Buyer representation Agreement.... Is it needed?

11 Replies

Being a buyer is it mandatory to sign a Buyer representation Agreement with your Real Estate Agent?  My agent suggests I sign it in order to work with him and for him to put an offer on a property.  Is this a common practice? 

 My concern is am I locking myself with a just one Real estate Agent to represent me for a set period of time... where I don't have the freedom to pursue other properties with other Agents? 

Has anyone signed such a document before? What are your suggestions on whether to sign it or not?

Hi @Vamshi Ananth ,

That really depends on the relationship you two are going to have. If you are going to be working with a bunch of agents and having them all give you a call when they find something, then don't sign it. Keep in mind though, the odds of you being the first call for any of them are pretty slim. I have plenty of investors who are the call after the initial group has passed on something that came across the desk. If you want to be the first call then sign one, but make sure it is the right agent for you.

Good Luck! 

Why would an agent want to work with you, if you are going to use a different agent to close a deal?  

Assume a scenario where I (the buyer) Identify the property I am interested and then ask the agent to work with me. The Agent is not doing any work before hand and not spending any time identifying properties. The buyer is dong all the driving and identifying potential properties.  Agent is just representing the buyer for that particular property and buyer is not locked in with a given agent.  

Originally posted by @Russell Brazil :

Why would an agent want to work with you, if you are going to use a different agent to close a deal?  

Assume a scenario where an agent values their time and wants to be compensated for that time like most people running businesses do.  If you dont want to work exclusively with an agent, then consider paying an agent per offer.  $300 per offer in the scenario you mentioned will probably get it done. BTW, 99% of buyers identify properties on their own these days.

@Vamshi Ananth

In your scenario you do not have an agent. Which is fine, however you have no one calling you with deals that pop up or advising you on contracts. You are your own agent. In which case, no don't sign one. If you want an agent to represent you and work for you, then they are most likely going to want a guarantee that you are paying them at some point. Most agents (That have had enough experience to get burned). are not going to run around and find you deals/negotiate prices/dig off market for someone who can just go around them and go right to the owner. I know I don't give out an address until I get one at least signed for that property.

Unless this is normal in your area I wouldn’t sign it. Like you mentioned it’s just not worth it.

300 bucks an offer is going to get expensive quickly.

Thanks all for the responses so far, It looks like signing a Buyer Rep Agreement is not mandatory and there can be other ways to work through and it all boils down to the kind of rappot Agent and Buyer have with each other.

Yes I agree. I do respect the Agent's time. But at the same time I do not think that the Agent get's to lock in a buyer with them for a certain period having no other options to work with.


Originally posted by @Caleb Heimsoth :

Unless this is normal in your area I wouldn’t sign it. Like you mentioned it’s just not worth it.

300 bucks an offer is going to get expensive quickly.

if you’re submitting lots of lowball offers sure then you should probably pay them.  But if I’m offering decent offers off of what I’m seeing then that shouldn’t cost you anything.

It's a 2-way street.  If you want to ensure that your agent will drop whatever they're doing to take care of you, sign the agreement.  If you're ok with them calling you back a day or more later because one of their clients who did sign an agreement called, then don't sign one.  When we're working with clients, we prioritize the ones who we know are going to lead to a payday.

@Vamshi Ananth

This really depends on the relationship you have with the agent in question. If you are a known closer, have taken the time to foster relationships, and overall show that you are a serious buyer I would guess, that more often than not, agents will not be asking you to sign any agreement. Remember, this business we call Real Estate is relationship dependent.

This presents a conundrum when one is new to the game or has not built up any credibility yet. When this is the case, the barrier to entry is great and it is incumbent on the investor to find a way to build that relationship or reputation. The best way I did this was to attend local Real Estate Meetups in my area. I put myself out there over and over again and eventually started my own Real Estate Meetup which has been one of the best things I ever did to help with my networking and relationship building.

Even with my limited experience I have never had to sign a Buyers Representation Agreement. However, I already had relationships with the Realtors I worked with beforehand and that is what got me in door and to the top of their lists (or at least close to the top!).