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We've been looking at houses for a month or so now, with the intent of buying in early 2012. We've been working with one broker (who was a recommendation). This week she asked us to sign an exclusive buyer agency agreement. This means we will only be working with her.
Is there any reason we wouldn't want to sign it?
We are looking at a bunch of new construction (many of them I found on my own). But she has met us there and made us appointments and I assume will help us negotiate. Anything different I should know when working with an agent on a new construction home?
How long is the contract for and is there any mention of how the agreement can be terminated?
You may want to post this in the real estate forum as well. I don't have personal experience, but have read quite a few threads were people bought new construction with agents that did very little. While other agents do a lot (keeping up on progress of the build/inpsections/etc.).
I personally would not sign an exclusive buyer agency agreement, also known as an EBA. An EBA is designed to protect the agent, not you. There may come a time when you want to negotiate directly with a builder or a private owner, and the lack of a commission will be an edge for you in the neotiations. If you are an under an EBA, you will have to pay a commission pretty much no matter what.
As an agent, I am a believer in open honest discussion. If I can find you a house, or if you select a house in the MLS system of which I am a member, I get a commission. If I find a FSBO and negotiate a deal, I get a commission. But if you find your own house from a builder or a for sale by owner, why should I get a commission, and why should you pay a commission?
By the way, some builders cooperate strongly with the local agent community and will pay the agent a commission without an EBA. Toll Brothers comes to mind. They actively encourage us to bring our buyers and even pay agent bonuses to do just that.
So I would not sign an EBA. It simply complicates the relationship with the agent and limits your options. Furthermore, what happens if you sign a 6 month EBA and 3 months down the road, you decide for whatever reason you no longer want to do business with the agent? Now you are stuck.
The market is highly competitive and there are plenty of agents (like 99%), who will not require an EBA.
By the way, the lack of an EBA forces a buyers agent to work harder to find you a house. If there is no EBA protection for the agent, you can find a house at any time on your own and the agent gets nothing. So it is in the agent's best interest to get his butt in gear and find you a house before you do.
I've been involved in buying 4 homes over the years, always working with a realtor. i was never asked to sign an EBA, nor would I. As Marc mentioned, you have nothing to gain, it's only to protect the realtor.
i do think that if you are concentrating your search to one area, you should find a realtor that you like, and work exclusively with him/her. There's just no need to sign a piece of paper that locks you in.
I never signed an EBA but used a realtor when I intended to sell my old home/buy a new one several years ago. As it turned out, I found a FSBO that I liked and the lawyers handled everything. My realtor turned out to be pretty crappy during the sale of my old home so I can only imagine how awful it would have been if I had signed an EBA.
I guess the Real Estate agent that is writing about the EBA does not understand the "Law of Agency" it protects the Buyer as well and has true representation, Who pays the commission? Who Does the Buyers Agent Really Work For, Think about it.
I guess the Real Estate agent that is writing about the EBA does not understand the "Law of Agency" it protects the Buyer as well and has true representation, Who pays the commission? Who Does the Buyers Agent Really Work For, Think about it.
EBAs protect no one except lazy agents who feel they need legal documents to keep clients tied to them - clients who might otherwise dump them when they fail to do their job.
If you do what you are supposed to do - provide genuine value - your buyers will be loyal. Without attempting to lock them in with an EBA. I wouldn't dream of attempting to lock a buyer to an EBA. It is against the buyer's interest and decreases buyer choice and flexibility. It also decreases my flexibility. If a buyer gets unreasonable, I may want to fire him. In which case, I don't need an EBA complicating the process.
Freedom works best. The buyer and the agent should enjoy each others company, share common objectives, and associate freely and openly. If the relationship is healthy and working, it will continue on its own. It does not need a phony "Exclusive Buyer Agency" contract to make it work.
As for commissions, they are of course collected from the proceeds of the sale. But they are paid by BOTH PARTIES, NOT THE SELLER. The commission is built into the price of real estate and is part of the real estate market. BUYERS PAY THE COMMISSION JUST AS MUCH AS SELLERS DO.
When I hear an agent say something stupid like "Oh, don't worry, the seller is paying the commission, so you are getting buyer's representation for free", I really want to puke.
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