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Buyer/Broker Agreements
11-14-2009, 05:25 AM
Post: #1
Buyer/Broker Agreements
Hi everyone.  Obviously I'm up REALLY early on a Saturday morning because something happened last night that really bothered me so much that I couldn't sleep at all! 

One of my husbands friends called me last week and asked me to find a house for he and his girlfriend.  I agreed, and asked if he was already working with an agent.  He said that they had been working with one, but didn't want to work with her anymore and wanted for me to find them a place.  I then asked if they'd signed a buyer/broker agreement with her.  He said "no".  My boss told me that I could then proceed, which I did.  I hadn't met with them, but I'd been talking to the girlfriend and sending her listings to look at.  She hadn't seen anything she'd liked, so we hadn't been out looking.  My plan was to present the agency disclosure when we first went to look at homes.  And honestly, I hadn't planned on having them sign a buyer/broker agreement because...well...yucky!  So, I emailed her yesterday to find out exactly their "must haves" and "things that could be compromised", because I hadn't been able to locate a property with all of their criteria exactly.

She emailed me back and said that their previous realtor had sent them some listings, and they liked one of them.  They looked at it with their previous realtor, made an offer, and it was accepted.  Needless to say, I was pretty darn ticked off.  They were basically having both of us work for them!  So, now I'm thinking maybe I should have immediately had them sign a buyer/broker agreement.  I hate the thought of asking someone to sign that, but maybe I broker recommends it, but doesn't require it.  Thoughts?  I've never had to sign one when looking for homes with a realtor, so I think that's why I'm so uncomfortable asking people to sign it.  Thoughts?  Thanks! 
11-14-2009, 05:50 AM
Post: #2
Re: Buyer/Broker Agreements
I used to be uncomfortable having people sign one - until my one client, who I trusted, went behind my back with the LISTING AGENT and bought it from HER...even though I was working with him, I placed an offer for him, got him the home inspector, etc.  The buyer/broker agreement would have kept him from doing that, probably - but it would give me more to stand on when filing a complaint w/ the board.

I usually ask buyers, now, to sign a 1 day non-exclusive agreement that covers just the homes I show them and any homes they ask me to show them.  I explain that the contract is extended beyond the 1 day /certain showings only by mutual consent - I tell them that I understand them not wanting to get stuck with an agent they dislike - and if they think I'm a flake, they are free to go with another agent - BUT - if they decide to buy a house that *I* showed them, I'd like to get paid for MY efforts just like anyone else would....and 99% of them agree and happily sign.  There were only three people who REFUSED to sign - and one still calls me occasionally to see homes, one was an attorney (go figure!), and the other one was a realtor from out of state. (again, go figure.)
11-14-2009, 05:55 AM
Post: #3
Re: Buyer/Broker Agreements
re: your husband's friend - thank goodness they didn't cause you to waste any gas on them.  And I wonder who didn't like the first agent.  I think I would have asked them flat out why they didn't want to work with their current agent.  If they said "She's not sending us any listings we like" I'd explore that further too....make sure that what they are getting to look at meets their criteria (i.e., price range, number of bedrooms, etc.)  Because if the other agent is sending them what they asked for - 3BR ranches with a garage under $225,000 - then you probably aren't going to send them anything DIFFERENT as you have access to the SAME MLS she does.  I would then encourage them to keep patient with their current agent.

I would only move on with this if they have a real legitimate complaint w/ their agent: not sending what they asked for, not listening to them, not returning calls/emails, not providing info...etc.
11-15-2009, 07:52 AM
Post: #4
Re: Buyer/Broker Agreements
Bean - I don't do buyer broker agreements because I think the whole concept is silly. I won't get on that soapbox right now, but I'll just say this (soapbox coming anyway probably):

Please do not EVER get ticked off at a friend over real estate. It's not worth it, on any level. People do what they do for reasons that make sense to them, and you may or may not ever know their motivation. It might be personal, but it's probably not. Just make an executive decision to be pleasant no matter what happens. Pleasant = Professional. Pissy = Unprofessional. Run your business this way and you'll hopefully avoid more sleepless nights (easy for me to say, right?)

In the situation you described, you really didn't have any reason to be ticked off. You didn't have much time invested and these things happen. Just know that at some point, business will fall into your lap without much effort. Other times, you'll work very hard for something that never pays off. It all works itself out, and the more experience you get, the better your closing ratios will be. I lost a lot of business in my first year because I'm sure my prospects could tell I was fairly inexperienced and while I was hurt and disappointed, I did understand. And it does get better.

A buyer broker agreement would not have helped you. NEVER use these agreements to tie someone down who isn't ready to be tied down. It won't work and will only cause hard feelings. Inspire loyalty by earning it, not obligating it.

Stay pleasant with these people and you might find them on your doorstep in the future.

"The Secret of Joy in work is one word - excellence. To know how to do something well is to enjoy it." Pearl S. Buck
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11-15-2009, 09:58 AM
Post: #5
Re: Buyer/Broker Agreements
Morning Bean,

Ditto what Jennifer said... Never get ticked at a friend over real estate.  I'd expand it to not getting ticked at acquaintances or prospects over real estate.  Negative energy is a drain and you never know when they might show back up on your figurative doorstep!

Also ditto to Perky on finding out up front why they want to change agents.  I always have that conversation right off.  Even if  they haven't been working with another agent, I ask if they ever have and what they liked or disliked about the experience.  Afterall, I don't want to make the same mistakes my predecessor did!  I also want to know if they have some strange expectation that is just impossible for me to meet.

Regarding buyer rep agreements, I generally get them signed at some point.  In Texas we are very strict about making sure agency is understood and we have to share a disclosure about agency at the "first meaningful discussion regarding real estate."  Sometimes that means I email them the disclosure with some listings, ask them to read it and let me know if they have any questions.  After it seems like we are really going to work together, I explain that my broker requires a signed buyer rep agreement in order for me to get paid (truth in the case of both brokers I have worked with).  I almost always handwrite a special provision that says either party can cancel the agreement with 24 hours notice.  I generally make a bit of a joke of it by saying that I never know when I might want to fire them as clients.  Seems to work for me...  Of course sometimes I have them sign the rep agreement when we write the offer.  Really just depends on the client.

One other thought, with first time buyers I go over it upfront because I consider it part of their education process.  I always try to meet with first time buyers for coffee to learn what they know and don't know, go over process and build rapport.  I generally then show them about 3 properties based on what they had told me previously.  They tend to be very different properties from each other and it helps me gauge what they are really looking for.
11-15-2009, 12:50 PM
Post: #6
Re: Buyer/Broker Agreements
Ditto, ditto, ditto.  Ironically, I have had a few BBAs signed in the past - at the client's insistence because they read somewhere it was necessary if they wanted their own representation.  I am happy to oblige, but don't ask for them upfront.

Everyone plays by different rules, of course, but here we have implied agency and while we are supposed to have a conversation about agency at the first opportunity, there is no disclosure. 

I agree 100% with Jennifer;  a BBA would not have made a difference in this case and honestly, you do not want a client who is only working with you because you have "locked them in" to a contract.  It may save you in one specific case BUT will ruin your chances of ever getting any repeat business or referral business. 

Will we get used on occasion?  Sure, but that's the nature of the business.  And how you react to your friends/acquaintances/relatives in these specific situations will determine how highly they think of you in the future.  I have gotten referrals from folks who did not use my services the first time around, so never think it ends with that one deal.  Chalk it up to it being "what it is", be professional and know there is always another deal around the corner!
11-16-2009, 09:20 AM
Post: #7
Re: Buyer/Broker Agreements
Carol: I really like your approach.

Bean: I agree with the others that a buyer agency agreement wouldn't have helped here. It sounds like they already saw the property they wrote on prior to you even emailing them listings. It sucks that the guy called you and made it sound like they wanted to work with you. It sounds like there was perhaps some miscommunication between him and the girlfriend. The bright side is that you didn't spend time showing properties. The downside is that your hopes were dashed.

In my office we have had many discussions over the agency agreement. Some agents never use it, some ALWAYS use it. I've only used it once, perhaps because I have mixed feelings about it. I think part of the problem for many agents is that when we start working with a new buyer we often send them properties and then start showing, without much discussion about how the process works. My managing broker has new clients meet her at the office for a brief meeting to go over the process before she takes them out. I think that doing that also helps to establish our professionalism as well. As we all know, there are people out there who simply call listing agent after listing agent to see homes. Of course I don't blame a listing agent for jumping up to show their listing (after all, it's our fiduciary duty to our sellers, right??), but in turn I think it's caused much of the public to not have any loyalty and to not understand our value as a buyers agent.

As far as using the buyer agency agreement as a tool to get paid...I dunno. On one hand I think that if things have happened that call into question which agent should get paid on a transaction, then perhaps the agent didn't do a good job of both explaining the process and/or maintaining the client relationship. However in my area we sometimes suffer the phenomenon of the Big City Agent and in that case using the agency agreement is worth it. I'm 30-40 miles outside Chicago. We have a lot of new homes out here and a large population of folks who moved out here from the city. Often they use an agent from the city to represent them, and often they want to come out here on the weekend and view homes and perhaps their agent is too busy to drive out. Or whatever. Many of my peers have taken hot calls from such buyers and showed them homes, only to never hear from them again. Only to discover later that they did indeed purchase the home the local agent showed, but the contract was written by their city agent, who likely never saw the home until after it was written on. In a case like that I can totally support pulling out the agency agreement!
11-26-2009, 05:39 PM
Post: #8
Re: Buyer/Broker Agreements
Being the new kid on the block in real estate, I can honestly say that I am learning from you guys...this is how I feel.

I have had a few people ask me to find them houses, commercial props etc... I just do my best to say in contact with the client.  I do ask if they are working with another agent, if they say no, then I will stay in contact and send them listings and follow up to see if they want to see the listings that I sent to them. 

I try my best to stay in the forfront of their minds.  If they make an offer on the property then I will have them sign a buyer broker agreement at that time (is this the right thing to do?) I don't want them to feel obligated to me in that sense, but obligated to you know what I'm saying?

11-30-2009, 11:04 PM
Post: #9
Re: Buyer/Broker Agreements
Good stuff everyone, and thanks.  Maybe I was just being a big baby.  I should perhaps toughen up and realize what Jennifer said...sometimes we'll have an easy sale, and other times we'll work our tail off for'll all even out in the end.  Smile
12-05-2009, 06:53 AM
Post: #10
Re: Buyer/Broker Agreements
Hi Bean,

You are not being a baby. It smarts when it happens, and usually it is because the other side doesn't know how business is done (it is our job to educate).

I can however see some buyers thinking the advantage is to go to a listing agent and try to negotiate the buyer agent's commission out of the deal... uh, did that sound cynical??? Yep. I know of 2 instances concerning this that directly effected my wishful income Smile.

Hang tight, it gets better, trust me..(but then you don't know me). It's part of the learning curve, and you got some practice improving on your already good customer relations!

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