What is an Exclusive Buyers Agent Agreement and Should I Sign One?
Exclusive buyers agent agreements are highly debated among professional Realtors. Some real estate agents would never work with a home buyer unless they sign one, and other buyer’s agents have never used an exclusive buyer’s agent agreement and would never use one.
What is an Exclusive Buyers Agent Agreement?
The answer to this question is fairly simple, but the contract you sign might be more complicated. Be sure to read any real estate agreement in full before signing and we already recommend consulting a lawyer for legal advice.
A simple exclusive buyers agent contract is an agreement between a home buyer and their Realtor that for a set period of time they will not buy any real estate of a specific category in a specific location without using the services of (agency) that Realtor in buying the property. It typically is also an agreement to compensate that buyer’s agent for their agency in the sale.
The 3 Basic Parts to an Exclusive Buyers Agent Agreement:
- Set period of time
- Agreement to compensate for help with finding a specific type of real estate in a specific location
- Agreement not to work with any other Realtor in finding the specified real estate
3 Reasons a Home Buyer Wouldn’t Sign an Exclusive
1. Time period is too long. Relationships can change. If the period of time set in the agreement is too long, the home buyer might feel trapped. Even if they like the Realtor, they could reasonably worry that the Realtor will stop serving their interests and working hard for them over a long period of time.
2. Compensation is too high, too risky. The vast majority of the time the seller offers to pay the buyer’s agent commission. In fact, some exclusive buyers agent agreements say that the buyers agent will accept whatever the seller is offering, while others put a hard number of the buyers agent commission, and so if the seller isn’t offering enough money to the buyers agent, it will be the responsibility of the buyer to pay their buyers agent the difference, no matter how high that amount might be. If you want to know the average buyers agent commission rates, we have done that research for you here. Keep in mind, while most homes listed on the MLS offer buyer’s agent commission, many for sale by owner homes do not.
3. Type of real estate or location is too general. The exclusive buyers agent agreement should specify the geographic location the agreement applies to and the type of property. The location and the type of real estate the real estate buyer is looking for should match the buyers agent’s expertise. Realtors are often experts within location and within a property type, not experts in general.
Example of an Exclusive Buyers Agent Agreement
Should I Sign an Exclusive Buyers Agent Agreement?
I’ve seen some exclusive buyers agent agreements that I wouldn’t recommend anyone sign. The level of risk to the home buyer is dependent on the specifics. If the period of time is short, there is less risk. Also if the compensation is tied to a specific location and specific type of property, that reduces risk as well. Finally, if the buyers agent agrees to either take the sellers offered commission or at least, take a reduced commission if the seller isn’t offering any, that makes an exclusive agreement more reasonable, in my opinion.
Are there Top Buyers Agents that Don’t Require an Exclusive Agreement?
It is important to say that just because a top buyers agent doesn’t require an exclusive agreement, this doesn’t mean they are willing to work with buyers who are trying to use the services of multiple real estate agents for the same reason at the same time. Be honest with the real estate agent you’re talking with, especially if you are asking them to work on your behalf in good faith, without a signed exclusive agreement. Kami Price, Principal Broker licensed since 2004, has helped hundreds of home buyers find their next property and is one of the top buyer’s agent specialists in the Portland metro area. She does not require that her clients sign exclusive buyers agreements, but if she is working in good faith with her clients, she expects the same in return. Kami would love to setup a no obligation consult with you today. Chat with the bot on this site or call her office direct at 503-773-0000.December 30, 2022