homes shown by that agent, and specify that right on the agreement and you can note the MLS #s. There is something called procuring cause that can be argued by the agent with or without that agreement. If they introduce/show you to the home that you decide to buy, they can make the case that they were the procuring cause and should be paid.

Though many argue that the agreement is not that enforceable, it is a meant to be a contract. Don't sign anything you are not comfortable signing is always my recommendation.

Good luck to you!!
Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
2 votes Thank Flag Link Sat Feb 11, 2012
" Next year, agents in NJ will not only have to hand out the Consumer Info Statement which describes the different types of agency, they will also have to get the clients signature"

Donna, this is done now.

A consumer information statement explaining agency is to be given to a potential client upon meeting with them, at an open house or a meeting a person for the first time. We ask the client to sign, but, It is the client option on whether or not to sign it.. If they do not sign it, it is noted and placed in the file. But, it must be presented now, Not "next year" as you state.

http://www.fdrealestate.com/img/cis.pdf

This document that explains the rules of agency.. Why are you highlighting it like there will be issues? Like it will change something.. it is an explanation of how the agent will work for the client. This is a document that makes sense and is for the client to understand how we work for them in the different scenarios.

What is all the hubbub with your negatively alluding to something is wrong post?
2 votes Thank Flag Link Sat Feb 11, 2012
Luchi -

We are past the point of your question with all the Realtor discussions, discussions that really will not affect you if you do you due diligence. Your Realtor will discuss agency relationships with you when you meet, and explain dual agency to you if that scenario arises. We are all listing agents and buyers agents with the posiibility of becoming a dual agent until we discuss that when we meet.

The answer to your question is - Do Not sign that document. Not for 48 hours, Not for 2 hours. Find another Realtor, ask friends, look online, feel comfortable with the Realtor and his/her knowledge. That is pretty much it.

Do not sign that document. Be a regular, loyal person and work with the person you trust.
You do not have to sign anything to do that!
2 votes Thank Flag Link Fri Feb 10, 2012
@ Donna, Perhaps, some of the confusion lies in your statement:

"Others who have answered here are answering as if the type of agency has nothing to do with who the agent must advocate for and a transaction broker albeit not the listing agent still is biased toward the seller. "

And in Illinois, we do have "implied agency"... (you are presumed to be working for the person you appear to be working for... so if you're functioning "buyer's agent" ... with or without a signed agreement... you ARE a buyer's agent, with all the fiduciary duty that implies).

So, whether I have a signed buyer's agreement or not... does not change the "type of agency" I have, and thereby doesn't change who I must advocate for. We don't have transactional brokerage... although we do have dual agency. But a dual agent can only be a dual agent with appropriate disclosure to both sides, and fiduciary duty to neither.

Always interesting to see how other states and regions do things. Good conversation.
2 votes Thank Flag Link Fri Feb 10, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
In Colorado, it's required to get paid the commission. Some new brokers don't ask for one until closing time....
I have many years experience and will not work with a client that refuses to sign one. I recommend that they go to one of the national franchises and find someone with less business experience.
- might not get the best deal on the house, but they didn't have to sign anything....
1 vote Thank Flag Link Wed Aug 15, 2012
Really? In Colorado an "Exclusive Right To Buy" contract is to get paid the commission? So Transaction Brokers don't get paid? I will be sure to avoid any agents that prefer not to earn my business the old fashioned way.
Flag Fri Aug 15, 2014
@Scott,

I agree with your observation that the answer to the question depends on the state in which the buyer is shopping for a new home. 07030 is a Hoboken zip code.

I am surprised at how many NJ agents answered here implying the buyer would get the same service with or without the contract. I am not saying that Luchi should sign it but he should know the difference, what he is, in fact, giving up by not signing it. Next year, agents in NJ will not only have to hand out the Consumer Info Statement which describes the different types of agency, they will also have to get the clients signature. I hope this leads to a little more attention both on the part of clients and agents. The agents that gloss over the difference either don't understand agency law themselves or just are not recognizing the most basic difference between a transaction broker and a buyers agent.

Transaction brokers, as long as they don't lie, have the discretion to determine what information they bring forward and what they withhold. Transaction brokers can avoid topics or issues that would raise doubt about purchasing where a buyer's agents who contractually must advocate for the buyer must proactively raise issues as part of due diligence and can be held legally liable if they do not. The buyer doesn't know the difference until an issue arises long after they buy. Again, rent control in Hoboken is a great example.

Again, how do any of the NJ agents explain if you get liability insurance as a buyers agent it"s 4 times as expensive? You know some actuarial out there looked at the data and there is more expected and demanded of buyers' agents.
1 vote Thank Flag Link Sat Feb 11, 2012
@ Donna

An agent certainly would be under no obligation to agree to an escape clause, but in my experience, when a buyer wants "out", it's often the case that the agent isn't happy either, and would welcome the release of the client.

An escape clause doesn't have to mean that they aren't entitled to commission on properties that they've already shown, it could mean that we're simply parting ways from hereon.

And allowing your clients to have an escape clause, contrary to your tone, has no bearing whatsoever on whether or not I value what I do and what I have to offer... rather it's an indication that I have the utmost respect for my value and the value of my client's time. If I'm not performing an exemplary job for my clients, and they're no longer happy, and no longer want to work with me, I don't want to tie them to me with a piece of paper that they signed before they got to know me and how I work. If it's not working, in my opinion, we should both be "unbound".

The insurance aspect that you mention, we don't have in Illinois, so that's an entirely different consideration. Hope that helps.

and "you get what you pay for.." That hackneyed expression... I wish were true... as most consumers will attest... you often don't get what you've paid for.
1 vote Thank Flag Link Thu Feb 9, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
If you don't like the agent, then don't sign the agreement. But, be aware that if you start working with another agent and decide to submit an offer on a property viewed with the first agent that your new agent may have to split his commissions. This only applies to properties that were shown to you by the first agent and not for any other properties. If the first agent hasn't shown you any properties that you like, then there's nothing to worry about.
1 vote Thank Flag Link Thu Feb 9, 2012
I couldn't disagree more with Sacrelender - that said he's a mort broker, not an agent. And yes, we do use them in this market. The best agents do use them. Desperate agents do not. If you want a good one, sign, if an inexperienced agent is your cup of tea you'll likely find they don't do EBAs. EBAs can usually be cancelled with three days' notice. It does mean that if the agent shows you the property, he/she has the right to get a commission regardless of whom you finally bought the property from. Why would a good agent show you property if you can turn around and buy it through someone else? And why would you work with someone you don't trust to do good work? PS It does not mean that you can't work with multiple agents, but when a good agent finds out you're doing that, you won't see them again. Good agents close deals, desperate ones tend to get you into a deal for a few thousand and it may not close - skimp on mayonnaise if you have to, but not lawyers and not agents. Get good ones.
1 vote Thank Flag Link Thu Feb 9, 2012
My husband and I used a realtor to help us find a house to rent, while we build, and purchase land in South Carolina. She did an excellent job of finding a rental home. She asked us to sign an Exclusive Right to Buy, Buyer Agency Agreement for any property that we may purchase. Since she did do a great job with the rental, we signed the agreement.

Our realtor has not negotiated in our favor with desired lots. On several occasions, when investigating the availability of unlisted lots, she has has given our maximum budget without even knowing what the asking price might be for the lot. We believe this is an unacceptable practice and automaticically puts us in a poor negotiating position. We did communicate our displeasure to her but we are concerned that this practice may continue which puts at a disadvantage.

We now have found a lot that is owned by a friend and not listed with an agent. Since there is no commission percentage written in on the Exclusive Right to Buy, Buyer Agency Contract what is the commission rate that we should pay our realtor?

Your advise is appreciated as we want to be fair.
0 votes Thank Flag Link Mon Aug 5, 2013
You've been provided with some excellent information ....and some that is unnecessary.
The long and short of it is that you seem to have some doubt about whether or not you want to become involved in this type of commitment....and you should!

If you are not absolutely certain that both this agent and their company will best represent you and your way of operating, perhaps it would be best to delay your decision. "Exclusive Right to Buyer" relations ships tend to benefit the agent the most. For a host of reasons, we often entertain questions from customers that want to terminate these agreements.

In the event you are seriously entertaining option, it would benefit you to have some type of "kick out" clause that does allow you to walk away without any penalty.

Hope this is helpful.

Best regards,

Bill Eckler
0 votes Thank Flag Link Mon Aug 20, 2012
Hi Bob, thanks for your response. If I didn't sign it, she would not be paid her commission by the buyer? Can I ask for it to be amended, as I feel I should have the right to not work with her if I'm not happy with her for any reason if this house fell through. I just don't feel that I should be obligated to her if I chose to work with someone else. I think a person should be 100% comfortable with their agent and should retain the right to go elsewhere if that agent just isn't the right one.
0 votes Thank Flag Link Wed Aug 15, 2012
Hi all, I just have a follow up question to this. I have been working with an agent and looked at several houses with her. I made an offer the other day and just signed the contract to the house last night. Today my agent sent me an exclusive right-to-buy listing contract to sign. She never mentioned one before, why would she want me to sign one now, AFTER I've signed a contract on a house? Of course, the house could fall through, we haven't done inspections or anything yet, but I have a good feeling about it all and don't foresee any problems. Is she just trying to lock me in in case it DOES fall through and I need to look for a different property? I would probably continue using her, but the fact that she's having me sign this now sort of makes me NOT want to work with her. Can I say "no thanks, I don't feel the need to sign this" or am I under some obligation to do so? Thanks a lot for your help!
0 votes Thank Flag Link Wed Aug 15, 2012
When you sign that contract, you are saying that you will be loyle to that agent. The agent works hard to keep your loyalty. Sign the contract for two weeks, that should be enough time to see if you like the agent. Then sign a longer contract to show your appreciation for the efforts your agent is doing.
0 votes Thank Flag Link Thu Jul 12, 2012
Usually it is for valid for properties shown by the buyer's agent only.
0 votes Thank Flag Link Tue Feb 14, 2012
Luchi,
I believe buyer agency contracts vary state to state. Personally, I would not want a potential buyer client to sign a contract with me before I show him or her any properties. Sometimes people just don't work well together!
0 votes Thank Flag Link Tue Feb 14, 2012
Luchi,

Sign the agency agreement for a short period of time, then go look at some homes. If you don't like the agent, you're only tied to them for a week or two. Hope that helps. Good luck!
0 votes Thank Flag Link Tue Feb 14, 2012
You may want to ask the agent or seek legal advice.
0 votes Thank Flag Link Mon Feb 13, 2012
John,

I really think you are glossing over the agency relationship. Luchi isn't saying he doesn't like his agent. He is saying he doesn't know this agent. Get to know him. Interview an agent the way you would do due diligence on any professional you hired - an accountant to do your taxes, a consultant to help you with your business.

I am saying get to know him and understand the value and the drawbacks for both in working with or without a contract.

Why would the state require us to give out the Consumer Information Statement if it wasn't important for consumers to know the difference? I think you are giving out poor advice. By saying 'never sign one under any circumstances', I think you are brushing over what the client gets by signing it.

It's clear you don't value it but I think it's inaccurate to say there is absolutely no reason to enter into a buyer's agency agreement.

Again, why is it if you identify yourself to your errors and omission insurance carrier as a buyer's agent, you pay 4 times the premium? More must be expected of the agent.
0 votes Thank Flag Link Mon Feb 13, 2012
Dear Luchi,
An exclusive Buyer-Broker agreement is a very common contract. When I work with my clients I always let them know that we can part company if we are not happy working together! The contract is entered into by mutual agreement.

Working under contract outlines duties and responsibilities for both parties and sets the groundwork for a professional working relationship.
0 votes Thank Flag Link Sat Feb 11, 2012
Agency relationships affect how the buyer is represented and what kind of duties the agent is required to perform. John I tend to agree with you about the signing of the exclusive buyer’s agency form being used on occasion as a document to handcuff the consumer. But the other side of the issue is the issue of representation and the buyer being assured that the agent is acting in their best interest and not acting as a transaction agent or dual agent or seller’s agent. You mention the issue of being stuck with a bad agent and this is a valid concern but what is also a valid concern is the issue of who the Realtor® represents. There have been many, many lawsuits and major misconduct on the part of Realtors® who act as dual agents and transaction brokers. (in most states dual agency is illegal) The previous 3 types of agency do not and is not the strongest form of representation for the buyer. No one in their right mind would go into a court room with a lawyer acting on behalf of the other party, or a lawyer supposedly representing both parties, and a lawyer supposedly acting a neutral 3rd party. Therefore the only possibility left is to have your own representation aka a buyer’s agency agreement. The length of the contract and the terms of the contract are another matter and I tend to not lock clients in for long periods of time until the relationship is established on both sides.
0 votes Thank Flag Link Sat Feb 11, 2012
Thanks to John for giving the link to the consumer information statement for New Jersey. This form clearly defines the possibilities of the client / Realtor® relationship. It also defines the fiduciary relationship as a buyer’s agent as being one which represents the interest of the client first and is the strongest form of relationships offered representing the BUYERS best interest in all matters. It further states a buyer wishing to be represented by a buyer's agent is advised to enter into a separate written
Buyer agency contract with the brokerage firm which is to work as their agent.
0 votes Thank Flag Link Sat Feb 11, 2012
First, it's not state law yet to have it signed. It's not an auditable item yet (the CIS). Some agencies required their agents to have it signed but it's not against the law not to have it signed. Therefore, many agencies will not get the clients signature. I believe that when anyone is asked to sign any document, they pay more attention. I believe that when it becomes law, that all agencies will have to get a signature on it, more clients will read it, more will absorb what the document is trying to tell them.

The liability and accountability aspect that comes with signing a buyer's agency agreement is like insurance. Many only understand what it covers when there is an issue. Glossing over the difference in responsibility between the two agencies I think is wrong. The reason we hand out the the CIS is to explain the difference. Telling people never never sign it means you think there is zero value to them and I couldn't disagree more. There is value to the consumer in having an agreement.

There is a difference between the two agencies and telling a consumer never to sign one because there is only a down side to signing it, in my opinion, is inaccurate and bad advice.

I can name many situations where if there was a buyer's agency agreement in place, the buyer could have re-couped real losses because issues about a property were not raised and became apparent only after the fact. Again, Hoboken's Rent control ordinance and overpayment lawsuits with trebble damages against unsuspecting buyers for 10, 15 years worth of overpayments even though the owner may have only owned the property for a couple years is an excellent example.

Again, I am telling Luchi he should inequivacally sign the agreement. My first answer started out with - interview the agent you want to work with as if you were hiring any other consultant or professional regardless if you sign the agreement or not.

Telling people there is no difference is plain inaccurate. Have you ever signed one? What were the circumstances under which you signed one? I would bet good money, you were a little more careful during due diligence if you signed one. Do you look at the inspection report an issue an opinion in writing when acting as a transaction broker? Do you issue an opinion of the condo financials? Do you look for remediation issues? I sold a property for a client who bought on a remediated site. He had massive, debilitating migraines. He would get them at least once a week. After one or 2 days, he would come out of it vomiting and barely able to stand. When he moved back to Canada they were far more controllable. Do you think he would have like to have known he bought in a building where there once stood a light bulb factory?

Some said "just be a loyal person" and 'stick with your agent'. I think those comments are niave.
0 votes Thank Flag Link Sat Feb 11, 2012
Hi, these contracts are in place to protect you the buyer and the agent. The terms in the agreement are MUTUALLY agreed upon so make sure you discuss this option prior to executing the document.

Chris
0 votes Thank Flag Link Sat Feb 11, 2012
I think the answer to your question relies on the law in your state. As Alan states in Illinois they have “implied agency” meaning you are represented by the person showing you homes and the Realtor® is representing your best interest. Our state, Missouri has no implied agency and Realtors® represent the interest of the SELLER until you sign a contract with the Realtor. The first thing Missouri Realtors are supposed to do when meeting the potential client is to give them a copy of “The Missouri Broker Discloser Form” which gives an overview of the law and the types of agency available to a potential client. Many Realtors in my state have been fined and some sued (by both the buyer & the seller) for representing potential clients and negotiating contracts which have not retained their services via the buyer’s agency agreement. Again, I reiterate the law in your state has a great deal to do with the way this question should be answered. Hopefully a NY agent will answer the question about the law in their state and at what point you are represented and considered a client.
0 votes Thank Flag Link Sat Feb 11, 2012
@Scott,

I don't know CA real estate laws but it seems obvious to me implied representation doesn't mean much. If it had teeth realtors would have been pursued for fraud just the way the state went after banks and appraisers. I have been following this closely because I retired from banking and worked in Compliance among other related areas. I have not seen anything where CA agents where pursued for their role in allowing buyers to overpay for real estate before the crash.

California had the most fraud and by a lot when looking at the number 2 state (Florida). Property values are down the most and by a lot of any state. 60% on average more in some pockets. They have bull-dosed entire neighborhoods there. I am sure agents knew that these buyers were overpaying and they said nothing so the deal went through. Because buyers can just walk from a transaction broker, the transaction broker had more risk if the buyer walked away from a deal even if it was a devistating financial decision for the buyer.

Scott, I couldn't agree with you more. Others who have answered here are answering as if the type of agency has nothing to do with who the agent must advocate for and a transaction broker albeit not the listing agent still is biased toward the seller.

Most of the time I work as a transaction broker because clients are afraid to commit. If I insist they will just go somewhere else. I am a very information based agent and really do my best to really help the client make the best decision. All of us can grin, answer calls at 9:00 and the client will think we are fabulous but what about the questions that the buyer doesn't know to ask?

There has to be a reason why if buy insurance and state on the app that you are a buyer's agent vs a transaction broker the insurance is 4 times as expensive. More is expected of a buyer's agent. The agent is in fact more accountable. If they don't advocate for the buyer there are consequences that don't exist if the buyer did not sign that agreement.

What other consultant works without a contract? What other type of contractor does anyone hire without interviewing them and signing a contract?

Next year in NJ it won't be enough to hand out the Consumer Information Statement. We are going to have to get it signed. i think that will help. I think many agencies have the Consumer Information statement in their offices, on their desks but they don't go through it with their clients as they should. If the client has to sign it, they will be forced to give them some explanation. Albeit small, I do think this will improve awareness of the differences between the different types of agency and yes even for many of the agents. Given what agents have said here there seems to be no acknowledgement of any differences and the law says otherwise.

NJ is one of the few states that allows dual agency. I also think we need to get rid of that too. A buyer should never negotiate with the seller through the sellers agent. He should have his own agent who is going to represent his best interest and provide answers not just to the questions he knows to ask but also the ones he doesn't know to ask.
0 votes Thank Flag Link Fri Feb 10, 2012
One other Item I failed to mention in our state (MISSOURI) a Realtor® must represent the interest of the seller in all things as a matter of a fiduciary relationship until you become a client. When you become a client by signing the buyer’s agency agreement their responsibility is to your best interest not the sellers. For example when you ask questions, the Realtor should provide answers which are truthful and factual but represent the point of view of the seller if you are unrepresented. Our state does not allow for implied representation. Check the laws in the state you are buying or ask the Realtor(R)
0 votes Thank Flag Link Fri Feb 10, 2012
Sign the agreement for a 48 hour period and for the properties you see that day. If after the first day you are comfortable with the Realtor® and think they will represent you well, you need to commit to them. This is a business and Realtors® don’t work for free what follows is generally what I recommend for people choosing a Realtor® . You should interview several Realtors® before making a decision. Do not solely rely on a referral! Do the work yourself and interview several. Here’s a short check list of questions to ask & things to consider:
1) The paperwork involved in this process is extremely complicated, having stated this It is important that a Realtor be “practiced at our trade” pick a Realtor® which has completed 15+ transactions the previous year
2) Interview 3-5 full time Realtors® (very few part-time agents have the same skills as a person who works Real Estate on a full time basis)
3) Do a basic back ground check on your Realtor® use a site like PIPL or just goggle their name, this usually turns up items such as lawsuits, bankruptcies or other items which you feel might interfere or conflict with a Realtor® representing your best interest. Ps: this does not work for a John Smith
4) Once you have interviewed your potential Realtors® and if you are still unsure and want a “trail run” sign an exclusive buyers agency for 48 hours with the Realtor® and explain if all goes well in the beginning then you will be willing to commit for 1- 3 months.
5) Work with a Realtor® which is local to your area. Meaning a 10-20 mile radius, they will know the schools, shopping and the growth potential of the area without having to go look it up!

Before you even start this process consider purchasing the book by Dave Ramsey “The Total Money Makeover” this will provide valuable information in regard to having a successful financial life & make a prudent home purchase!

That’s your list! Good Luck!
0 votes Thank Flag Link Fri Feb 10, 2012
I have never asked a client to sign such an agreement.
If you do not like my services, you should be able to move on to another Agent.

On the other side of the coin, once you have an Agent working on your behalf, you should stay loyal to them.
They will then give you the very best service.
0 votes Thank Flag Link Fri Feb 10, 2012
Luchi,

You are stuck with an exclusive unless you have an option written into the listing.
Your better off signing for a very short time, you can always extend the listing.
Unles your right on the money with the listing don't expect miracles
0 votes Thank Flag Link Thu Feb 9, 2012
Again, California had the highest level of mortgage and appraiser fraud in the mortgage crisis. Do you think agents knew clients were overpaying?
0 votes Thank Flag Link Thu Feb 9, 2012
@Alan,

There are ways that consumers could take advantage of a transaction broker and then circumvent them. I am sure this has happened to you if you have been an agent for any amount of time and I am sure it's happened to most of the agents at one time or another.

Have you ever shown commercial property? In NJ, much of the commercial property is exclusive ie not listed on an MLS with a cooperating agreement but exclusive one agency. No commission is offered to cooperating brokers. Many buyers who want help start with an agent and when they find a property that is not listed and they feel they can get a better deal by cutting out the cost of commission to the agent who showed them a property, many clients are willing to do this even if an agent helped them understand the area, pros and cons, how a sale works, comps, etc.

We have many clients who come in from out of town. Many have sticker shock. I have done many an area tour, explained the differences between one neighborhood and another, introduced them to a building that they loved but realized that they had to go up in price in order to get the size unit they wanted. I have had situations where they wanted to see a larger unit in a building that I introduced them to the very next day when I was already booked. It meant nothing to these clients to get any agent to show them another unit and cut me out. Maybe that is less of an issue if you are focusing on single family homes vs. condos where each unit is a separate property yet all are very similar especially with new construction.

I do have people who have asked me proactively to sign a buyers agency agreement. My broker has been in business for about 25 years and I was the first agent in her office ever to be asked to sign a buyer's agency agreement. My observation is the people who signed them tend to be more educated, buy higher than average priced homes and understand the accountability aspect of what the agreement brings. I have done several which is why I am cogniscent about the insurance. I have to call the insurance broker and tell them I am signing a buyer's agency agreement since our policy was written for transaction brokers. So, far, since the volume is relatively low, they have allowed us to do it. They did make it clear that if reaches a certain level, we have to pay for it.

I believe it heightens the awareness of the agent and they make sure all bases are covered when they just don't have quite the same impetetus when they don't. And I am by no means saying they are giving poor service when engaged as a transaction broker. I think it does consciously and subconscious impact the agent and what they do in the moment they are speaking with a client about a property and the level of effort in followup.
0 votes Thank Flag Link Thu Feb 9, 2012
Wow! That’s interesting. Here in California not only is the agent liable in any transaction irrespective of any agency contract, they can be liable if the buyer believes they were acting on their behalf. That’s right, an agent can be sued and held liable even if they didn’t get paid or were not even involved in the transaction. It sounds like there would be an advantage to the buyer in your state to have one. That’s why while this forum is great for general information, it’s really best to get advice from the local experts.

Unfortunately here I’ve seen buyer-broker used by more than a few unscrupulous agents who get a buyer to sign the agreement, show them a few houses, and then they never talk to the buyer again. These agents wait for their name to appear on the county records and sue them for the agreed upon commission - even if they had no contact with the buyer for months prior to their finding a home with the agent that actually helped them buy. A few years ago there were several companies that really pushed this agreement, but I haven’t seen one in the last few years used by anyone.

Oh, and yes I’m a lender, but I’ve also been a Real Estate broker since 1988.
0 votes Thank Flag Link Thu Feb 9, 2012
Luchi,

You can sign this paper, it just re-assures that if your agent shows you a house, that agent will be getting paid, in the case that you buy it. But for you, as a buyer in NJ your are totally protected, and this agreement is NOT a contract. It is not binding in court and just further explains to you the "agency" the agent will have with you! And if you read the agreement, you can get out of it with a written notification 3 days prior of voiding the agreement.

(in my opinion) If you were not to sign it, it means you are not a serious buyer. And I wouldn't waste my time with you. Time is money.
0 votes Thank Flag Link Thu Feb 9, 2012
Hi Luchi, many different opinions here.
Bottom line, a contract is a contract, is a contract. Yes you would be locked into using that agent or end up paying them a commission out of your own pocket.
Buyer agency agreements aren't the norm in this area and contrary to what another agent said here earlier, many, highly successful agents, do not use them because it is quite difficult to lock in a buyer they have just met to such an agreement.
I think you'll find that if you interview a few local realtors you will find the best match for you without having to be tied to a contract having no experience with the agent.

But once you do find one you decide to work with they will expect you to work with them exclusively and they should.
Remember, agents are paid only when they close on a home, and they invest a lot of time with their clients.

Work with who makes you comfortable.
Best of luck!!
0 votes Thank Flag Link Thu Feb 9, 2012
In all of the rent control law suits in Hoboken, if they had a buyer's agency agreement, the buyers could have sued the realtor if he/she did not disclose Hoboken had a rent control Ordinance for 1-4 families.

Do you think the transaction brokers did anything wrong when they didn't disclose the pitfalls to owners? Darren, do you proactively tell buyers about Hoboken's Rent Control Ordinance when they buy?

For years in Hoboken, agents told buyers never to register their rents and it came back to nail them. Nothing happened to the agent because there was no buyer's agency agreement. A transaction broker had no obligation to tell them about and it and the vast majority didn't.

You get what you pay for.
0 votes Thank Flag Link Thu Feb 9, 2012
Alan May,

Why would an agent sign a buyer's agency agreement with an "escape clause"? Would you do all that extra work and take on all that extra liability if you can be cut out in the end? Do you value what you do? I value what I have to offer.

In NJ, the insurance for a buyer's agency - one that consistently works as a buyers agent is MUCH MUCH greater than a transaction broker. Our insurance broker monitors how many we do. Most buyers don't sign them but if they did, our errors and omission insurance would be much greater. That may not be how it is in IL but NJ is much more litigious.

I do them occasionally and would be glad to operate this way consistently. I am very data driven, analytical, service oriented agent and would love to provide more service. I do a lot of Tenancy agency agreements as the loyalty with renters is not there and I cannot spend time with renters if they are not going to be loyal to me.

I am not afraid of the responsibility and will gladly pay the premiums.

Hoboken has had a huge issue with a local rent control ordinance. It was poorly written and it's very confusing. The Ordinance only permits the owners and current tenants to get a legal rent calculation from the city which is why a lot of agents avoid it. If they raise it with clients, the next question will be, "well what are the legal rents" and the seller often doesn't want to do that until attorney review. I think having the buyer's agency agreement in place would allow agents the time to explain all this to buyers where as a transaction broker they may not want to risk turning the buyer off or taking on a follow-up that will take a lot of time for a buyer that is not committed to them. When you have a commitment from the buyer, you can take the time to proactively tell them about something they didn't even know they should ask about. You can answer all the questions they throw at you as a transaction broker and do everything they expect you to do and they are oblivious of these nuances.

Our office developed a disclosure that we have Landlord's sign where they attest to the legal rent. We developed this with our attorney after the ordinance passed but before the city released the disclosure that has to be signed by the Tenant where the landlord discloses that Hoboken has rent control and attests that they are charging the legal rent. We have both signed for each of our rental transactions.

I have OPRAd the rent control file for Landlord's who did not want to go on record requesting it themselves and I can tell you they are consistently a hot mess. Registration forms with no date filled it and where you cannot read the stamps. Registration forms and amounts that do not match current leases. If you have a property that has a long history that has passed through many owners, it's a mind field. The ordinance has a long way to go before it's functional. WIth a buyer's agency agreement, I think agents would extend themselves more to explain all this. As a transaction broker, if the client doesn't want to hear about it why would you bring it up more than you have to?

See the link to my article where I write about Hoboken's Rent Control Law on my blog. There are several articles about it. I have these in my archives and I have sent them out in my newsletters and often use them with rent control comes up for informing both buyers who may eventually rent and tenants. It's a great way, of letting get the foundation and then we can discuss it further.
0 votes Thank Flag Link Thu Feb 9, 2012
Hi Luchi,

The fact you brought this question up, signifies to me that you have doubt in this Agent. Some Agents have Buyers sign an EBA, others show from the start that there is no doubt you will find a great home and educate them from the time you meet them, to the day you close. I tend to the latter. Buyers working with me aren't pressured into signing agreements, I spend my time getting to understand what you are looking for via; price, neighborhood, amenities, timing, etc...

Good luck in the process, let me know if I can be a help.


Thanks,

Darren

Darren Giordano
Sales Consultant
BrianDavid, Realtors
201-723-3300-cell
DGiordano@BrianDavidRealtors.com
Web Reference: http://www.gioMOVES.com
0 votes Thank Flag Link Thu Feb 9, 2012
Don't sign one. All it does is lock you into using one agent and it is all good for the agent and might not be so good for you. If you must sign one, do it for a short time period, like weeks or 1 month.
0 votes Thank Flag Link Thu Feb 9, 2012
The contract would commit you to that agent to a specific period of time. I, unlike the agent in California, don't necessarily agree that it's a bad thing to sign it. With all due respect there is a big difference between California and NJ. California had the highest incidence in appraiser fraud during the boom. There was an article just today in USA Today about how California joined in a massive settlement with the largest mortgage underwriters in case on deceptive practices, mortgage and appraiser fraud.

http://hobokenrealestatemonitor.blogspot.com/2012/02/new-yor…

Most agents are not being held accountable because they worked without contracts. If they had a buyers agent agreement with buyers they absolutely would have been held accountable.

1. You should interview agents before you hire them. If they want you to sign a contract they should be open to that. Would you hire a financial advisor without interviewing them? They usually have a 6 month minimum commitment before they will do your initial plan.
2. NJ is one of the few states in the union that allows something called "dual agency". (See the link below that describes the various types of agency.) That's when the buyer goes directly to the listing agent to view a property and make an offer. Last week, I had to tell a seller that not only did he buy his property at the peak of the market in 2006, he over paid at the time by about $75,000. By signing the dual agency form, he basically had no representation. The listing agreement takes precidence over representing him and by signing the dual agency disclosure he actually agreed to it. He was convinced by the listing agent that the property was worth more than it was. He paid $530,000 for something that I just valued at $279,000. I was an underwriter for Chase in the early 90's and have underwritten over $750MM in mortgages and looked at over 3,000 appraisals
3. Signing a buyers agency agreement raises the bar for your agent. They are legally liable to proactively raise issues about the property - remediation, rent control laws, reviewing the inspection, reviewing the financials. As a transaction broker which is what it is called when you work with an agent without a buyer's agency agreement has no obligation to review any of that for you. Even if they do and they miss something, you cannot hold them liable for not raising it. There is an underlying assumption that when you work with a transaction broker that you the buyer are doing your own due diligence.
4. Signing a buyer's agency agreement is like buying insurance and you are hiring something that is an advocate.
5. Transaction brokers will be helpful to the extent it's not too expensive, not too time consuming and won't hinder the deal. It's easy to provide info on the most frequently asked questions but time consuming to do the detailed work on a single property.
6. Because you can leave a transaction broker at any time, they have more incentive to get you to contract than make sure you are getting a property that meets your need. As long as you are an earnest buyer, a buyer's agent knows that eventually you will buy and they will be compensated.
7. Transaction broker's are compensated by the seller. Although they are suppose to be nuetral, they end up having a slight bias towards the seller.
7. Like hiring any consultant, the value of signing it is as good as the person you hire. No other consultancy works on a contingency basis. You have to interview the person you are hiring. If you don't .... caveat empter.
0 votes Thank Flag Link Thu Feb 9, 2012
To answer your question directly: You can get out of this type of contract if you "write in" an escape clause. Those contract can be amended to say anything you'd like, presuming that it's legal and you and the agent agree.

Maybe you want to write in something like "Contract can be cancelled upon 24-hour written notice". or "... upon 24-hour written notice, after 30-days"... something like that.

Don't allow it to be open ended... it should have a starting point, and an ending and a way for you to get out if you're not happy, or if it's just not a good fit.
0 votes Thank Flag Link Thu Feb 9, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi Luchi,

I've been a top agent for the past 16 years in the Hoboken market and have never had a buyer sign an agreement.
If the agent does his job well and the buyer has a connection with the agent.
Then, there is no reason to sign an agreement.
I would be happy to meet with you and see if we could work together.
Talk soon.
Best regards,
David Bistany, CRS, SFR, Green
Liberty Realty, LLC
525 Washington Street
Hoboken, NJ 07030
o-201-222-2900
c-201-852-3291
dbistany@libertyrealestate.com
http://www.libertyrealestate.com
0 votes Thank Flag Link Thu Feb 9, 2012
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