Buyer Representation Agreements

One of the drawbacks to working with buyers is that unlike taking a listing there is no requirement that you have a contract with a buyer. Many agents will only work with buyers that are willing to enter into Exclusive Buyer Representation Agreements. So what is that?

It is a contract with the buyers, formalizing your working relationship and spelling out the responsibilities on both sides. A buyer rep agreement tells the buyer what you are going to do for them and what they are responsible for during the home buying process.

The brokerage agrees to use their best efforts to find the client a home that meets their needs and to assist in the negotiation of the contract.

The buyer agrees to work exclusively with the brokerage to find their new home and to inform other agents they may come in contact with that they have an exclusive agreement with the brokerage and to refer all questions and issues to the brokerage. in other words, they agree not to deal with any other broker or agent.

Issues such as intermediary status and competing clients are addressed as well. But what you really want to know about is compensation issues. Compensation is addressed in paragraph 11 and discusses what fee you are going to charge for your services and who is responsible to pay that fee. That's a good question. The answer is it depends. How much you charge is up to you, or to your broker if company policy spells it out. You can charge a flat rate, an hourly rate or you can work under the traditional business model of being paid a percentage of the sales price at closing. This type of contingency fee allows for no additional money up front for your buyer and is the way most agents have been paid for a very long time.

The agreement authorizes you to be paid regardless of how the buyer acquires the property. If they contact a For Sale by Owner(FSBO) or if they call another agent you could be entitled to be paid under the provisions of your representation agreement. On the other hand, without a buyer rep agreement, if your clients call another agent or a FSBO you have no recourse to collect a commission. OUCH.

Many agents work without buyer rep agreements because they don't know how to explain them properly to their clients. They are afraid that these folks will go work with someone else that doesn't require them to sign anything first. And the fact is some of them will go elsewhere.

You have to figure out if it is worth your time to work "without a net." If you want to take a chance on every deal then don't worry about buyer rep agreements, but if you would like to help ensure that you are compensated for the work you do then you need to learn what to say, and how to say it, to convince your clients that it is in their best interests to agree to work with you exclusively.

If you are interested in learning some of the scripts and dialogs to get buyer rep agreements signed, just give me a call or send and email.

Buyer Consultation

Most new agents will begin by working with home buyers instead of sellers. It is typically easier to find and work with buyers than with sellers. Remember when you are working with sellers as a listing agent all your marketing of the home is done on a contingency basis. That means you have to pay for the marketing you do and you don't get paid until the sale closes.

Many new agents are kind of pressed for cash and working with buyers only costs you time and a little gas money. However, with gas prices the way they are you don't want to spend a lot of wasted time driving folks around. The wasted time can be avoided by conducting a thorough buyer consultation with your clients right at the beginning of your relationship.

To begin you must know what they are looking for in a home. Some of the questions are pretty obvious like how many bedrooms and baths, and what price range are you looking for.

Let's talk about price for a second. Your clients may not have been in touch with anyone for their financing yet. They may have looked online at amortgage calculator to see how much they can afford. If that's the case they may not truly qualify for what they think they do. Try to get them in front of a qualified mortgage professional as soon as possible to avoid wasting a lot of time. It is essential that you have a solid idea of what they can afford and are willing to spend before you start showing them homes. If you show $150,000 homes and they like them and then find out they can only afford $120,000 they will not be happy with the difference that $30,000 makes in the homes.

Okay back to the questions:
1. Price Range?
2. What is your time frame?
3. What do you like about your current Home?
4. What do you dislike?
5. Do you have any special needs in your new home?
6. What do you consider a reasonable commute?
7. Which rooms do you consider most important?
8. Do you have a certain part of town in mind? Be careful not to steer your clients to any particular area(a violation of fair housing laws).
9. What style of homes are you interested in?

This is just the beginning. My buyer consultation book is 54 pages long and goes into great depth to discover the buyers wants and needs.

If you are interested in more information about buyer consultations then send your questions to click here