-- Boon or Bane?by Pete Schomaker
Pete is a Realtor working in Ramona, California. http://RamonaHomesAndLand.com
Heavily touted throughout the industry as the wave of the future, a buyer’s brokerage is a contractual agreement that ties a homebuyer to a specific real estate agent. A buyer’s brokerage is an ironclad contractual agreement. If a buyer should find a For Sale By Owner who refuses to cooperate with Realtors, the buyer would still owe a fee to the agent they purchased that home.
Is this truly a benefit for the buyer?
Many brokers implement buyer broker agreements more to protect themselves than to protect the buyer.
You see, an agent invests a lot of time and effort behind the scenes, reviewing Multiple Listing Service data and previewing homes before they show them to clients. There is also the time and money spent driving prospective homebuyers to the various homes.
At any time, the client could turn around and buy from a For Sale By Owner or utilize the services of another agent they meet at an Open House or by calling on an ad. If a buyer switches allegiances at the last moment, the agent’s investment in time and money is lost.
That is why many agents prefer their clients to sign buyer brokerage agreements.
The real estate industry can be very difficult for nonprofessionals to understand. A buyer without a written agreement is fair game for any agent that can get them to write an offer regardless of the amount of time and funds another agent has invested in them. Sadly, many buyers are lured away from an agent they have worked with by a wily competitor.
If you are in the market to buy real property, do some research and interview agents to determine who will represent your interests first. Instead of looking at an agent as a salesperson, view them as your "agent" – someone who is there to help you. Interview them with that criteria in mind, as well as determining their market knowledge and ability.
If you think and agent is just trying to "sell" you – don’t hire them.
Generally when an agent represents a prospective purchaser of real property, they work diligently for that individual. With the advent of agency disclosure laws in most states, the duties and responsibilities of agents to their customers are specifically outlined.
Will a buyer's broker work more diligently for a buyer because they have a signed contract? In theory, they will work harder. There are many highly reputable brokers who work strictly with buyer brokerage agreements. But what happens when an agent makes a good first impression, then does not deliver as originally promised?
If you are not uncomfortable signing a contract which obligates you to working with a particular broker, by all means, do so.
To safeguard yourself, however, you should make sure there are clauses in the contract that allow you to cancel. Also, if there is no expiration date on the buyer's agreement, not only does that make the contract unenforceable in most states, it should also send a signal of the agent's real intentions. Another possibility is to limit the buyer’s brokerage agreement to houses available for sale in the Multiple Listing Service. That would allow you to buy directly from an owner that you find on your own, without the help of your agent.
An old adage of the real estate business is "know thy buyer." An educated public will learn that "know thy agent" is as appropriate, if not more so.
copyright 2001, RealEstate ABC, www.realestateabc.com