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Tuesday, February 20, 2024

3 reasons you should be using a buyer agreement now

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According to broker Joseph Santini, buyer agreements are good for buyers and good for buyer agents. Find out more about these valuable tools and how to get them signed.

The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.

Buyer agreements have always been around, and the primary reason for using them up until now has been to protect you, the agent, from buyers looking at properties with you and then purchasing that same property with another agent.

Editor’s note: Always consult your supervising broker and state regulations before negotiating any commissions with consumers.

A non-exclusive buyer agreement does not lock the buyer into using any one agent, but they commit the buyer to buy the property through that agent if they show it to them. It seems fair and reasonable for everyone, and agents have been using them for a long time.

There are also exclusive buyer agreements that commit the buyer to one agent for a time. With these agreements, the buyer is committed to using the agent for any property they buy, period.

This is a much heavier ask of the buyer, and most of them will not appreciate the restriction that this creates for them, at least at this point. 

Even though they will probably stay with you as their agent, these agreements are sometimes just too much for them psychologically. You will have to decide if using an exclusive buyer agreement may be better for a certain customer. There may be times when this will be the tool to use; remember that you may scare some buyers away with the exclusive buyer agreement.

Here’s why buyer agreements are good for buyers

Remember that buyer agreements are also good for the buyers because by signing one, they will get an agent who is not afraid of going the extra mile for them with all the services that need to be performed on the buy side in finding that perfect home.

Things like endless searches and multiple showings. The agent and buyer will agree, and the agent will feel comfortable knowing that they will get paid for their work. Like all agreements, the buyer agreement is designed to protect both parties.

The most important thing with these agreements is how they are presented and explained to the buyer. Once the buyer understands what you are asking them to sign, it is usually smooth sailing, with everyone feeling good and on to looking at homes.

One thing to ask yourself is if the buyer won’t sign a simple buyer agreement, will they sign a contract when the time comes? Consider buyer agreements a great way to screen your buyers to see how real they are.

With the recent outcome of the Sitzer | Burnett case we now have another reason to use the buyer agreement. Though this is not a new reason, you just may see it more than ever coming to your real estate market soon.

The reason is buyer compensation. When the listing side is not offering compensation to the buying side, the buyer’s agent must negotiate their own commission. 

Don’t worry, as this is not new. Many residential agents have been using this document and working with buyers when they noticed that the listing side was offering a lower commission than what the agent wanted to charge for their services.

The list side may have offered 2 percent when the buy side agent wanted 3 percent. Congratulations to these forward-thinking agents who will be ready for the future.

These agents explained to the buyer that they charge X amount for all their services and further explained that the listing side was offering only X and then asked the buyer to make up the difference. It is not a brand new scenario, but one that may become more commonplace later.

Commercial agents have always done business this way and received their pay from the buy side. You may want to talk to your commercial friends to see that this will not end the world as we know it.

Just be aware that it may become more commonplace on the residential side, so we should prepare for it and always look for when to use our buyer agreements by checking that compensation on the MLS.

Your 3 reasons to use a buyer agreement

  1. To get paid by the buyer when the seller is not offering enough compensation.
  2. To prevent the buyer from buying the property directly from the owner or with another agent after you find it and show it to them. Nothing has changed with this one.
  3. To create an agreement between you and your customer that protects both of you so that you both feel comfortable working with each other.

So, when we look at buyer agreements, they are not new. Some agents are seeing the need for these in their marketplace and others not at all.

Many agents that I speak with covering various price ranges feel that not much will change anytime soon as their sellers understand the value of offering good compensation, which will always be an intelligent way to sell a home and always will be the seller’s choice. This is especially true in the high-end luxury space.

Sellers want to sell fast and remember that sellers offering compensation, when done correctly, is OK and will continue to be a valuable tool for sellers to get the highest amount for their property in the shortest amount of time.

 Joseph Santini is a managing broker at Coldwell Banker Residential Real Estate in Boca Raton, Highland Beach, Delray Beach in Florida. Connect with him on LinkedIn.

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