Should I sign a work agreement with realtor?

Question

Hi BP friends! I'm a newbie investor, in California, looking to to invest out of state. I'm looking for agents to work with to buy my first real estate property using BRRR method. I started calling agents in Dallas today and the 2 agents I spoke to both wanted me to sign a work agreement, meaning I will have to pick solely 1 person to work with. Is is possible to ask them if I can get an idea of property listings they have on hand, and then once we are ready to start viewing properties I can sign the document? I feel like I don't know these agents well enough or their expertise to commit to one this early on.

Please advise, and if you know of super star agents in Dallas or wholesale agents, please let me know. Thank you.

Please advise, and if you know of super star agents in Dallas or wholesale agents, please let me know.  Thank you.

Steve K. · Answer

@Kate Lee Every state is different so I don’t know how it works in TX, but here in CO the agent/client relationship goes like this: unless there is an agency agreement in place you are a technically a customer and we’re not supposed to advise you or advocate on your behalf. Once the agreement is signed you become a client and we can advise you. I usually meet with potential clients , perhaps show a property to them or have an initial consultation if they’re remote in order to make sure it’s going to be a good fit before entering into a binding agreement with them. The agreement can be customized as well for example an agent can write in a clause that if you’re unhappy/ want to work with someone else then the agreement can be terminated with something like 72 hours notice (first agent would probably have “procuring cause” on any properties they’ve showed you already), or the client can work with one agent for one type of property/ a specific part of town and a different agent for a different investment goal. You can also refuse to sign anything and try to work with multiple agents but their level of commitment to you will be equivalent to yours with them. Again every state is different but in Colorado we have to provide a form “Definitions of Working Relationships” as soon as we start working with someone and we’re supposed to have an agency agreement signed before writing offers/ advocating on a clients behalf. I’d recommend finding the right agent and committing to them but don’t be afraid to ask for any additional clauses to the agency agreement that make you feel more comfortable with the arrangement.

Tevis Verrett · Answer

Dear Kate,

As a realtor doesn't want to waste their time  with noob investors putting in lowball offers in a constricted market-it is understandable why they will want $$ upfront to work with you.  My thoughtful advice, know your market, and market is local.  What are the schools, what is the gentrification? what are the rent pressures? what is the industry.  You become the SME (subject matter expert) and then weapons go hot, execute.  If you want to have a realtor do your heavy lifting in due diligence, then prepare to pay bit.  I personally dont use realtors unless I am jumping into new markets.  I know what is going on, and excecute on the weakness that I can identify.  My 0.02

Michael Helfant · Answer

@Kate Lee - I'm also an investor friendly agent for many out of state investors, although in SE Michigan. That type of contract is pretty common, although we don't always require it. Generally, I'll get a feel for if a client is serious pretty early on, and setting up an MLS search in investor friendly markets using investor friendly criteria isn't all that time consuming. If you're preapproved, have clear criteria, and are honest and direct in your communication, it will work out for all parties. If the service is good enough, you'll want to work with that agent anyway. From the agent's perspective, though, I understand the risk and unwillingness to "waste" time if you aren't sure a buyer is truly serious.

Come time to actually submit an offer, we HAVE to have that form signed to officially represent you, so at some point it does need to be signed. I'd hop on a call with a few agents that understand the process and are familiar with the different markets - You'll learn pretty quick who is the best fit for you.

Dustin Allen · Answer

@Kate Lee

If that was their opening stance, they likely don’t want to spend any time until they have a signed agreement.

If you’re just looking to see what’s out there, I would look on Zillow or Homesnap and search around on your own.  It doesn’t really matter what listings the particular agent has, they are going to look at the same mls that feeds all the info to the consumer facing sites. When you have a better sense of what and where your are looking at, you can decide on what agent you want to use. I don’t recommend asking for an agent through Zillow or any other consumer site. They will just connect you with whatever agent is willing to pay for your information.

Lucia Rushton · Answer

@Kate Lee As an Investor Friendly agent, I personally, and I think most of us on BP, spend quality time educating new Investors. This is both a time commitment and a vested interest commitment. Setting up a MLS listing (although one with certain criteria - requires a concierge level service) is minimal time; but driving to see property (DFW is not a small city) takes time with pre-research, scheduling time with you, post-research, etc. We want to ensure that this is a mutually beneficial relationship.

If you would like to work with an Agent that does not require a commitment, be prepared to get a lower quality of service (possibly) and as always my comments here are "in my opinion".

Best wishes,

Ana Marie B. · Answer

I wouldn’t sign the agreement. Plenty of realtors (quality ones) our there who don’t require an exclusivity agreement. I’ve never signed one and have worked with wonderful realtors out of state who hustle.

I’ve usually interviewed mortgage brokers first and have asked them for realtor recommendations (if you don’t know any in the area). Just my $0.02.

James Swanson · Answer

Hi Kate, I live in Roseville Ca and I just purchased my first duplex in Texas. I used Paul Blair. He is a realtor in Dallas and I absolutely loved working with him. He is very responsive and looks for properties that fit your criteria. He doesn't just send you 500 properties a day like some of these realtors do. I'd highly recommend reaching out to him.

Paul Blair · Answer

Hi, local Dallas Broker here, I have never used a buyer agreement in 20 years of selling in New York, Los Angeles, and now TX.  I find them to be a deterrent to the initial relationship.  If you find you like the agent and the agent is doing a good job you should continue the relationship.   However if you have this agreement in place an no longer want to work with the agent you will have to ask them to cancel and it's a whole ordeal.

I do find it more common here in Dallas that agents ask for these buyer agreements.

Wale Lawal · Answer

This is common for a realtor to ask for a buyer's agreement. This protects the agent's time and lets them know you are serious. I would recommend finding an agent that meets your criteria before signing anything. Good Luck!

Josue Vargas · Answer

@Kate Lee

Knowing you are an out-of-state "prospect buyer" and looking to buy  most likely distress properties, it will take more effort for an Agent to do what you want.  Their time is valuable.  They don't know you, you don't know them, therefore show them proof you are a serious buyer and can actually have a good chance to close on a property.  Pre-approval letter with a lender will be great specially if you are looking to buy distress properties and asking for a superstar agent.  Pre-qualified letters are good, not great.  Most agents don't want to spend time with people who don't know and are a long shot, specially in this crazy market with a lot of offers and buyers paying over the top asking price to secure their offers (its a sellers market, not a buyers market).  In Texas, like @Steve K. said, you are a customer without an agreement and you are a client with an agreement, meaning with an agreement they have "fiduciary" duties to you and you will be properly represented.  That said, do not sign an agreement until you know them, have video conferences with them, be prepared.  Do not just look around and have one or two phone conversations and expect a superstar agent to work for you without an agreement and no commitment from you.

Good luck.

Should I sign a work agreement with realtor?

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