Is it a must to sign a contract with a realtor ?

Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes

I don’t want to sign a contract with one realtor because I’m not quite sure how the relationship will work. I don’t want to be roped into a situation where I need to see a property right away and they may not be available or they don’t understand why I’m not paying full price for a property. I would like to try out different realtors and make sure they will be a right fit for me. Is it necessary that I sign a contract to use a realtor?

3 Reply

449 views

Most Popular Reply

Jeff CopelandBusiness Member

Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes

Many real estate agents are taught to "never show properties to a prospective buyer without 1) a preapproval letter or proof of funds showing the buyer is qualified to purchase a property in this price range, an 2) an exclusive buyer's agency agreement that ensures the buyer won't go around you and cost you your commission". In some cases, the agreement may even be required by their broker.

The reasons for this are pretty obvious if you think about it.

1) As an agent, you cannot and should not take any schmuck off the street into peoples' homes. (If you were selling your primary residence, would you want agents bringing unqualified buyers on tours of your master bedroom when you're not home?), and

2) Agents only get paid after the sale. So they won't stay in business very long if they show every buyer that walks in 20 homes, and then the buyer goes around them and buys the home directly via the listing agent, with a different buyer's agent, or without representation.

So don't be scared off by an agent asking for an exclusive buyer's agency agreement, and never say never. There are very sound business reasons for them asking for it, and you don't want to walk away from a potentially great real estate agent over this relatively simple matter.

When they ask for one, why not just explain "I completely understand why you need this, but I'm not willing to commit to anything long term until we've done a few deals and know each other a little better. Why don't we make the agreement good for [anywhere from 10 to 90 days] and renewable? That way, you're protected on any properties you show us this week, but we're not committed to anything long term if either of us decides to go in a different direction."

Needless to say, this requires you to work with one buyer's agent (per market) at a time. But there really is no need to do otherwise.

Win-Win. Problem solved.

Copeland Morgan LLC4.770 Reviews

Website View Page

40 Reply

See this reply in the discussion

80 Replies

Jump to latestLatest

Sort by

Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y
To the contrary. As a REI, you should NEVER sign a contract with a realtor.
7 Reply
Jeff CopelandBusiness Member
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
7y
Many real estate agents are taught to "never show properties to a prospective buyer without 1) a preapproval letter or proof of funds showing the buyer is qualified to purchase a property in this price range, an 2) an exclusive buyer's agency agreement that ensures the buyer won't go around you and cost you your commission". In some cases, the agreement may even be required by their broker.
The reasons for this are pretty obvious if you think about it.
1) As an agent, you cannot and should not take any schmuck off the street into peoples' homes. (If you were selling your primary residence, would you want agents bringing unqualified buyers on tours of your master bedroom when you're not home?), and
2) Agents only get paid after the sale. So they won't stay in business very long if they show every buyer that walks in 20 homes, and then the buyer goes around them and buys the home directly via the listing agent, with a different buyer's agent, or without representation.
So don't be scared off by an agent asking for an exclusive buyer's agency agreement, and never say never. There are very sound business reasons for them asking for it, and you don't want to walk away from a potentially great real estate agent over this relatively simple matter.
When they ask for one, why not just explain "I completely understand why you need this, but I'm not willing to commit to anything long term until we've done a few deals and know each other a little better. Why don't we make the agreement good for [anywhere from 10 to 90 days] and renewable? That way, you're protected on any properties you show us this week, but we're not committed to anything long term if either of us decides to go in a different direction."
Needless to say, this requires you to work with one buyer's agent (per market) at a time. But there really is no need to do otherwise.
Win-Win. Problem solved.
Copeland Morgan LLC4.770 Reviews
Website View Page
40 Reply
Brandon L.
Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
7y
@Lakeisha Baker maybe some honest communication about your expectations and goals for your transaction with a few real estate agents will be more productive as opposed to "try out different REALTOR's"
It is important to be respectful of a professionals time to "try out" is not being respectful, it's being wasteful because you don't know what you are looking for but want to try them out to find it.
Make a list of what is important to you, and take 5-10 minutes to speak with agents over the phone or in person about it.
Normally an agent will let you out of the contract if they feel you are not a good fit for them, but ultimately the contract is between you and the broker, not the agent. The contracts shows that you are serious, and weeds out those who are just looking to "try out"
Take a step back, gain some clarity and focus on what you want, find what you want, then proceed with the contract. If you have any other questions about the contract feel free to ask.
12 Reply
Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Lakeisha Baker I pretty much agree with @Jeff Copeland, but I'd suggest a slightly different approach.
Talk with the agent about your goals and strategy. If you plan to blast out lowball offers, this is the time to tell him, because that may well mean that you're not a good fit.
For example, in my neck of the woods, properties sell on average at over 98% of asking price. If your strategy is to submit dozens of offers at 70% of asking and hope for a lucky break, you'll be wasting a lot of that agent's time.
Then ask him to go with you to one or two properties and get a feel for each other. If all is well at that point, I'd consider signing an exclusive buyer's broker agreement with him.
However, I recommend that you discuss the territory and length of time that it covers. If you're willing to go farther away than your agent is, you should specify the geography in the agreement. It also needs to be time-limited, but renewable. A 6 month trial period isn't unreasonable.
6 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
An agent whose time is valuable will only work with you if they are the only agent you are working with. Only agents whose time isnnot valuable will work with you knowing you are working with multiple agents.
Also, many states require some sort of written agreement per law, even if for a short period of time. Maryland and VA both require written agreements per law.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
9 Reply
Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y
@Lakeisha Baker It varies by where you’re at and the laws and local customs of that market. As you can see from other responses, in some states, it’s actually required by law. However, in my state, I have worked with many different agents from different offices in various cities/counties and never even been asked to sign an exclusive agreement with an agent. So it just depends.
1 Reply
Cassi Justiz
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y
I have heard of a handful of high volume investors who work with more than one agent because it's hard for one agent to find enough deals for them. Depending on the investor and agent, some people will do a take on the buyer broker agreement and do it on a per property basis instead of a time frame. It probably isn't something you can do without a really favorable history with a brokerage and agents, but it's something to keep in mind for the future.
6 Reply
Ozzy SirimsiBusiness Member
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
7y
Someone who knows what they are doing most likely will pass that offer, but you can basically find a number of newbie realtors and you can work with them per property basis.
1 Reply
Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
7y
You can always call the listing realtor to show properties. You don't need to sign an agreement for a long time like 6 months. You can sign for a shorter length of time and you can exclude deals you find yourself offline.
3 Reply
Daric Myers
Gillette, WY · Member since 2018 · 44 posts · 19 votes
7y
@Lakeisha Baker I don't think I would ever sign with just one agent for all the reasons above. If one shines over the rest you may consider using him or her on the front end as the back as an incentive to show you awesome deals in the future. It will cost you a bit more, but a great agent is hard to find sometimes, so it's good to try and keep them happy.😎✌️
1 Reply
Shaun Morgan
Rental Property Investor · Lubbock, TX · Member since 2018 · 54 posts · 30 votes
7y
My wife was a realtor and she says that signing a per property agreement is the best way to go in this situation. It protects you from a bad situation if the deal goes bad and it protects the realtor doing that deal so they can get paid. It is a win win for both. You just have to sign more contracts with them since it is a per property agreement.
3 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y
Agent agreements are for homeowners. They are looking for one property, and when they find it, that's it.
REI are looking for many, many properties. REI are in a business, and like any business, both the buyer and the seller must EARN eachother's trust...and then business.
I work with, not use, work with a number of REA. Most of them know eachother. Most REA can access most everything, but NO REA can find everything, nor cover all markets. Most REA are specialists in certain areas of investing, as well as certain geographic areas. Many will tell you that they will go wherever you want them to go...and list...then, when you want to send them across town, they all of a sudden work slower, and put you on the backburner...and I fully understand. Their time is valuable.
Like I said at the start. This is a business for both. Build relationships with your REA and they won't need an exclusive agreement.
Next time a REA requests, or requires an exclusive agreement, ask them if when they find a property for you to look at, are you the only one they show it to?
6 Reply
Account Closed
Rental Property Investor · Seattle, WA · Member since 2018 · 129 posts · 163 votes
7y
@Lakeisha Baker If you are buying a property, absolutely not. I simply use Redfin’s or Zillow agents. They have 0 pressure since most of them are paid a base salary. The app also let’s you select a date and time that is convenient for you. I agree, you should meet as many Realtors as possible. You will find that it’s a lot about personality and work ethic. All my agents respond to my text msgs regardless of the time of day or if it’s weekends or holidays. You want agents that are “hungry” and “go getters” especially if you are in a competitive market. Goodluck!
2 Reply
Dennis Tierney
Investor · Omaha, NE · Member since 2011 · 475 posts · 211 votes
7y
I have been primarily a buyer over the years and have never signed a buyer's agreement with an agent. They are more likely to bring you a property if they get both sides of a deal and don't have to split the comission. The only time I've signed an agrement is as a seller.
1 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Joe Villeneuve:

To the contrary. As a REI, you should NEVER sign a contract with a realtor.
Thank you, I got nervous about signing paperwork and not knowing how we would work out.
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Jeff Copeland:

Many real estate agents are taught to "never show properties to a prospective buyer without 1) a preapproval letter or proof of funds showing the buyer is qualified to purchase a property in this price range, an 2) an exclusive buyer's agency agreement that ensures the buyer won't go around you and cost you your commission". In some cases, the agreement may even be required by their broker.
The reasons for this are pretty obvious if you think about it.
1) As an agent, you cannot and should not take any schmuck off the street into peoples' homes. (If you were selling your primary residence, would you want agents bringing unqualified buyers on tours of your master bedroom when you're not home?), and
2) Agents only get paid after the sale. So they won't stay in business very long if they show every buyer that walks in 20 homes, and then the buyer goes around them and buys the home directly via the listing agent, with a different buyer's agent, or without representation.
So don't be scared off by an agent asking for an exclusive buyer's agency agreement, and never say never. There are very sound business reasons for them asking for it, and you don't want to walk away from a potentially great real estate agent over this relatively simple matter.
When they ask for one, why not just explain "I completely understand why you need this, but I'm not willing to commit to anything long term until we've done a few deals and know each other a little better. Why don't we make the agreement good for [anywhere from 10 to 90 days] and renewable? That way, you're protected on any properties you show us this week, but we're not committed to anything long term if either of us decides to go in a different direction."
Needless to say, this requires you to work with one buyer's agent (per market) at a time. But there really is no need to do otherwise.
Win-Win. Problem solved.
Thank you I never thought of it that way.
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Brandon L.:

@Lakeisha Baker maybe some honest communication about your expectations and goals for your transaction with a few real estate agents will be more productive as opposed to "try out different REALTOR's"
It is important to be respectful of a professionals time to "try out" is not being respectful, it's being wasteful because you don't know what you are looking for but want to try them out to find it.
Make a list of what is important to you, and take 5-10 minutes to speak with agents over the phone or in person about it.
Normally an agent will let you out of the contract if they feel you are not a good fit for them, but ultimately the contract is between you and the broker, not the agent. The contracts shows that you are serious, and weeds out those who are just looking to "try out"
Take a step back, gain some clarity and focus on what you want, find what you want, then proceed with the contract. If you have any other questions about the contract feel free to ask.
Thank you for your insight, I will definitely take your advice. Have one question, how do I know if I’m dealing with a broker and not an agent?
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Charlie MacPherson:

@Lakeisha Baker I pretty much agree with @Jeff Copeland, but I'd suggest a slightly different approach.
Talk with the agent about your goals and strategy. If you plan to blast out lowball offers, this is the time to tell him, because that may well mean that you're not a good fit.
For example, in my neck of the woods, properties sell on average at over 98% of asking price. If your strategy is to submit dozens of offers at 70% of asking and hope for a lucky break, you'll be wasting a lot of that agent's time.
Then ask him to go with you to one or two properties and get a feel for each other. If all is well at that point, I'd consider signing an exclusive buyer's broker agreement with him.
However, I recommend that you discuss the territory and length of time that it covers. If you're willing to go farther away than your agent is, you should specify the geography in the agreement. It also needs to be time-limited, but renewable. A 6 month trial period isn't unreasonable.
Thank you, I do agree 6 months isn’t that long and I would have time to really get a feel for what I really need a want from my realtor.
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Russell Brazil:

An agent whose time is valuable will only work with you if they are the only agent you are working with. Only agents whose time isnnot valuable will work with you knowing you are working with multiple agents.
Also, many states require some sort of written agreement per law, even if for a short period of time. Maryland and VA both require written agreements per law.
Omg!!! I’m in va, I didn’t know it was required by law to sign a contract with a realtor. Is there a required length of time for the contract?
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Kyle J.:

@Lakeisha Baker It varies by where you’re at and the laws and local customs of that market. As you can see from other responses, in some states, it’s actually required by law. However, in my state, I have worked with many different agents from different offices in various cities/counties and never even been asked to sign an exclusive agreement with an agent. So it just depends.
Thank you, I’m learning so much right now.
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Cassi Justiz:

I have heard of a handful of high volume investors who work with more than one agent because it's hard for one agent to find enough deals for them. Depending on the investor and agent, some people will do a take on the buyer broker agreement and do it on a per property basis instead of a time frame. It probably isn't something you can do without a really favorable history with a brokerage and agents, but it's something to keep in mind for the future.
Thank you, I’ll keep that in mind.
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Ozzy Sirimsi:

Someone who knows what they are doing most likely will pass that offer, but you can basically find a number of newbie realtors and you can work with them per property basis.
Thank you, I’m a newbie investor but I don’t want a newbie realtor. We both can’t be learning at the same time lol.
2 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Colleen F.:

You can always call the listing realtor to show properties. You don't need to sign an agreement for a long time like 6 months. You can sign for a shorter length of time and you can exclude deals you find yourself offline.
Thank you, I was wondering if I did sign a contract with a realtor and I found a deal off market would the realtor I’m on contract with get a commission?
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Daric Myers:
@Lakeisha Baker
I don't think I would ever sign with just one agent for all the reasons above. If one shines over the rest you may consider using him or her on the front end as the back as an incentive to show you awesome deals in the future. It will cost you a bit more, but a great agent is hard to find sometimes, so it's good to try and keep them happy.😎✌️
Thank you!
0 Reply
Lakeisha Baker
OP
Rental Property Investor · norfolk va · Member since 2018 · 26 posts · 10 votes
7y
Originally posted by @Shaun Morgan:
My wife was a realtor and she says that signing a per property agreement is the best way to go in this situation. It protects you from a bad situation if the deal goes bad and it protects the realtor doing that deal so they can get paid. It is a win win for both. You just have to sign more contracts with them since it is a per property agreement.
Thank you, I like that idea.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.