Many new buyers are a little skiddish when a Realtor asks them to sign an Exclusive Right to Represent Buyer Agreement. What if they don’t want to be locked into working with just that Realtor? Can’t they just work with multiple Realtors?
For sellers, the answer to this question is pretty clear: After interviewing several Realtors and hearing their pitch as to how they plan to sell their home and why they feel they can do the best job, a seller will make a decision and then sign a Listing Agreement contract with just that one Realtor to be their official Listing Agent. But what about Realtors representing buyers?
It’s important to remember that buyers typically do not pay out-of-pocket for the services of a Realtor to represent them. Just like Realtors representing sellers, the Realtors representing buyers get paid from commission, so in other words if a buyer’s Realtor doesn’t find their buyer a new home and close on it, they do not get paid!
Here’s how Realtors’ commissions work: It is typically a percentage of the final sales price, agreed upon by the sellers and the listing brokerage within their Listing Agreement. Then, at closing, that commission is usually split 50/50 with the buyer’s Realtor.
With the possibility of never getting paid unless a home is found and purchased, it’s easy to see from the perspective of a buyer’s Realtor why they would want a signed Representation Agreement in place before spending time and money out-of-pocket (transportation costs for driving around looking at homes, MLS membership fees to have Realtor access to homes on the market for showings, etc.). In fact, some states have passed laws stating that Realtors must have a signed Representation Agreement before even being allowed to show prospective buyers homes.
On the flip side, of course, from the buyer’s perspective it can be intimidating and scary to have a Realtor you’ve never even met in person suddenly shove a contract in your face and ask you to sign it before you are allowed to enter the house you’ve already taken time off work to drive out and see.
The solution? Take your cue from sellers and vet your Realtor candidates! Ask them questions, fully explain what you are looking for in a home and where, get their feedback, ask them their game plan for finding you that perfect home, and if you feel comfortable with their answers, then you can offer to sign a Representation Agreement before going out and looking at houses. Or, if you’re still not quite convinced or hesitant for any reason but want to get started looking at homes, you could ask the Realtor to make the term of their Representation Agreement for a very short period — a temporary “trial run” just to see how it goes.
Good Realtors practice the Golden Rule: If you have already been talking to another Realtor in depth, or another Realtor has already shown you properties, we don’t like to step on the toes of fellow Realtors by trying to “steal” you away to sign a Rep Agreement with us instead of them. With that in mind, however, it is your responsibility to disclose that information and let us know about the other Realtor you’ve been involved with, especially if you have already signed a Rep Agreement.
Warning: Signing Representation Agreements with more than one Realtor could create a huge legal mess, as both Realtors would legally be entitled to the buyer agent’s portion of the commission when you buy a house. You would be held legally responsible for fulfilling both contracts, which means you would be paying commission for one of them out-of-pocket at closing.
Bottom line: Before just rushing out to look at houses with an unknown Realtor, or multiple Realtors one at a time, do your homework and interview Realtors either over the phone or in person. That way, you can sign a Representation Agreement with the Realtor whom you feel the most comfortable with, in confidence that they will find you the perfect new home.