Buyer Representation Agreement

[Nir]

I have just started looking into real estate investments. The real estate agent in one of the cities I`m considering has recently sent me a buyer represtation agreement to sign to ensure I only work with him on all investmenrs within that city. Initially, I planned never to sign such an agreement as I believe in a trust relationship and do not think it is necessary. wanted to consult with the more experienced investors here - is it generally a bad idea to sign on such an agreement that restricts you from working with anyone else? should I discontinue working with this guy if he presents it as a manadatory requirement in order to work with him? THANKS. {ps. he made a good first impression but now surprised me with that new requirement}

 

[Nir]

Should I avoid signing that with a real estate agents who insists to represent me by contract rather than by trust relationship. Is it a big no no to sign such an agreement? I would not even have a dilemma if he did not make a good first impression. THANKS

 

[randy]

I would not sign. If he does his job you will deal with him. What if you find a FSBO with no help from him how much should you pay? I have always told real estate agents from the begining what our relationship will be. Usually not much work for them.
It really depends on the amount of work that he is doing for you. If he is just showing a few properties big deal. If he is finding unlisted hard to find properties by personal contacts sign.

I would just give my word that I will not buy MLS from anybody but him

 

[RedlineBrett]

QUOTE (investmart @ Dec 6 2007, 07:15 PM) Should I avoid signing that with a real estate agents who insists to represent me by contract rather than by trust relationship. Is it a big no no to sign such an agreement? I would not even have a dilemma if he did not make a good first impression. THANKS

I have a license, and I don`t get my buyers to sign them. I have no problem with a `trust` agreement. But I screen my buyer clients very carefully - it can be A LOT of work to bring a buyer along.

That said, if you are asking for a lot of stuff beforehand and using your agent to help with a lot of market research and due diligence - ya, I`d say it is fair for the agent to ask you to commit. Agents will work harder for you if you sign this doc... shows you are serious. If you are waffling at all or your agent feels like you don`t respect their role in your purchase you move down the priority list. If you commit they know "I get paid if I find this guy what he wants" and they will hop to it!

Why wouldn`t you commit? What your agent is doing is finding out if you are worth his time. If you are a serious buyer and an ethical business person you should be quick on your due diligence and see if this agent is a good fit for you or not - don`t leave him or her in limbo because they have their numbers to worry about too. By putting this agreement in front of you your agent is effectively `popping the question` and putting the onus on you to make a decision. Really, he`s looking to save you both some time.

Best of luck

 

[Grant]

I have merged both of your threads into one. Please do not start more than one topic about the same thing. If you need a topic moved, please send a PM to an administrator.

 

[mikecunning]

QUOTE (investmart @ Dec 6 2007, 06:04 PM) I have just started looking into real estate investments. The real estate agent in one of the cities I`m considering has recently sent me a buyer represtation agreement to sign to ensure I only work with him on all investmenrs within that city. Initially, I planned never to sign such an agreement as I believe in a trust relationship and do not think it is necessary. wanted to consult with the more experienced investors here - is it generally a bad idea to sign on such an agreement that restricts you from working with anyone else? should I discontinue working with this guy if he presents it as a manadatory requirement in order to work with him? THANKS. {ps. he made a good first impression but now surprised me with that new requirement}


When I started selling real estate I never used them because I wanted people to want to work with me...as I progressed in my sales career I got sick of buyers walking into open houses and buying from the listing agent...best intensions aside, some buyers never really got the `word` thing...so, I started using buyer`s agency agreements as we call them in BC. Immediately, my sales business went way up - it was a way of pre-qualifying a prospective client...many people think that realtor`s time is `free` or that they don`t actually do that much work...they could not be more wrong...a good realtor is worth their weight in gold....in a sense, you may want to consider working with someone like this BECAUSE they are serious about the business. Having said that, however, if you do choose to embark down this path, make sure that it is for a relatively short period of time....you may also want to add something to the effect that it only applies to properties that he introduces you to...good luck

Mike

 

[JefferyJohn]

I would consider him needing this agreement prior to proceeding as a good sign. A good realtor may have the option to be choosy about who he works with. If he doesn`t have to work with someone not willing to guarantee compensation for his efforts . . . he won`t. On the other hand, a realtor quick to work with *anyone*, including tire-kickers, could be a sign of inexperience. This agreement also clarifies the relationship you have with your realtor, and itemizes what you can expect from them, and what they can expect from you. This prevents much misunderstanding and offense in the future.

If there is something in the agreement you don`t like - negotiate it. For example, if their specialization is in a certain property type or area (ie: mine is Edmonton industrial properties); limit the agreement to only include that specialization, for a certain window of time, instead of the entire city. Clarify the specifics so you aren`t signing your life away.

Obviously, as a realtor, I just might be biased about this issue. Change shoes for a second . . . how hard are you willing to work for someone with the possibility of not being paid? My wife and children prefer me to have an agreement in place before hand.

Good luck with it! It is more than likely that in the near future these agreements will be required by RECA.

 

[RussellWestcott]

Here is a great article written by a Veteran Real Estate expert who has purchased many, many, many properties.Article written by Arlen Dahlin
I know my Realtor has moved away from the traditional buyers agreement form that most Realtors use. He has created a slightly different document.

This document outlines his commitment to the client. PLUS outlines his expectation of the client. It is very similar to the buyers representative agreement, but is more customized and does not appear so ominous.

As well, before my Realtor agrees to work with anyone, you have to fill out a 4 page questionnaire to determine things such as:

• Your 5 year plan?
• Available capital to close on property?
• Where is the money coming from?
• If using JV`s do you have signed agreement?
• Your Mortgage Broker?Your Lawyer?Do you prefer, condo`s, townhouses, single family Fixer-uppers?What is your specific criteria of property you are looking at?What qualities do you look for in a Realtor?How often do you want communication?

etc.. etc...

After he goes through the questionnaire he can quickly determine if he can help the investor out or not. He is very busy, because he finds great deals, and wants to make sure he has clients that are ready to make a decision when he presents you the opportunity. The clearer you and your Realtor are with what you can do, and what they are going to provide you, the better relationship you will have.

And once you find your Realtor, you treat them like GOLD, because that is what they help you create.

Cheers

 

[EricB]

best thing to do, would be to sit him down and tell him you will sign one per property. as in if he shows you a property you will sign a buyer rep that deals with that one property only. so if you decide to buy that property he will get the commission. other then that, if your looking to invest and not buy, don`t bother signing one.

 

[bigbear]

I do not sign exclusivity contracts. Those contracts can become a massive roadblock if the realtor does not do his job. What if he doesn`t do his job? What if you find a great property but can`t buy it without having to pay him? This has happened to me.

In addition, if you sign it, then doing lowballs and FSBOs becomes difficult. Realtors do not like to lowball or deal with FSBOs and you can miss a lot of great deals.

If you are to sign the agreement, put a term of no longer than three months.

Best of luck!

 

[MicFromMirus]

I work with many REA and they don`t seem to have a problem with that. I bring each of them business. If they find me a deal, I will deal with them for that particular property. I`m clear about my intentions and they are fine if I am fair with them. Concluding any transaction should be mutually beneficial, so there should be no issue. You need to reassure the agent that you recognize the value of their work and will gladly deal with them if they bring you a property that fits your porfolio.

If they still require you to sign an exclusivity agreement, it may mean that you have not proven that you are trustworthy. Or it may simply be that they have been burned and don`t want to waste their time (completely justified).

I personally have never signed such a contract, but would maybe consider it if it were for a short period of time with a very highly productive & reputable agent.

 

[mikecunning]

QUOTE (bigbear @ Dec 15 2007, 04:57 PM) I do not sign exclusivity contracts. Those contracts can become a massive roadblock if the realtor does not do his job. What if he doesn`t do his job? What if you find a great property but can`t buy it without having to pay him? This has happened to me.

In addition, if you sign it, then doing lowballs and FSBOs becomes difficult. Realtors do not like to lowball or deal with FSBOs and you can miss a lot of great deals.

If you are to sign the agreement, put a term of no longer than three months.

Best of luck!

Be sure to write in specific performance requirements, that way if the realtor doesn`t do his job the contract can be terminated.