So I am looking to buy some real estate as the market has come down significantly (although it could go further). I have been looking for about a year and have not pulled the trigger yet.

Looking to buy a duplex/fourplex (owner occupy) or SFH (hopefully deep discount) in one of the more popular areas for young professionals near the major universities in the area. Went to look at a temporary rental this week and was asked by the agent (who owned the rental) if I would consider using him as the Buyer's Broker. He seemed to know his stuff and is very knowledgeable in the areas I am looking in.

He asked me to sign an "Exclusive Buyers Broker Agreement" which basically locks me into using him for a year. I have never been asked to sign one of these before. He says if it does not work out we can "rip up" the agreement BUT there is nothing about severability in the document. It just seems like a lock-in.

Has anyone ever been asked to sign one of these? He says that if this agreement is in place he is free to negotiate the pest price for me, otherwise he really represents the seller. And of course he would work "harder" for me.

Are there any real benefits to doing this? Apparently this also covers any FSBOs I might find (he gets a cut) or if any of the previous sellers I have made offerer to last season (two deals fell through) come back this season. It covers all property within specified areas.

I generally dislike Realtors and what they stand for btw. I hate participating in the scam but I seriously need a place to live and am tired of renting (rent is quite expensive in the area) and property values in the target areas are reasonable.

Thoughts??

i don't see any advantage for you in this. for the broker, it's a great deal.

I wouldn't do it.

My experience has been good. In both cases, I signed the agreement after spending a couple hours looking at houses with the broker in question. No more than a six month lock. What do you know about this guy? Do you feel good about working with him? Have you looked at any houses with this broker? You want to see you the dynamic works.

A decent buyers broker will work a little harder for you. If your guy has short sale experience and good references, it might be worth a six month deal. Short sales are an art to get through the system.

In both cases, i got access to local sites with enhanced listing information. I actually found my houses myself from the search criteria I set up in the sites.

Dorian, I would not sign because you are already being told BS. It is not true that the agent only represents the seller the unless you sign an exclusive buyer broker contract. If the agent represents that they are acting as your agent to find you a suitable property, the agent is held to a fiduciary duty based on verbal representations. In California, an agency disclosure is required in advance of any contract or agreement. The agency disclosure clearly shows who the agent is representing.

The real reason the agent wants a contract is to lock in his commission so that if another agent is the procuring cause of you finding a property, the agent still gets paid. It also prevents you from using any other agent. I would never advise a client to sign a 1 year exclusive contract, and you are correct in that the agreement is hard to break short of cause. No way would I trust someone at their word, and would only agree to a 30-120 at most- and that is with agents I trust.

Whenever signing an exclusive buyer broker contract, be sure an include an addendum that outlines the duties and level of service the agent is expected to perform. For example, you might want to require the agent to provide you with weekly listings for all properties within your price range. You might also want to require a minimum amount of showings.

As to buying a house, your first stop should be getting pre-approved for a loan and shopping lenders. Talk to at least 3 lenders, and keep a master file that contains documentation that is needed to procure a loan. Obtain a credit report with FICO scores upfront, and provide the lenders you talk to with a copy to work with rather than have each potential lender pull a credit report. Although the loan officers will want to pull their own credit to get an automated underwriting decision, most competent agents can give you a quote based on your credit and income/asset documentation. When comparing rates and costs, only compare loan related costs and not other costs such as escrow and title. This is because some agents might estimate third party costs differently, and the third party costs should be about the same with all lenders. So, again, only compare rates and loan fees.

I've had good luck with a broker referred through redfin: http://www.redfin.com/real-estate-agents

To get listed as a partner on redfin they have to agree to not be pushy and allow you to 'just look' at houses with no pressure, as redfin is tailored for the internet generation. This worked great for me as I am just starting to look.

Don't do it; his loss. My Realtor has looked at over 100 properties with me since last October and she hasn't made me sign anything.

C4

Any updates on the septic system for your lot?

Not yet...I'm doing a FOIA request next week to see all county land records for the property. I need to sit down and see what my options are for an alternative septic system. I'm planning to do a new perc test in August and then put it up on the MLS.

I found out recently that county water/sewer has been run a little closer to the lot since I bought it...yay! Also, I think I need to hold it for a year to reduce my capital gains liability.

IMO, buyer's broker good, weird contract bad.

N/NIA

Do it yourself. You don't need a buyer's agent. If you do go through with it I'd make sure it only covers houses he brings to your attention.

Thanks for the input.

Yeah, the whole thing seemed distasteful. The thing that bugged me the most was when he gave me the line "Signing this contract lets me know your committed to buying."

I told him I am not "committed" to buying anything and just want to find a place to live and a deal that makes sense for me. If I don't find what I am looking for I am not going to buy just because I sign a document.

He e-mailed me a copy of the document this morning with his signature on it. I am not going to sign it. I don't see how this benefits me.

Do_the_Math - I thought you might find this interesting. He specifically gave an example that if I would sign the contract if he knew that I was going to offer say 20k over the market price he would be able to tell me. If I did not sign he said that he would not be able to because it benefits the seller. From what you indicate this is outright wrong. I hope so. It seems wrong. I have worked with agents before with no contracts and they told me what they thought a realistic offer price would be or what I could get the property for.

Is there any benefit or drawback just dealing with listing agent and not having someone "on your side'?

Someone can correct me if I'm wrong, but if you use the listing agent they are still going to want to charge you a fee. Realtors are a dime a dozen...move on to someone else.

Is there any benefit or drawback just dealing with listing agent and not having someone "on your side'?


I would do this. Its what I did. The listing agent will act as as transaction broker for you and simply help the transaction move along. With the ability to look at most properties on the internet, just do your search and call the listing agent to ask to see the property. I personally don't see what a buyer's broker brings to the table.

Quote:

I personally don't see what a buyer's broker brings to the table.

For troo...I found every property we wanted to look at. My agent simply let us in to look around. After 100 or so properties, I felt she had actually "earned" some of the money, however, she didn't find us a single home of interest.

Dorian, that is a load of BS. An exclusive agreement is not needed to establish fiduciary duty. Furthermore, the agent is supposed to give you an agency disclosure that discloses the agents relationship and duty before you sign an contract (such as an offer to purchase). If the agent is the seller's agent, he still has to disclose the relationship and duty at the time of the offer and can establish a dual agency if it is acceptable to both the buyer and the seller.

As to working with the listing agent, it is allowable, but many agents avoid it because it is difficult to represent dual interests. However, if you do deal directly with the agent, be sure and obtain full compensation and agency disclosure. If the agent isn't willing to cut the commission for handling both sides, you are better off having your own agent represent you.

From what the agent has represented to you already, I would not deal with the agent at all whether exclusive or otherwise.

You need to just get your license..or when you find your own deal find a realtor that will write the offer and rebate you the commission (they keep 1%). If you really find a guy bringing you short sale/ under market "deals" then yeah a contract like that *might* make sense

As to getting agents to rebate commission, I do not recommend that you do this on a FHA loan. It is the equivalent of the agent (who has a financial interest in the transaction) of reimbursing a portion of the down payment. However, if the agent is a family member and it is fully disclosed, the commission can be gifted.

I do not recommend going to the trouble to get a real estate license for one transaction, but I do recommend being informed and understanding real estate laws (and laws affecting real estate licensees) in your state. There is a lot of information available on the internet, just try to focus on official sources. You can also take homebuyer education classes. As to representation, look for ethical professionals that you can trust. Check them out thoroughly, and get everything in writing.

Also, do your homework, leg work, and consider getting tax and legal advice before your sign anything.