Is It Time to Introduce Buyer Representation Agreements?

Signing a contract when representing sellers and listing a property is second nature to all real estate professionals. An agent would never list a property without a contract, right? So, why do so few agents require a buyer representation agreement? It’s not standard practice because it can be a difficult conversation to have with buyers.

In a 2022 November session at the National Association of Realtors® NXT Conference in Orlando, Adorna Carroll, president of Dynamic Directions, Inc., offered training to real estate agents on buyer/seller representation.

For buyer’s agents, getting a signed buyer agreement requires a careful conversation about the amount of time you will be spending with your buyers to find them their dream home. Yet rather than propose a signed buyer agreement, agents often do this work without a signed agreement, keeping their fingers crossed that the buyers won’t act without them or with a different agent.

The next time a homebuyer approaches you for assistance in finding their dream home, have them sign on the dotted line. “I recommend you tell them, ‘There are certain things that I need to cover here so we can mitigate your risk and we can manage mine,’” she said.

Putting together a process for buyer representation

There are several classes that you can take to guide you in how to approach buyers when requesting they sign an exclusive buyer agreement. Some that Carroll recommends are: Accredited Buyer’s Representative course (ABR®), the Seller Representative Specialist course (SRS) and the Real Estate Negotiation Expert certification course (RENE). Enrolling in these courses and earning these certifications will elevate your skill set and reassure buyers that they are working with a seasoned professional.

But once you’ve acquired the skill set to attract buyers, what do you include in a buyer’s contract? How do you write one? And most importantly, how do you get buyers to sign?

According to Carroll, there are a few key points that every buyer’s contract should cover:

• What the agent can do by law.
• What the agent can’t do by law.
• The agent’s business routine.
• A start and end date.
• Payment guidelines.

Some buyer’s contracts include termination fees, but not all do. Whether or not you decide to include a termination fee will be largely based on personal experience. Some agents require termination fees for any expenses they forwarded on behalf of the buyer in the search process.

No exceptions

Using a buyer representation agreement is important whether you are working with buyers you know, like family, friends or colleagues, or complete strangers.

It may be easier to get known clients to sign on the dotted line, but for some reason, agents are least likely to ask them to do so. In reality, these known clients probably make up a large percentage of an agent’s client base.

Asking unknown or new clients to sign a buyer’s contract has challenges as well. Clients may not yet feel comfortable signing with an agent they’re unfamiliar with, and that is OK. You don’t want the business of a buyer who will be difficult to work with. However, if an unknown client does sign, then you have a set of parameters on which you can build a relationship with them. Allow them to ask questions about the process and spend time with you in your office so they feel assured in their decision to sign with you.

Your time is valuable, and a signed buyer representation agreement ensures that your value is recognized. #

Florida Realtors® buyer agreements

Florida Realtors® has several contracts designed for working with buyers in different relationships. Here’s a list of some of the ones that are available.

• Exclusive Buyer Brokerage Agreement–single agency (EBBA-6sa): This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, single agency representation with a buyer and provides for a retainer fee.
• Exclusive Buyer Brokerage Agreement–transaction agency (EBBA-6tb): This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, transaction agency representation with a buyer and provides for a retainer fee.
• Exclusive Buyer Brokerage Agreement–no brokerage relationship (EBBA-6nr): This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, no brokerage agency representation with a buyer and provides for a retainer fee.
• Exclusive Buyer Brokerage Agreement–transition from single agency to transaction agency (EBBA-6tn): This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, single agency representation with a buyer and provides for a retainer fee, with a right to transition into transaction agency.
• Showing Agreement (SA-3x): This form may be used to create a buyer’s commission agreement based on a one-time showing of property.

Click here to find a list of all the contracts Florida Realtors provides members.

The benefits of using a buyer representation agreement

The National Association of Realtors® put together a video discussing the benefits of using a buyer representation agreement. Here are some takeaways:

Buyer representation agreements are a win-win proposition for both real estate professionals and consumers. They assist in building trust and a mutually beneficial relationship by promoting transparency through up-front conversations, and provide clarity regarding services consumers can expect to receive, as well as how their real estate professional will be compensated. This transparent practice is crucial for consumer education during one of the biggest and most complex transactions many make in their lifetime.

When meeting with a buyer who may be unfamiliar with buyer representation agreements, be prepared to articulate the many benefits of these agreements, such as how they:

• • Ensure the client has a loyal advocate representing them in the transaction.
• • Provide clarity on the services a consumer should expect from their agent, and how the consumer can partner with the agent to conclude a successful transaction.
• • Understand the agent’s representation and duties owed to the consumer, including whether the agent may be serving as a dual agent.
• • Allow consumers an opportunity to ask questions about how their real estate professional is being compensated, including who is responsible for the payment for their services.

For resources to help facilitate these important conversations during a buyer representation meeting, including articulating your value and explaining how compensation works, check out competition.realtor for infographics, informative articles and more.

Audrey Lee is a content writer for HW Media.

This information is meant as a guideline and not legal advice. Always enlist the help of an attorney when crafting and executing contracts. This article originally appeared on RealTrends.com