Buyer Agency Rep Agreement - Addendums

Buyer Agency Rep Agreement - Addendums

Snohomish County, WA · Member since 2023 · 7 posts · 4 votes
As an investor, I'm preparing to select an agent in Little Rock. I'd like to modify the standard Buyer Agency Representation Agreement in a couple ways, and am looking for feedback to identify if these amendments may be agreeable to an agent, and if so, what the unintended consequences might be to me as the customer.

First, I don't want to stand in the way of an agent earning 3%, but I don't want to pay for a shortfall. My addendum will state a rate of 3%, with a shortfall waiver for the difference between 2.5 and 3%. 

Secondly, I'd like to offer a price-reduction incentive. I'm aware that negotiating a price downward is reducing the income for my agent. I'd include an addendum providing a 10% incentive fee to my own agent, separate and distinct from base fee (and shortfall waiver), calculated as the difference between the lowest advertised price of the property and the final accepted purchase price. In other words, if the agent helps me get a price reduction of $10,000, they will receive an extra $1,000.

If I presented these addendums to you as an agent, would you be offended? balk? would it leave a negative impression on you? Are you open to negotiating the agreement?

Your thoughts are welcome.
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  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    1mo

    we have a min transaction fee for our buyer or tenant rep deals. When a buyer seeks to work with us they understand that we represent them to the best ability we can and fight for the best deal we can get for them, and that having the min transaction fee ensures we can continue to offer a high level of service and data to back our work.

    I'd also challenge you to rethink the mindset or correlation you have around "a good deal" and list price.  What if paying 20% over list and securing the deal allows to make 2x you goal return rate on the project? 

  • Snohomish County, WA · Member since 2023 · 7 posts · 4 votes
    1mo

    Thanks for taking the time to reply. A minimum transaction fee is another way to approach it. It's good to hear there are alternatives.

    I don't expect paying 20% over list will secure 2x ROI for my long term hold strategy, but good input to keep in mind. Over the weekend I got on the phone and started calling agents blind. My goal was to find someone willing to answer their phone, who really wanted the work. One person answered my out of state number on the first ring. Turns out he's a managing broker and motivated to negotiate terms of the buyers agreement that will work for both of us. Didn't mention the price-reduction incentive. Fingers crossed.

  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 546 posts · 456 votes
    1mo

    We (agents) should never be so easily offended by creative ideas. Honestly, I think you may be overcomplicating things a bit @Dawn Hunt. For me, as long as I'm compensated 1.5, 2, 2.5, 3% or whatever, I'm good. Depends on the buyer, the budget, etc. Just can't work for zero. Which can still happen after months of work due to the buyer moving, bailing, losing financing and so on.

    I don't need to be rewarded for getting my buyers a better deal. That's always the goal. Buyer and sellers get so hyper-focused on our commission on THAT transaction that maybe took 14-30 days to close. I'm not paid for just helping the buyer get under contract and see it to the finish line. I'm paid for my two decades of investing experience, market knowledge, expertise and so on. I wouldn't be super thrilled about a buyer's extra scenarios that may apply. Also, what if it took 2 weeks or 2 years to help you finally close a deal? That's the nature of our business. Sometimes the buyer can be really worth it and other times not so much.

    I get the intent but consider if you maybe missed a deadline at work or failed to perform 100% to your employer's expectations, would you think it is ok to refund some of your wages for the year or take a reduced salary next year? I would suggest if you believe the agent caused a shortfall or disappointed your expectations, you would just not use them again or refer them. That is far more detrimental to their business than asking for a discount on that deal's commission.

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