Brokers’ opinions may vary on the best way to use buyer representation agreements. It’s hard to argue, however, against their crucial role in establishing rights and responsibilities between buyer agents and their clients.
The Accredited Buyer’s Representative (ABR®) designation course argues strongly in favor of written agreements, pointing out their significance in establishing mutual expectations, preventing misunderstandings and instilling loyalty.
In some states, agreements are required. Even where they aren’t mandated, some agents believe that language in the REALTOR® Code of Ethics implicitly requires one.
Buyer agreements are also an excellent risk management tool. If your agents have a firm grasp of what they should and shouldn’t do in various situations—and can explain this to clients—they’re less likely to invite complaints or litigation.
Common Hurdles
While it’s hard to punch holes in the value of buyer representation agreements, it’s easy to understand why many agents resist them. Various human emotions are typically at play, including:
Confidence. Agents may feel timid about explaining the benefits buyers gain by working with them. Of course, too much confidence can be off-putting to buyers, who want to feel center stage in the agent/client relationship.
Fear. Buyers and agents alike may experience a fear of commitment. Buyers think “I don’t want to be locked in,” whereas agents worry about a buyer tying up their time.
Agents also worry that asking for a signed agreement could drive buyers away, especially if agreements aren’t commonly used in their market. (If buyers are reluctant to sign one, agents may opt to offer a short-term agreement, a nonexclusive agreement, a trial basis or employ other strategies.)
Trust. Some agents say they’d rather trust their clients—that the best relationships are built on trust. However, how is trust established? Is it merely a matter of building rapport?
Or does establishing trust also entail demonstrating that you’re professional, knowledgeable and capable of helping buyers achieve their goals? That’s trust built on competence, which is fully supported by buyer representation agreements.
The ABR® designation course tackles each of these obstacles, and others, helping agents gain knowledge and skills in all aspects of buyer representation, including buyer agreements and the initial buyer consultation.
ABR® Perspectives
Each year, we survey ABR® designees to gain their perspectives on multiple topics, including buyer agreements. As a group, they have more industry experience (median of 13 years versus 8 years) and are more successful (median gross income of $76,700 versus $41,800 in 2018) than NAR members, as a whole.
While NAR’s member survey doesn’t ask about buyer representation agreements, anecdotal evidence tells us ABR® designees are much more likely to use one.
When asked about formalizing working relationships with buyers, 75 percent of ABR® designees indicate using some type of buyer representation agreement, predominantly an exclusive right to represent (67 percent).
Among those who don’t use buyer representation agreements, many concede, in verbatim comments, that they should be using one or are heading in that direction.
Helping Your Agents
If your agents would benefit from honing their buyer representation skills, consider supporting their efforts to earn the ABR® designation, starting with the ABR® designation course. The training is offered across the U.S., Canada, and beyond, as well as online. To learn more, visit REBAC.net /abr/course.
Marc D. Gould is senior vice president of Member Development for NAR, overseeing a wide range of professional development programs for REALTORS®, including the Real Estate Buyer’s Agent Council (REBAC). REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. With more than 30,000 active members, REBAC awards the Accredited Buyer’s Representative (ABR®) designation to REALTORS® who have completed the specialized education and documented experience in working with consumers purchasing a home. To learn more, visit REBAC.net.
The challenge is that the language needs updated in the Buyer agency agreement. It states the Buyer pays the commission. It needs to have language that the buyer’s Agent/Broker’s commission is paid from the proceeds offered by the Seller.
First time buyers especially have a hard time understanding how the money flows from the sellers side. And that the agent is actually working for them and not the seller since the seller is paying the commission.
They say the genius makes the difficult simple and the idiot makes the simple difficult. Leave it to a group of attorneys…
CommentA Buyers Agreement is also good protection against other agents poaching your client and/or eventual sale.
You are soooo right, Fred. I couldn’t have said it better. I would also like to see variations of this form made.
I find it hard to believe that “75 percent of ABR® designees indicate using some type of buyer representation agreement, predominantly an exclusive right to represent (67 percent)”. I’m not saying it’s not true as I don’t have statistics or done the research, however with so many realtors working with buyers and not having them sign an agreement, especially not committing their clients to pay for the sales commission, I don’t see the advantage for the buyer to do this.
I’m finally retired after many, many years in real estate, and I remember clearly the days when some companies wouldn’t share fee with agents who were honest enough to say upfront that they were representing the buyer, although common sense said that we typically wanted to take care of the party we knew most about, the one who trusted us and assumed we were taking are of them. The FTC survey in (I forget the year) said that a great percentage both of buyers and of sellers assumed we were taking care of the party we were showing the property to. Common sense finally reigns. Single Agency Realty Association (SARA for short) had a big part in this, along with REBAC.
Is there anyone left who remembers what was not quite “the good old days” when agency issues were very touchy in some states? Mary Sheridan, SARA founding secretary.
I also agree with Fred’s statement- docs lingo is out of date and misleading – all to often I get the response. – don’t want to be committed to anyone – yet they expect us to commit our time and energy at their beck and call – we should be able to charge for showings same as lawyers charge for consultations
The agreement needs to be rewritten. It is very hard for buyers to understand when and why they would be liable to pay a commission. There should also be a separate agreement for rentals-not included in a buyer agreement.