Buyer representation Agreement.... Is it needed?

Question

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?

Russell Brazil · Answer

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.

Jonathan Pflueger · Answer

@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!).

Mike Cumbie · Answer

@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.

Sean Cole · Answer

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.

Caleb Heimsoth · Answer

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.

Vamshi Ananth · Answer

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.

Russell Brazil · Answer

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

Buyer representation Agreement.... Is it needed?

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