Get it in writing!
A friendly competitor of mine spoke to me yesterday about a disturbing trend. Consumers do not realize that a contract with their agent protects them, as well as the agent. The practice of doing buyer agency without a contract has become common-place and it runs contrary to Realtor Code of Ethics.
He's a member of the Professional Standards Hearing Committee---which hears ethics complaints from the public and other Realtors, says that it seems as if many Realtors have never read the Realtor Code of Ethics and that, of those who have read it, far fewer keep up with its revisions.
It is a case in point that many buyer’s agents do not sign professional contracts with their clients. (Nearly all seller’s agents do.) There seems to be a perception that the relationship with a buyer client is somehow less important than one with a seller client.
Since 2004, Article 9-1 of the Code of Ethics states that Realtors “shall assure whenever possible that all agreements … including … representation agreements … are in writing in clear and understandable language.” So, while it’s true that the law does not require any real estate agreement to be in writing, if anyone says, these days, that they’ll work as a buyer’s agent without something in writing, they are in clear violation of the Realtor Code of Ethics. And the Code of Ethics is not something that members can pick and choose the convenient elements or abide by only those with which they agree.
If you are a buyer working with a buyer’s agent, do you have a contract? Is s/he accountable to you? Do you know what to expect from your agent? Is it in writing? Does your buyer’s agent use written contracts with their seller-clients?
"An oral contract is as good as the paper it is written on."
Rona,
I think the problem is due to many layers. First, I've found that buyer's agency as a formal protection category is still so new for so many long-time brokers and agents that they haven't all been fully educated on it yet. Second, I've found most buyers object to signing the document because they feel they want the flexibility. I cannot imagine working with a buyer client without a signed agreement, as it's a statement of mutual commitment to the process and to each other. Most buyers who have not been properly educated about the process fear being liable for paying their buyer's agent at the end of the transaction.
I have never asked a buyer to sign a contract. Other agents think I'm insane. They are right! But it always seems like a dangerous thing to do. I realize I am only going to hurt myself if I don't.
Most agents don't think it is necessary to have a buyer sign a contract. They are wrong.
They'll change their minds the first time they show up at the closing table to get their check and the attorneys say, "Um, why are you here? You're not getting any money ..."
Rona,
I agree with you. As a Realtor/Broker everything I do with a client is in writing just so there is no misunderstanding. I teach several homebuyer education classes for MAHA throughout the city and I tell all of the students that they need to interview and get to know their buyers agent before they start doing business together to ensure a good fit. And, last but not least, when agreeing to a Buyers Agency Contract the Buyer needs to be sure and ask for a cancellation clause, prior to any offers being made, in case things don't work out and they want to go in a different direction. I've seen to many Buyer Agency contracts with too long of a commitment, say one year or more, or no expiration date at all, which is very dangerous. Make sure you get your agent to write up a contract and make sure that you understand and agree to all terms before signing. And, last but not least, when in doubt have an attorney review your contract before signing just to be on the safe side.
Buyer Agency is not so new in Massachusetts. Exclusive Buyer Agency has been available to real estate buyers for almost two decades. Exclusive Buyer Agencies and their Agents do not list property or represent the seller side of a transaction. We (including Rona) are legally and ethically duty-bound to work in the best interest of the buyer side of a transaction.
Is it possible that the type of Buyer Agency mentioned above is Designated Buyer Agency? When most traditional real estate agencies and their agents abandoned Seller/Sub Agency in 2005, they adopted Designated Agency.
This type of agency allows a real estate agency to work with both sellers and buyers as clients. Is it possible some of these real estate agencies and agents haven’t figured out how to get the highest price for their seller and the lowest price and best terms for their buyer for the same property? Are consumers still confused after the real estate agent explains the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure ?
www.TheBuyerSide.com
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