Exclusive Buyer Agency Contracts. Don’t Sign Them… Yet.

What is an “Exclusive Buyer Agency Agreement”?
This is a contract that a buyer is oftentimes asked to sign by a buyer agent Realtor. In part it commits the buyer to use this one agent exclusively for several months.

Why in the world would you sign this?

How could signing all your rights away ever help you, the buyer? Where is the “What’s in it for me?” in that proposition?

Don’t you still want to be able to:

  • Use another Realtor if you don’t like this one?
  • Buy a FSBO and have no commission be paid!
  • Bypass the buyer agent and make the listing agent give me the commission?
  • Walk into a New Construction and sign papers, who needs a Realtor for that? I got them down $50k!
  • Have 2 or 3 eager Realtors compete for your business. Each one working their tail off to find you that hidden gem. Doesn’t cost you anything, so why not? (just like the Double Agents show, where 2 Realtors compete: see Video)
  • If you find the home, why should he get paid anything?
  • Why sign an “exclusive” agreement, when you can sign a “non-exclusive” agreement?

And that sales pitch is so hoaky sometimes:

  • “My broker requires it before showing you anything.”
  • “This is standard.”
  • “If you don’t sign this, then I am legally working for the seller. If you sign this, it acknowledges that I am working for you, the buyer.” (my favorite, as the law reads, it is true, but in reality, it is just a pitch)

What a ton of B.S.

So let me know if I missed anything. All of the above is the typical viewpoint of the buyer right? I know it well. I grew up with it. My mother was the most cynical person and would never sign one of these agreements. She didn’t see the “how can this help me.” In part it is the Realtor’s fault for not explaining the process clearly.

But, and here is the big butt, I have seen the other side! It isn’t always as shady as it initially appears and it can help the buyer.

As a Realtor, many newbies feel bad getting their clients to sign these contracts. Sometimes they let it slide, until one day they understand why it protects the Realtor. Then I’ll go into how it helps the client.
What? This exclusive contract can help the buyer? How in the world is this going to come around full circle? Ah, the suspense.

  • Background story: I was helping some clients buy a home in 2004. Many buyers might think we are paper pushers, but some of us Realtors go above and beyond. Including once driving to Chantilly to take 100+ photos of the interior of one unit. Why? Because of Sucky Listing Agents. The agent only had 1 photo, and the buyer was out of town, so I created a virtual experience for them. (I do this for all of my buyers, I take about 50-100 photos of EACH place we see together and I create on online private album for them to remember everything. Does your B.A. do this?)Anyhow, we put an offer in on one place. We didn’t get it. I’m ok with that. I could have talked them into a higher price, and won, but I didn’t do that. I worked for their best interest, not mine. Then they found a For Sale By Owner. It was literally 20% overpriced (as many FSBOs are). They had me run the numbers and do a full analysis on the neighborhood etc. I even helped them talk through what they wanted to offer. I warned them no matter how upgraded it was, it was a really high price. It was like buying the best house in the worst neighborhood. They decided to offer anyhow.

    I then get an email the next day saying that my services were no longer needed (You’re fired), they had bypassed me and bought the FSBO for $30k over what it should go for. Payment to Frank was $0, (hours wasted). Buyer overpaid $30k. Having some consolation knowing they overpaid= Priceless.

Since then I require my clients to sign an “Exclusive Buyer Agency Agreement” early on. Not before the first showing, like some, but shortly thereafter. I give them enough time to feel me out, but I can’t invest a ton of time with a customer that is still shopping around agents and might bolt at any moment. A catch 22 of sorts.

So, ok, you got screwed, that sucks, help me understand how this helps me, today’s buyer?

  1. The contract outlines what the agent gets paid. Mine says 3%. And that means if a listing is offering 2% (only a few homes do), my buyer pays the balance, and if there is a FSBO offering 0%, my buyer pays the full 3%.

Wait a second, that sucks. I’ve always been told that the “seller pays.”
Again, a sales tactic brainwash: “Buyer agents are Free.” Don’t believe that. Guess who is writing the check/loan for a $400,000 house? Guess where the Realtor fees get drawn from at closing? Correct, that check. You are indirectly paying for all the fees.

  1. b. Wait it gets better. My exclusive agreement also states that if the buyer compensation exceeds 3%, the rest is rebated to the buyer! See (Shady Realtor Bonuses? 10%!! Free Cruise? Be Aware.“) Isn’t it great… no… just normal… that you have a contract that outlines what your Realtor is getting paid? Overpayments/bribes go back to the buyer, and there are no behind the scene shenanigans going on. (Buyer benefit 1: The buyer agent’s commission is fixed and you aren’t pushed into a property that bribes the agent)
  2. The agent can remove the fear in the back of their head that their client will walk, and they can give unbiased advice.Come on, human nature is going to kick in. How can you ask a Realtor “What would be a good deal for this”, (a question I don’t directly answer, but that is a long story) knowing t
    hat if the buyer doesn’t buy this place, the buyer still has the right to snatch up another place and fire the agent. How can an agent be aggressive for you if their commission might drop from $10,000 to $0 if they tell you the truth and guide you through a lower bid? It just can’t happen. The agent in this situation is NOT WORKING WITH THEIR BUYER, BUT AGAINST THEIR BUYER. This does NOT help the buyer. (Buyer benefit 2: Buyer agent is working FOR the client, not competing against them).
  3. Double their efforts. What Realtor in their right mind is going to go above and beyond and try to find you houses that are off the market or spend too much time on a buyer that doesn’t see the process as a team effort? I oftentimes send out letters to entire communities that my buyer likes. And that works. Usually for every 10 MLS places I show, I’ll scrounge up 1 or 2 places that are yet to be listed, withdrawns, FSBOs, or another hidden gem. Without that commitment from the buyer, I’d see it as a waste of time, or too risky. (Buyer benefit 3: More time invested in finding you more places equates to a better price or more inventory/options.)
  4. Help you or help another committed buyer? A good buyer agent will be turning away clients, or referring to another good agent, when they get too busy. If you want a new Realtor that has nothing better to do than drive you around forever on the 50/50% chance you will use them, great, but why not use a Realtor that respects your time as well as their own time and puts his foot down and sets guidelines for the work that they perform?

What about non-exclusive buyer agency agreement? I heard some agents will use that. Doesn’t that help me while protecting me?

All that does is a) squelch the “I work for the seller” trick and b) outlines how the Realtor gets paid. Both good things, but knowing that the buyer might go buy something after seeing something at an Open House or a new construction without them, the bias will still be there for you to buy quickly and for a higher price.

What about New Constructions, isn’t it better if I’m Realtorless?
Almost always the price for the buyer is the same with or without a Realtor (wow a pitch that you might have heard, that is essentially true). But, yes, on a rare occasion the sales office might get a bonus if they sell a unit to you without a Realtor, but who cares? You still don’t have anybody working for your best interest. Who cares if you got them to drop $50,000, a good Realtor might be able to say “Wait, in another community across town, they have been dropping $100,000!” or “Don’t believe their comps, they are illegally not posting the seller subsidy (see Beware: New Constructions Illegally Not Disclosing Seller Subsidies). Recently I helped a client get a new construction for $10,000 under the price he was initially told was non-negotiable AND I wrote into the contract a clause that allowed him to exit the contract if the prices of the condos continued to drop (a pricing guarantee). That single handedly could save him $40,000. And all you thought we did was show up with a smile and cash our check? What about the Jaguar the money I saved you can buy? Will I get a free ride at least?

Also in one case with an Arlington new condo, is the sales office going to tell you about how the building was almost condemned and slated to be destroyed because it was sinking? Um, I don’t think so.

What about bypassing the buyer agent and making the listing agent give me the commission? Heck even Money recommended this step (see article)
From somebody that has been in over 10 national publications, (CNBC, WSJ, NYTimes etc) magazines sometime give new reports a “beat” to cover. Sometimes they are not experts and they think they can jump in and reinvent the wheel. This reporter is an idiot. When a listing agreement is signed, it is between the seller and the agent. If an offer comes in with 3% back, the buyer can’t simply void the listing agreement. The offer is netted out and the listing agent can still get their double commission. Even if they don’t still get it all, (oftentimes they do) you still have nobody representing you to help you get the best price and help you avoid all the shady Realtors tricks that are out there (DOM fudging, etc). Who cares if you “save 3%” if a good buyer’s agent might have been able to get you 5% or more?
What about these FSBOs, isn’t it better if I find one without a Buyer Agent?
Yes. In theory. But those FSBOs tend to be cheapskates. This is fine, but cheapskates (like my mother!!) are notorious for overpricing! Great you “save” on Realtor fees, but you get a horrible deal. With a Realtor who is on the same team as you, can help you evaluate the pros and cons of that unit and also strategize how you can get the seller down. No not just with a low offer, but other ways. I love dealing with FSBOs that think they know it all. My client pays the Realtor fee (wink wink) but then they get the place for $50k under true value.

Again, yes, signing the agreement might preclude you from buying a gem FSBO that is underpriced and not offering Realtor commissions. That is a “risk” that you have to understand and be willing to accept, in trade for the other benefits of having a dedicated Realtor.

Buyer’s can’t have it both ways. You can’t expect an agent to work their tail off for you, offer unbiased data analysis, and offer aggressive negotiations while the agent knows you hold an “out” card. What, is the agent expected to just cross his fingers that his time invested will work out favorably? Is it worth holding onto that out card? That is up to the buyer, and if they see any value in their agent.
To recap: I’ve put myself in the buyer’s shoes. I know where they are coming from and their hesitations. I can understand and respect that initial
viewpoint. Now put yourself in the shoes of the agent. How likely is that agent going to be to help you try and fight for an extra $5,000 or $10,000 off? Human nature would kick in and say, “Why should I be aggressive on this offer if they might just go elsewhere if this deal doesn’t happen?”

If I sign one, when should I sign it?

  • Wait until you are comfortable with your agent.
  • Even if the agent didn’t ask for one, consider signing one before you put in an offer. That way you are saying a) “What are you getting paid?” b) “Don’t worry, I will use you, now tell me honestly about the value of this place.”

Good luck. Hopefully after reading the rest of this blog that highlights the insider tricks of Realtors, you will better understand why this exclusive buyer agency contract is requested by some and required by others and how it ultimately helps the buyer.

Also make sure to leave a comment and read others comments.

- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily.

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  • 13
  • February
  • 2007

76 Responses to “Exclusive Buyer Agency Contracts. Don’t Sign Them… Yet.”

  1. Rob Lang- Realtor ABR, ePro, GRI says:

    Boy, you had me going there for a while. I wasn’t sure which side you were on. Good points on why buyers should ask for an EBAA.

  2. Monika McGillicuddy- Real Estate Trainer says:

    Excellent post! I was wondering where you’d end up too.

  3. Jeff Dowler- San Diego Realtor says:

    Wow, lots of info here. Echos my beliefs.

    Curious if you have gotten questions about how you, as BA, can represent me in the negotiations where you fee is a result of the offering price. The higher the price you suggest we offer the better your commission, or conversely…

    How have you responded? Or do you nip it in the bud right off the bat and let them know upfront how you deal with this apparent conflict.

    Jeff

  4. FRANK LL0SA Broker says:

    Great questions Jeff.

    If the buyer is on my side, I can tell them “look, these guys are desperate and are trying to bribe me with a bonus for a full price offer. I’m going to ignore that bonus and offer what you want me to offer.”

    If there is a bonus, THE BUYER gets the bonus.

    The entire point of the Exclusive contract is that I get 3% regardless. So the #1 goal is getting the lowest price for my client.

    Frank

  5. Fran White : Kansas City Real Estat says:

    In the first part of the post, I was ready to ream you.. :) but I read the rest.

    Great post.

  6. Kelley Eling- California Agent says:

    Excellent post, and they are getting to be more and more common. The way they are written it does protect all parties and the client takes you more seriously. I have heard clients say that they have “hired” an agent to sell their home, but they are “using” and agent to buy.

  7. FRANK LL0SA Broker says:

    Brilliantly put Kelley!

  8. Jennifer K. Giraldi, North Atlanta REALTOR says:

    Awesome Post Frank! I fully agree with you…..EBA is very important to both parties these days.

  9. Leigh Brown Charlotte NC Broker/Owner says:

    That’s one of the best posts I’ve read in ages!!!

    I have duly bookmarked it and will share it with folks. Have to say though, I cracked up with the ‘priceless’ comment… I think that all of us who have worked our fannies off for someone who cut us out have seen the same thing happen-and secretly rejoiced.
    =) Thanks!

  10. Rick Beal- Realtor says:

    In Maine, you cannot give any advice for a customer until they sign an Exclusive Buyer Agency Agreement and become a client. As one of my Real Estate instructors calls it, you are a “monkey with a key.” I will work one day in a customer relationship, but no more; I can’t work that way – it’s not fair to either party. I also detail the “gap” that they may have to make up if the seller does not offer my full fee. I earn that money and do my best to document the value I bring to the table thus far very successfully.

  11. FRANK LL0SA Broker says:

    Hey Rick,

    The “monkey with a key” is exactly what I refer to as the excuses that Realtors use to trick their clients to sign with them. Just playing devil’s advocate here, couldn’t they just sign the “non-exclusive” agreement that I refer to in my post? That way they would be a “client.” I’m not saying that buyers should sign “non-exclusives,” I’m just saying that as Realtors, we need to better explain why it helps THEM and why it helps us. None of this monkey business.

    Frank

  12. Michele Connors says:

    boy you got me stirred up for a moment- excellent audience catcher!
    You put alot of time and thought into creating a post that sits on the fence and plays out both sides of the story….

    I will bookmark and reread as it is full of great pointers. I even love the last sentence after your signature.

  13. Trevella Williams- Hawaii Realtor says:

    Hoo Boy! Great post! I love using a Buyers rep agreement, it weeds out the people that only want to waste your time, but it is challenging to know when is the right time to put it forward…I like to say before I physically show them properties but it doesn’t always work that way.

    The double agent video was great! Talk about being on the fast track!

    Thanks Frank!

  14. Tim Maitski - Realtor in Atlanta says:

    Very good post.

    I like your idea of taking pictures of all the homes that they see and giving them an album. I was thinking of taking pictures as we look at homes and then burn them a CD at the end of the day. Just haven’t been able to work the picture taking into the normal routine yet.

    Tim

  15. Anonymous says:

    Blog is great.
    At first it seemed like it was against buyer agreements, but you brought it back.

    One other thing you can add in
    there and explain is how the Seller normally agrees to pay a percentage that includes the buyer agent....and if there is no buyer
    agent, the listing agent gets it ALL. Buyers should get
    representation if they are paying for the listing agent anyhow.

  16. formfiller says:

    Let me give you the perspective from the other side:

    1. Nothing in the BA (a) changes the underlying dynamic of the RE transaction; i.e., no commission is paid unless a deal is done, and the higher the price the higher the commission, or (b) that a dual agency exists. Unless it is a true BA, where the buyer’s agent receives 100% of his/her compensation from the client under an agreed-upon formula.

    2. If prospective buyers were actually presented with the true cost of the BA (”at closing, you may have to pay me, the broker, several thousands of dollars or X dollars per hour for my services”) I guarantee you not one BA would ever get signed.

    BTW, I hope you know that the statements you mentioned (e.g. “it’s standard”) are not only cheesy but exactly the kind of conduct certain state AGs and the DOJ are interested in.

    I will note that BAs are uncommon in the NE. However, if brokers can really demonstrate to the market that BAs add value to the client, they will catch on. If not, the previous posts, while well-intentioned I’m sure, represent wishful thinking.

  17. FRANK LL0SA Broker says:

    Hello NE buyer,
    As for #2, I disagree. I don’t try to hide anything. My contract is VERY clear, and my clients are ok with the concept of their paying the Realtor fees one way or another.

    Oftentimes if it is a FSBO, a net is reached and then an addendum is created to add back in the fees by increasing the price.

    And yes “the standard” comment could be a DOJ issue. But I don’t say that, so no worries.

  18. Anonymous says:

    Currently, I am on the other side of the horn on BAs. I know I know, I am probably going to get hammered for this considering the forum I am presenting to, but hear it out.

    We signed one with a realtor after seeing a few homes with him. We felt like it was the right thing to do considering he showed enthusiasm and knowledge that we didn’t possess.

    Now after 5 (FIVE) failed attempts at putting in a successful contract and a long list of various other incompetencies, I want out. Can you give me any advise as to how I can get out of this? Do I still retain the right to represent myself or the services of another agent before the end of terms? Help!

  19. D'Ann says:

    at post!
    I also let my buyers who sign rep agreements know that if at any point during the process they feel that I am not doing my job, they “fire” me with valid reason.

    Being in the NVAR arbitration committee, I see that while a buyer rep agreement can help, it isn’t the end all, be all to determining procuring cause.

    Your point about new construction is good as well. After working with a builder for several years, I know that builders will rarely “incentivize” you for not having a realtor...they depend on realtor business too and consider realtor commission as part of their marketing budget. Imagine how angry realtors would get if they found out that a builder was saying “If you don’t use a realtor, I’ll give you the 3% commission in the form of a discount!” Um, yeah…they are not trying to infuriate the realtors who account for 30-80% of their business (wide range I know, but the community Amir manages in Virginia currently has 62% realtor participation).

    Thanks

  20. tchaka owen says:

    Hahaha….I know you so I already knew where you were going. I also remember the very deal you pointed out where you were “fired”.

    I’m going to bookmark this blog and share it with clients. You’re timing’s great – I just showed 2 houses to a couple and was explaining the advantages of signing with an agent.

    -Tchaka
    http://tchakaowen.blogspot.com/

  21. tchaka owen says:

    Does “Formfiller” not realize that the “the standard” comment is actually you pointing out the bad elements in the business?

    -Tchaka
    http://tchakaowen.blogspot.com/

  22. Formfiller says:

    Sorry if I wasn’t clear, but “tchaka” should know that I referenced the statement as warning to brokers in general.
    That statement, along with “6% is standard”, and “don’t list with a discount broker, no one will show your house” are red flags.

  23. baxter says:

    All this is simply irrelevant – the question is not about whether agents – buyers or sellers side – should get paid. They should get paid.

    The real question is that 3% of the price has simply no relation to the work being executed. The 3% was set to cover fixed costs for selling a house when prices were low.

    The 3% is $10,0000 for a house at $333,000, but 20,0000 for something that sells for 660,000. This is the same house being sold in 2001 AND 2004. Did anyone else’s salary double in 3 years?

    There is nothing that justifies that extra $10000 for the latter, other than the MLS monopoly power.

    Your argument here is thus a straw man argument, which hides the real issue – a 3% commission is too much for todays prices.

  24. FRANK LL0SA Broker says:

    Hey Baxter,
    Thanks for your comment.

    Did you know the average Realtor in the US makes $17,000 per year?

  25. Geoff says:

    Assuming an agent does NOT work for a broker – how does the $ made from a sale break down?

    Lets say for example a sale of $600,000 house. What happens to the $30,000?

  26. million says:

    Frank,

    Joule has switched over to rentals… do you foresee any other new condo developments making the jump due to cancellations and/or lower than expected sales?

    Yes, I realize Joule is wrapped around a gas station (which clearly justifies the rents they are listing) and thus not indicative of the overall condo market in Arlington. But still, if you had to pick one other??

    Thanks.

  27. FRANK LL0SA Broker says:

    Dear Million!
    Great question. Blog coming soon on that topic.

    Frank

  28. Judith Clausen- Denver Realtor says:

    The days of “I won’t list a house and that proves I’m a more dedicated buyer’s agent.” Huh? I don’t think any of us ever say that. What we DO say is that we DON’T list houses because that eliminates any potential for comflict of interest, and that we SPECIALIZE in serving the best interests of buyers. When you work only with buyers as a fiduciary you become a specialist and an expert on buying. That’s all we do, all day every day — act as fiduciaries in representing folks who buy. We do know how sellers think, because all of us started out working both for buyers and for sellers. The law requires it. And so does all the special education we get learning how to serve buyers best.

  29. Brian Brumpton: Brian Brumpton Boise Realtor says:

    Wow, the first few paragraphs made me furious, way to suck us in and turn it around. Those are some great points you make. Personally as an agent I wouldn’t hold someone’s feet to the fire. If they have a legitimate reason for not working with me chances are I feel the same way. That goes for sellers and buyers.

  30. Anonymous says:

    It amazes me that even some real estate attorneys think a rebate of commission to a principle is fraud – on or off the HUD.

  31. Anonymous says:

    How does the price of the home relate to the value of services spent on buying that home? Couldn’t a Realtor spend more time with a picky family trying to buy a $300,000 home than a non-picky family trying to buy a $600,000 home? Yet the Realtor charges more to the non-picky family.

    Frank, you and other Realtors talk about your earnings per hour of work, yet you charge a percentage of a transaction. If you’re already thinking in terms of your hourly income, why don’t you charge an hourly rate rather than a percentage of the transaction?

  32. Fence says:

    Hi Frank,

    Regarding anonymous’ question (getting out of the agreement), what if you are unhappy with the agent that you have been working with and want to go with a different agent in the same brokerage firm? If the EBAA is with the brokerage, are you on the hook for paying 3% to the old agent and the new agent? Or is the 3% just to the borkerage? Thanks for the great blogging!

  33. Jesse Kaye says:

    Great article! I’m really happy to see that another Realtor is questioning the system in place for years that has done nothing to help the consumer. Its designed by Realtors, for Realtors.

    If you have the opportunity, stop by my blog at http://blog.developersagent.com/

  34. Anonymous says:

    I am all for protecting everyone’s rights in an agreement. However, as the standard EBAA clause reads, the buyer can never be certain that the agent is TRULY working for them. Basing the reward, (the commission), on the sales price is not incentive for the agent to negotiate a lower price. A buyer’s agent agreement should indicate that 1) the buyer pays the buyer’s agent directly and; 2) the commission should be based on the savings negotiated by the agent on behalf of the buyer. I’d get a lawyer to help with the wording but as long as the commission is based on the sales price all bets are off.

    Just some thoughts from a frustrated first time homebuyer.

  35. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Dear Anonymous,
    I’d rather have a client pay $5,000 OVER list price on a place that is under priced vs “saving” them $75,000 on a place that is $100,000 overpriced and getting some huge bonus.

    In your scenario, the agent would be incentivized to steer them toward the one that gave the bonus and not the one that was a better deal.

    And don’t think that this doesn’t happen. In my building at Clarendon 1021, there is an FSBO that is literally $100,000 overpriced. Meanwhile there was a pre-foreclosure that dropped quickly to $60,000 under the initial purchase price and sold with 3 offers at full list (if not over).

    I know the system isn’t perfect, but houses aren’t a commodity like pig futures or corn. There is no benchmark to conveniently go off of.

  36. Anonymous says:

    Still no response on how to get out of a contract!!! I found myself as a first time homebuyer in such a predicament where I knew the realtor did not have my best interest and kept telling me lies….including all loans have a prepayment penalties!! I did use that to get out of a contract. But how does a buyer protect themselves when an agreement is not working????

  37. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Hey Anonymous, Can you use a fake name? Or your first name? So I know who is who.

    As for getting out of the buyer agent contract. I didn’t follow your question. On the one hand you said you got out of a contract, on the other hand you want to know how to get out of one?

    You can try talking to the broker or an attorney.

    More often then not, the reason the buyer wants out of the contract is not because of the agent that did something wrong, but something else. Perhaps a friend of a friend Realtor said they would give them $1,000 back, or the relo company is now recommending a Realtor and they will pay for your move. So the contract is in place to also protect the buyer agent from spending 20 hours with a client, then to find out that they heard about some promo elsewhere.

    If your buyer agent really sucks, a lawyer can get you out in under 3.2 seconds.

  38. Anonymous says:

    My agent ref me to a loan broker who was his father, I live in cali & he removed contigencies knowing we didn’t have a loan and we thought we did. we had to put 5% down for loan, Then our loan guys calls us 10 days before close asking us for 3% more & with an outrages APR or else I will lose my 10,000 in escrow. We had to leave work and try to get another loan from Bof A which we got with out anymore money other than the 5% we may not close in time & will be fined by the seller. my agent (was a friend) knows that my son has been recently diagnosed with a cyst inbetween his eye&brain and could possibly be cancer, I have been unfront with them from begining to end i told them everything my credit & financial situation and they both said no problem. Before I placed a bid we asked our agent only place it if we are confrimed with the loan becuase we have no money to put down and the little that we do we need it to make the renovations to the house since the house needs some fixing. I want to fire my agent can I
    no buyer agency (did not know what that is) Thank you MD&LD from Cali did not want to create a log in name sorry

  39. andeegal26 says:

    As a 1st-time home buyer, my husband and I were lucky enough to run across an ethically questionable buyer’s agent. We certainly realize the value in having one, if they are actually working FOR you! I used Frank’s “live chat” and he was TREMENDOUSLY helpful.

    As we have not yet received a copy of our “agreement” we are going to try to notify the brokerage that as a result of not receiving it, our offer is not ratified, and therefore we are withdrawing our offer to do business with the agent in question and the firm. Not sure if this will work, but will update with final results when we have them.

    Thanks Frank! :)

  40. Home Buyer's Agent - Atlanta, Georgia GA says:

    When negotiating on behalf of my buyer-clients, I delve into certain data to assess how a particular home builder is negotiating with other buyers. When I’m armed with this data, it’s merely a starting point to get a better deal for my buyer. By extrapolating the details of a new home transaction, there is potentially thousands to be saved.

    One can research the home buying process to a great extent and still miss many beneficial opportunities to save; only experience can extrapolate these opportunities on behalf of the buyer.

    Respectfully,
    Stephen (Steve) Graham
    Associate Broker – Buyer Agent
    Realty Professionals, Inc.

  41. dubai real estate portal says:

    The internet is a great place for buyers to begin their searches and a way for them find a Realtor, but I can’t think of one client that found something online that they wrote on. In many cases I didn’t even show them those properties because many were under contract or did not have some other criteria that the buyer wanted.

  42. Denise says:

    I have written an entire dissertation about my stinky realtor and have decided it’s much to most to post on a blog. Just wish I didn’t sign an exlusive because now I won’t find a house. What a terrible experience for a first time home buyer who will now probably remain a forever renter. I’m absolutely calling her managing broker to complain. Short: she showed me the house (that I found). i wanted to make an offer. she refused until i looked at other properties. then she was slow to respond. offer finally in (a day after I was told it would go in). listing agent had questions. she didn’t respond promptly and gave too long on the offer (5 days – i said why 5, she said that is norm, i thought 2 or 3). and here I am – just found out didn’t get house. (I could have paid more, done more, etc. and never even had opportunity to counter – I had to ask my realtor to call them when i found out there were 5 offers and see if something else could be worked out. My realtor said she would, but that we should wait for counter first.). And, this really was a great house. Even the way she told me… stinky. I told her I wanted my $4k earnest money back and she said she would hold on to it for the next house. I said no, mark VOID and mail it to me today. Ugh.. can’t wait to go to YELP and post on her. (Seriously – with the dissertation I wrote – even the realtors would understand. I don’t blame the sellers for not picking me. Now I’m locked into stinky mcstinkerson until October 1. Shrug.

  43. randy says:

    Coming to this thread a bit (!) late, hope someone is still reading. My EBA contract says that they get a 3% commission, but also a “$595 administrative/regulatory fee at settlement.” Huh? Is that normal? The 3% alone isn’t enough (house should be in the 400-450k range). Just wondering if others have seen this and what you think. Thanks!

  44. randy says:

    I’m a bit late to this thread, hopefully someone is still listening. Is it normal for an EBA contract to tack on fees in addition to the (3%) commission? My contract (not yet signed) says, “…to pay us a $595 administrative/regulatory fee at settlement.” Huh?! I wasn’t expecting to see that. Normal? Thanks!

    randy

  45. Marie says:

    I’ve talked to a couple realtors, and the ones I’ve gotten along best with let you look over the contract, don’t rush you to sign it, and give you an out if things aren’t working out between you. Last week we were referred two realtors by our lender, and met with both of them to see who we liked best. One made us feel like we were wasting his time, and that we had to things that financially did not make sense for us. We loved the second one, he was more our pace. But, when we called the first guy to let him know we were going with someone else, he told us we had an exclusive agreement with him! We can’t talk to anyone else. My husband swore up and down he didn’t sign it, then we realized what happened. He gave us a disclaimer regarding lead paint to sign (We’re the seller in this case), and had my husband sign in two places. The second page had nothing to do with lead paint, it was actually the third page of the exclusive contract (it wasn’t stapled together). Luckily he left unsigned copies of the documents behind or we never would have figured it out! The contract was never mentioned, he never told us he had one, what it entailed, or that one was being signed. Now we’re stuck with someone we don’t trust, who knows we want out and won’t let us. We decided not to move.

    So I completely agree that you should make sure you are comfortable with the realtor before signing an exclusive agreement (we knew we weren’t), and make sure you don’t get caught in a flurry of paperwork! Take everything out of his hands to read through before you sign!

  46. rachel says:

    i had been using a realtor that was SOO FULL OF … poop… i’ll say.. we found a house.. put an offer in.. signed the papers including a buyers agency paper.. the offer didnt work out … this lady was rude, pushy, let alone talked HORRIBLE of my husband.. but of course that didnt happen until we put that offer in on the house..

    now the house was dropped 20k and we want to put a new offer in on it.

    i told sally *the rude realtor* that its just not working out and we are not buying now… she said back thats fine blah blah blah.. then some more ruid things about men and my husband

    now we are working with a new one .. since i told sally that its not working out with us and she agreed.. does that mean we are out of the contract or no? and what do i have to do to make sure we are. i see how she talks to her husband but there is no reason to talk to others like that. she’s supposed to be running a business here

    any advice??

  47. FranklyRealty.com says:

    I am not a lawyer (yet), but it doesn’t sound to me like you are out of the contract. You told her you are “not buying now” when in fact you should have said “we are not buying now WITH YOU.” So no, if she found out that you bought, she might be able to claim that she is entitled to the commission. Ask your new agent. Also get something in writing (even email) from the agent making it more clear that you are not under contract with her. Again, I’m not a lawyer, so you can’t say “but Frank said…”

  48. Sherry says:

    Client signs exclusive buyer agency contrat with agent which contains a non refundable retainer fee of x dollars due and payable upon execution of agreement. Retainer will be applied to any commssions paid to broker. Agent shows client dozens of properties and then client falls into a black hole located somewhere on this earth never to be heard from again. Client does not answer calls, emails, or text messages. Mom won’t even answer the land line. I am correct in assuming the agent (broker) is entitled to the retainer fee? Of course we all know what happens when we assume…..

  49. Karen says:

    RE: Buyer Agency Agreements (BAA) — (1) Great post; (2) My view is that technically/legally, for all homes I show a prospective purchaser, prior to having a signed BAA, I would automatically represent the seller per the MLS system. Why? The Listing Agent (LA) advertises the Seller’s home in the MLS (w/the seller’s permission) to all SUB-agents of the seller and to Buyer’s Agents representing buyer clients. Without a signed Buyer Agency Agreement at or before entering the property, then the Agent who shows the property is automatically a SUB-agent of the seller and thus must do what is in the best interest of the seller, not the buyer, b/c the seller is technically/legally the client of the Agent (Sub-agent) even though he/she SEEMS to be representing the buyer b/c he/she is showing them property.

    I always ask buyers to sign the BAA 1st time I meet with them IF we are previewing property that day. Often, I’ve already been involved in an email exchange in which I’ve provided Home Buying information, advice and sent them listings, etc. I will, however, write the BAA so that it expires in 1 week or 1 month or even in 2 days.

    And, I take the time to explain the BAA and accompanying addenda.

    Would like your thoughts on that? Maybe I’m wrong but “sub-agency” remains a choice in the MLS and the BAA. Then when we write the Purchase Contract, we must again state in a legal document that we are the Buyer’s Agent and it means for THAT property.

  50. Karen says:

    RE: Procuring Cause of the Sale

    (1) Okay, with no BAA (and just the Brokerage disclosure as sub-agent of seller), I as the Agent (sub or Buyer’s) who showed the property to the purchaser am the “procuring cause” of the sale. So, I get paid regardless of whether the buyer runs out and hires (w/a BAA) some Brokerage/agent who kicks-back 50-75% of the Sales Agent end of the Listing Commission to the buyer. BUT, that means an arbitration battle before the Board. On principle, it should be fought but most of us would prefer to forget it. Plenty of battles over “procuring cause” exist. . .and should.

    (2) The downside for the Buyer is that without the BAA, a Realtor simply cannot be honest about a property in any way that might harm the seller. Without the BAA, the agent must keep in his/her mind that legally he/she cannot say or do anything that is not in the best interest of the seller. This is real bad for the buyer. And, it’s a really bad position for the agent to be in too. Whoever I am working with — buyer or seller — is in my mind and heart my client.

    (3) When showing property as, technically, the sub-agent of the Seller, I must restrain myself from answering any questions OR telling my buyer customers anything that I notice about the property IF it’s not in the best interest of my client, the seller.

    I never work without a BAA even if it’s just for 2 days.

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