Silicon Valley Home Buyers: Should You Use a Buyer Broker Agreement?

Should you use a buyer broker agreementIn many parts of the U.S., a buyer broker agreement is normally used between home buyers and their real estate agents, much like a listing agreement is used between sellers and theirs. It’s not so common in Silicon Valley, though. Often home buyers are a little spooked at the prospect of signing a contract for buyer representation & compensation.

My Realtor colleague and blogosphere friend, Elizabeth Weintraub, has a great article on this topic on About.com,  Buyer’s Broker Agreements & Buyer’s Broker Contracts, in which she explains the various types of buyer contracts and agreements which are commonly found around the country. The one which is used the most, if one is used at all, is the “exclusive representation” (which again is similar to a listing agreement, which is also usually an “exclusive representation agreement”).

Why use a buyer broker agreement?

Why would anyone want to use a buyer contract?  Whether you’re the consumer or the agent, the answer is pretty much the same: to have options. In my real estate practice, I do not request nor require a buyer contract as long as my buyer client is willing to purchase something from the selection available on the multiple listing service (MLS).  If that isn’t enough, though, then we chat about the buyer’s options.
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Agency Question: “Do I have to buy the house from the Realtor who showed it to me?”

Graphic image of a house for sale and a Realtor who showed or previewed the house (person with briefcase)Awhile back, I got an email from someone who’d seen a Silicon Valley house she liked from a real estate agent whom she didn’t like.  She wondered, “do I have to buy the house with the Realtor who showed it to me?”

The answer, of course, is not always clear. It depends on your relationship with the agent.  It may also depend on why you choose to buy the home with someone else’s assistance, if you did so.

(1) Your relationship with the real estate agent

Did you sign a buyer broker agreement with that Realtor? If so, you may owe a commission to her if you buy the home through someone else.

Did you write an offer on that property with the agent? If so, again you may owe a commission to him if you hire someone else to help you purchase it afterwards.

In many cases, there is a verbal contract that you are working with a Silicon Valley real estate professional exclusively. This does “count” too but it may be easier to change your status if it’s a verbal agreement.

(2) Problem agents, problem consumers.  Do you want or need to break the relationship with the Realtor who showed you this or other homes?

Is your agent giving too pushy? Doesn’t seem to know what he or she is doing?  Too hard to reach?  Too busy to really assist you? Or doing something else that you perceive as a “red flag”?  Sometimes agents should be fired.

You most likely can break that agency relationship with a problem agent if it’s a verbal contract only and you haven’t written an offer on the property in question, but you must  clearly tell him or her that you are not going to continue working together and then have a gap in time between then and when you do write an offer on the home (at least a few days, if not a few weeks).  You can break the agency relationship verbally or in an email or both, but it needs to be clear so that there is no misunderstanding. A call or voice mail followed up by an email would be very clear.

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