I am currently working with a broker who has mentioned having me sign a buy broker agreement. I am hesitant to do so because as I understand it, it would be like me asking the broker to sign a agreement saying he can only work with me and no other buyers. Am I wrong to assume this? What are peoples thoughts on buyer broker agreements from an investors stand point?
As an Investor & Realtor it depends and varies depending on your location. While Licensed in MS as a Realtor and where I own rental property I as an agent looked for my own investments via the MLS, LoopNet, CoStar, etc (MS is a non-disclosure state). The investor I represented was from out of town and did sign a Buyer Agency Agreement with me(6-9 months contracts). I closed a deal(no problems encountered). My broker requested of all her agents that we not work with Buyers without a Buyer Agency Agreement(not an Exclusive Buyer Agency Agreement). BAA are commonplace in MS (at least the Jackson area) and are easy to terminate prior to the end of the contract. EBAA(I've never had or asked a Buyer to sign this type of contract) from what I'm told and understand are not as easy to terminate prior to the end of the contract. From the Broker/Agent stand point, he/she is asking the Buyer, hey If we are working well together, respect my time and do not work with another agent at the same time for the same type of property. Most credible agents and BAA's will let the Buyer terminate the contract at any time in writing. No one wants to work with a client when the relationship is just not working. So from my stand point, it doesn't hurt you to sign one.
Now I work in the DC area and my Broker here has the same request, that we not work with Buyers without the BAA signed. I have a seasoned investor that has one signed with me to help him find a property he is seeking. He is local(in VA) but does not know the DC market well. So far so good, but he can send me an email tomorrow and say, Hey it's not working and I want to terminate(his contract is signed until the end of March). The contract would then be over. In DC the term of these contracts is much shorter than in MS.
I had family over for the weekend from the Columbus, OH area and we just talked about BAA because they are working with a Realtor for a Primary Residence and an Investment Property and have worked with the Realtor for over a year without a BAA. They felt they were not commonplace in that area, having been through the process before with other agents.
Ask around your area to determine if most credible agents require it. I feel it (singing the BAA) respects both sides from their time stand point and professionalism that is expected. I hope this helps.
Brokers love them of course. I wouldn't sign one simply because you never know when someone else will send you a deal. I am however very loyal to my out of area agents. If I find something on my own I call them and have them preview the property and then decide whether to make an offer. I use them to write that offer. If they find me something and later I decide to sell they get the listing. I currently work with 3 agents. I use different agents to negotiate different types of property.
As an agent I don't use them myself and even if I did I wouldn't work any harder than I do now. I think they have little benefit and are more trouble than they are worth. They are not used much in Norcal despite the push for them a few years ago.
Just have the agreement state it applies ONLY to homes that he/she shows you. That allows you to work with other brokers should this agent be unavailable, etc.
@Reuben Stone Sounds like they are doubting your relationship. I see that as a sign of weakness. That broker needs a pipe line so full that it wouldn't even phase him if you did or didn't do deal with him. The only thing from you is to be fair, if they bring you a deal, you should probably go through him.
I have a pretty good relationship with the broker. I could see why he would be worries about doing a bunch of work and then no getting compensated for it. Some people just don't think about that stuff. How should I tell him that I do not want to sign a buyer broker agreement but I still want to continue to work with him? Simply put it "Mr. Broker, I am more than happy to work with you on deals that you provide me but i'm an investor and I need to keep my options open because I simply don't know when a great opportunity will arise?" Something like that?
The agents I've actually worked with do not require it when I say I won't sign an exclusive agreement and will agree to base the buyer-broker agreement only on the properties they have shown me. I don't work with them if they insist on an exclusive agreement as it means they can literally do nothing for you, put you on a back burner, and if you buy something, anyway, even a FSBO, they still get paid.
I know this is an older thread but came up in my searches. I was just talking to my agent tonight and he brought this agreement up. We are both newbies, but he's already been working his tail off to help me find properties, and if he brings me a good deal I have absolutely no problem with him getting paid for it.
But the one thing that does concern me and please correct me if I'm way off base, but if I were to send out yellow letters and such and then find a deal on my own that way, would I then have to bring that agent in on the transaction if I would normally just be using a real estate attorney to draw up the contracts?
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