Should I sign an exclusive agreement with agent?

Question

Hello Everyone,

I want to do fixes and flips, Nowadays, I connect with an investor-friendly real estate agent, and we have a good and informative conversation. He wants me to sign an Exclusive Buyer Agency Compensation Agreement. As I plan to purchase a property within one month, I hope to not just work with one agent, so that I can expose as many deals as possible. So I doubt whether I should sign, or it's a kind of rule that I have to sign if I work with agents to find the deals.

Thank you so much for your advice!

Frank Pyle · Answer

I agree that part of the NAR settlement requires agents to have a comp agreement signed prior to showing a house.  They risk their commission if they do not execute one.  Personally, as a buyer I would limit the time frame until I had a solid relationship with the realtor.  The department of justice filed a request to eliminate the comp agreement requirement due to possible anti trust violations.  The judge rejected it.  We will see where it goes from here…

Marc Winter · Answer

There is a set time for the agreement, so if you can't give 30--45 days for the agent to find you the right deal, or don't trust they can/will, then move on to the next agent.

By entering into an agreement with the agent they become your fiduciary, and as such will represent your best interests.  This has become increasingly popular after the suit settled 2024 with the National Association of Realtors regarding commissions and client representation.

see article:

https://www.cnn.com/2024/03/15/economy/nar-realtor-commissio...

Good luck!

Zachary Deal · Answer

Lots of great advice in here already and does vary from state to stat but, I think it is important to find an agent you trust and like and then allow them 30 - 60 days to find what you are looking for. As others have mentioned they will be putting a lot of time and effort into this so it is important to have an agreement that protects them as well and allows them to do their job. You can go the one property route but I think doing an agreement period is much more motivating for the agent (and will save you time, hassle, etc)

Benjamin Aaker · Answer

This is not unusual in the retail real estate agent world. The agent puts a lot of time into finding and showing you potential properties. This is a way to ensure compensation. You don't have to sign the agreement, though some state laws require an exclusive contract. If you don't sign, it's likely the agent will bring you less or no deals. If you do agree to sign, you can (at least in my area) specify in the contract that it is just for a particular property, or a particular location, etc.

Frank Pyle · Answer

The buyer comp agreement has to be a specific dollar amount or percentage.  It also states the term of the agreement.

Ken M. · Answer

I'm not an agent and I haven't read the NAR requirements, but I believe it commits you to paying a fee to the agent. If that is so, it behooves you to understand how much that fee is and when it becomes due. It is not a trivial thing.

Bryan Stengel · Answer

Hi Kmsuea, it all depends on your commitment to actively looking for and purchasing a property.  Signing an exclusive agreement with a real estate salesperson indicates to them that you are committed to finding a property.  Realtors often put a lot of time and effort into their job, which is why the exclusive signing indicates your commitment to compensating them as they get to you finding a property, getting into contract, and officially closing.  I would encourage you to sit down with a couple of real estate salespersons and choose one based upon experience as well as knowledge of the area.  I would also say that many real estate salespersons will not be committed to an investor that just tells them to send properties to them that fit their buy box and then never hear from them again.  You will get much further in your search by signing with somebody experienced in the space.

Griffin Malcolm · Answer

I would only sign something like that for specific properties unless you know you're getting good volume from a single agent. To me, signing a broad exclusivity agreement kills your bubble; you're now cut off from every other agent's network.

Of course, it has to be worth the agent's while to bring you a deal over someone else, so try and offer something of value like a finder's fee or, if you're flipping, the right to list the renovated house with the agent.

David Martoyan · Answer

@Kmsuea Abdei

signing an Exclusive Buyer Agency Agreement is common, but it can limit you to working with just one agent. If you want to keep your options open to access more deals, it’s worth having an honest conversation with the agent about your concerns. Some agents might offer flexibility, like a non-exclusive agreement, especially if you’re upfront about your plans to explore multiple opportunities. Ultimately, it’s about finding an arrangement that aligns with your goals without compromising your ability to discover the best deals. Best of luck with your flips!

Should I sign an exclusive agreement with agent?

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