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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?
On new construction homes, the agent has to be with you and sign-in with you the FIRST time you visit the builder's homes. If not, the builder will not pay your agent. If you sign an exclusive with that agent, you may be on the hook to pay their commission if the builder doesn't pay.
I do think it's a good idea to have an agent represent you when buying a new home. Builders write their own contracts that is slanted heavily in thier favor. A good agent will know the differences, know what's important, and counter out the terms to make it a more reasonable contract.
Different areas have different customs on whether they expect an exclusive or non-exclusive agreement. The biggest difference is that if you don't like your agent, you're somewhat stuck with them if you sign an exclusive agreement until that agreement expires. If you have been working with this agent for a month now, you should have a good feeling if the fit is right for you.
Before signing enything, read through it carefully and ask questions if you don't understand. It's so important to understand what you are signing up for, and most people don't.
A buyer's rep agreement protects both parties. (At least, ours does.) It puts in print the understanding between the parties as to what responsibilities each has to the other. (Just like any contract, really.)
It sounds like you're happy with the work your agent has been doing for you. As stated above, the biggest difference with working with a builder rather than a resale is that the builder has their own contract written by their attorneys representing their interests, and negotiating on some of the terms of that to protect your internests, as well as price, will need to be done. Also, as said, the builder has to know on first visit that you are working with an agent. Sometimes the agent has to be with you, but absolutely you must tell the builder's rep that you are working with an agent and give their name. This varies not only from region to region but from builder to builder.
As long as you are happy with the agent's work thusfar, there's no reason not to sign.
A builder's rep, by the way, may or may not be a licensed agent, but in either case (and most especially if they ARE a licensed agent), they are there to represent the builder and the builder's interests, not yours. Which is as it should be - the builder knows they need their own representation and has hired someone to provide that.
I use buyer agency agreements. The most important things for you to read and understand are 1) what is the agent being compensated by the MLS for the homes as most buyer agency agreements ask the buyer to pay for any deficits; 2) The length of the contract. Don't tie yourself into an agent for a year or something crazy. Mine are 90 days. 3) Is there a clause that allows you to terminate the relationship easily? 4) What is the length of the protection clause, meaning how long after termination would you own commission if the agent found you the property.
The only reason not to sign one is if they are so slanted towards the agent. The agreement should be relatively fair and reasonable. Meaning if reasonable people read it they would think it is appropriate.
I know there have been some threads in the past about what agents do for a new construction purchase. What would the expectations be past the negotiation of the contract?
If she's a good agent and you trust her, there is no reason not to sign it. Many states require agency for the agent to work on your behalf or else they are considered a sub-agent of the seller. My state actually requires them so I have to get one signed every time I work with a buyer. They are designed to be mutually beneficial-The agent's time is protected with exclusivity and your buyer rights of confidentiality, loyalty, accounting, obedience, etc. are protected.
Builders won't pay the agent for any upgrades you choose; the basic house price is what the commission is based on. A good agent will still go with you to the design center to advise you on choices that are out of line for your area/market. No point in putting lipstick on a pig OR in being so cheap your house looks it (for future resale).
I have never bought a house without a buyer's agent (since that became legal where I lived) and I would not hesitate to use one again. As noted, you have to be comfortable with the agent.
Builders won't pay the agent for any upgrades you choose; the basic house price is what the commission is based on. A good agent will still go with you to the design center to advise you on choices that are out of line for your area/market. No point in putting lipstick on a pig OR in being so cheap your house looks it (for future resale).
I have never bought a house without a buyer's agent (since that became legal where I lived) and I would not hesitate to use one again. As noted, you have to be comfortable with the agent.
Very good point. We try to always to to selections with our buyers. We have experience to help the buyer choose which upgrades it is better for the builder to do and which could be done after closing and save them a lot of money. We've got our own referral network of contractors who charge much less than the builders mark-up.
My last two buys were new (in developments) and I dealt direct with the builders agent. I saw no need for a buyers agent. I know how to negotiate (I come from a sales/marketing background) and my lawyer reviewed everything before I signed anything.
My last two buys were new (in developments) and I dealt direct with the builders agent. I saw no need for a buyers agent. I know how to negotiate (I come from a sales/marketing background) and my lawyer reviewed everything before I signed anything.
Some people are totally fine on their own. It really is a matter of personality, skill, and desire.
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