My Agent wants me to sign a "buyer's-Broker" agreement. go/no-go?

Question

So I'm searching for a Multi family property in Utah, I've contacted some agents and let them know I'm looking.  One agent, who I've worked with for a bit, send me an email stating they have an off market deal and that they've "Attached is the Buyer Broker Agreement so we can represent you and show you the property".  It goes for the next few months.

Its my understanding that if I sign the agreement I have to stick with that agent for the next few months and I can't purchase a property through another agent if another agent brings me a deal.  Is my understanding correct?  Should I sign it?  Would it be "bad form" for me to not sign the agreement sense they've been doing some work for me?   Thanks.

Also, I'm working with a property owner on a  "for sale by owner" on a deal at the moment.. would this agreement affect that deal.

Thanks.

-Ray

Cody Steck · Answer

In Utah, the BBA can be specific to a property. Make sure it has that property address on the form and you’ll be fine. If you don’t purchase that property, you’re free to not use that agent in the future.

Russell Brazil · Answer

You have a choice. Do you want to work with multiple agents, or with a single agent?  You also need to understand the quality of the agents you are working with. Unless you are some big time investor taking down 25 deals a year, a high quality agent is not likely to work with you unless you are working exclusively with that agent.

For instance, Im one of the top agents in the DC metro area.  Time is my most valuable commodity.  I simply can not sacrifice my time working with or for someone who is then going to close a deal with a different agent.  The agents who will work non-exclusively with you...their time is likely not very valuable.

Now if you were someone taking down 25 deals a year, thats a different scenario. And in that scenario...those guys are someone Im simply passing along an address to and they are buying the property site unseen for all cash.

Robert C. · Answer

@Ray Loveless, I have a lot of trust issues when it comes to signing buyer exclusivity agreements, so I'll share an opposing view. In my mind, there are a lot of conflicts of interest from the brokers' side. In a tight market like today, with fewer and fewer good deals available, how do you know a broker is putting your interests ahead of another client that they've worked with longer, or that has more money than you? Many of the top agents in my market are also investors themselves, and it's clear that they will sometimes take a great deal for themselves rather than pass it on to their clients.

I think trust has to be earned in both directions, and signing a piece of paper from the outset can put a damper on the future relationship. As an active investor, it can quickly feel inequitable when only one person is legally bound to be exclusive.

Whatever you decide to do, one thing I will say is that it's always best to be transparent. Bring up any questions or concerns prior to signing the agreement (maybe that can lead to a better understanding or different arrangement even). Also, make sure there is a reasonable termination clause or a hard expiration date.

Frank Wong · Answer

Hi Ray,

@Russell Brazil pretty much nailed the reasoning for the need to sign the agreement.  Especially in your case in which the broker sent you an email stating they have an off-market deal.  They want to know if you are serious.

Honestly, most top agents that make you sign the agreement don't care if you work with them for the full length of the agreement.  If you don't like the agent or don't mesh well they won't hold you hostage to the agreement.   At least I don't nor the agents  I know.  I always tell my clients upfront and in writing, they can cancel the agreement at any time.  Just send me an email wishing to cancel and end our relationship.

The agreement is more of a commitment by you to the agent because the agent is going to work for you.  They will find deals, create CMAs, dig for more info without ever getting paid a dime until a deal is closed.

Sam Shueh · Answer

That is fair for the realtor. He will do diligence show you properties. If you do NOT buy the home he identified you do not owe him anything. But many buyers have their own agenda often involving hardship on agents.

You can even tell him or put in writing that agreement is just that property.  You can work with other agents but most agents know each other. Once caught you can not find realtors to help you.

Cherie Orellana · Answer

@Ray Loveless you can have them write up an addendum to the buyer broker agreement  that excludes a deal you are already working on if you would like

Cherie Orellana · Answer

By law a buyer broker agreement needs to be signed once you make an offer to have in our files.  However the agreement can specify a specific address you are making an offer on and do a new one each time. Or there is also a non exclusive buyer broker form.  I don’t have my buyers sign one until an offer is made. I am confident they would stick with me and if they found something off market I definitely want the best for them.  That being said I have my own brokerage and not going off a larger brokerage rules. This agent may have a requirement with their brokerage as well. If they insist you sign one tell them you are also pursuing off market deals and alternative options  and are not comfortable signing an exclusive buyer broker agreement. However if their brokerage requires one you are happy to sign a non exclusive agreement. The other option is an addendum that specifically writes out alternative terms you and the agent agree upon.

Ray Loveless · Answer

@Cody Steck, @Cason Acor, @Cherie Orellana - This would be a "Exclusive buyer-broker agreement & Agency Disclosure".  There is no addresses listed on the agreement.  I've submitted an offer with them in the past but not on this specific deal.  I'm leaning towards signing the agreement sense they work with a larger property management company and have some good resources in finding off market deals... and also sense they've continued to send me deals.  I haven't heard much from the other agents.

Would this affect the "for sale by owner" deal I'm working on?

Thanks for the good advise!

Ray Loveless · Answer

@Russell Brazil, - Thanks, good feedback from the agent stand point.

Cason Acor · Answer

What @Cody Steck said. A good BBA will be for a specific listing. As long as you have that written out, you should be okay to solicit other properties from other agents. But also realize, a lot of agents aren’t going to want to work with you if you don’t sign a BBA, it’s pretty standard practice. Now would be a good time to brush up on Utah’s agency laws.

My Agent wants me to sign a "buyer's-Broker" agreement. go/no-go?

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