Agreement with Buyer's Agent
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Anonymous
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I am looking to purchase a townhome and have contacted a RE Broker. Broker has sent me a "Exclusive Right to Represent Purchaser Agreement" which has a compensation clause that states as below:
1. Broker's Fee shall be earned, due and payable under any of these circumstances whether the transaction is consummated through the services of Broker or otherwise 2. Broker's Fee shall be 3% or per MLS listing plus $295. If the seller or the seller's representative offers compensation to Broker, then Purchaser authorizes Broker to receive such compensation and the amount of such compensation shall be credited against Purchaser's obligation to pay Broker's Fee. Broker may retain any additional compensation offered by the seller or seller's representative, even if this causes the compensation paid to Broker to exceed the fees specified above. In no case shall Compensation be less than the fees specified above. My main concern is regarding (1) as I am considering potentially buying directly from the owner from whom I am currently renting. I do not think it makes sense to pay a 3% commission to buy the home which I am already renting for 2 years. Is this a standard clause with all Brokers? #2 may be fairly standard but in light of #1 I want to just validate if this is the norm. Thanks |
Anonymous
| If the property you are looking at is not on the market, how about approaching the seller directly and not getting a broker involved? A real estate attorney can help you with the paper work. If the property IS on the market and the seller has agreed to standard broker commissions, find a buyside broker that will re-imburse you some of the fees. I have heard that real estate attorneys can do this (act as a broker then credit a portion of the fee) or a discount broker like Redfin. I agree with you, 3% is definitely much too much in this situation! |
Anonymous
| You do not need a broker to buy or sell a property. You can use a standard real estate sales contact from online and take that to a title company. |
Anonymous
I don't think this is the norm. We've worked with multiple agents in various states and DC and never signed such a document. |
Anonymous
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OP here. Thanks for the feedback. Sorry I have not been clear.
We are not sure if we want to buy the townhome we are currently living in as we want to go to a better house if possible. So we are searching for something better, but if we do not find anything else we would then try to buy the house we are currently living. So we are looking for a realtor who can help us with looking at other homes but if we do not find anything else we want to buy directly from our current owner without involving a realtor but with help of a real estate attorney as others have mentioned. Based on the comments I am even more preplexed 1. Is it common to have a signed agreement to engage a realtor if you are looking to buy? 2. Is it common for the agreement to state that the buyer is responsible for paying 3% of commission regardless of whether a seller pays such a commission or not? The agreement states that as long as I buy something by June end I am responsible for paying 3% regardless of whether the property has been shown to me by the realtor or not. First time home buyer and appreciate the feedback. |
Anonymous
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I did not sign such an agreement with my buyers agent- and I loved her. She was great to work with, and the sellers listed her as the reason they chose my offer over 2 others on the table when I asked. I wouldn't have signed such an agreement- I met with two others who would have required that and both would have been a bad fit for me. I lucked into mine by meeting her at an open house.
I would say search around a bit more and find an agent that doesn't give you pause or make you question their practices on dcum. Good luck! |
Anonymous
No buyer's agent is allowed to submit an offer on behalf of a buyer without a written agreement, so either PP is wrong or her agent was very, very wrong. OP, if you are worried about buying the home you currently rent, I would just specifically exclude that property from the buyer agency agreement. Then you don't have to use your agent to manage that transaction and you can do it without brokers if you want, and the % commission that you might have to pay out of your pocket would ONLY be in the case of a different FSBO where the seller is NOT cooperating with buyer's agents and you would want her to represent you. RE the additional compensation: occasionally a listing will offer a bonus to a buyer's agent, e.g. "$1,000 bonus to selling agent for offer before year end!" or something like that. |
Anonymous
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You do not need to sign a document to get help from a buyers agent. The buyers agent, of course, will want you to. That language would make me nervous too.
1. Why do you need to pay $300 PLUS the seller will pay 3 percent. The 3 percent from the seller is enough. I would not sign it. 2. I think the better agents do not ask you to sign these. 3. Did you tell this person that you were considering buying the place you are living in now? That is probably why clause #1 is included (making sure he/she gets slice of the pie PLUS $300 from you). 4. If you don't sign it and this person refuses to help you, there are other RE agents that can help you. 5. If you decide to sign it (DON'T do it) PLEASE make sure it has a clause stating you can cancel at anytime; make sure it has an expiration clause (1 month?); and consider excluding the house you are in from the deal. 6. Finally, some of these contracts state that even if it expires or you cancel, they will still get 3% and the $300 if you purchase within a month of the expiration/cancelation. Watch that wording too. |
Anonymous
| Thanks so much for all the information. This is very helpful. |
Anonymous
I signed it just before we were putting offer in- I was not locked into it for the months prior that we worked together. Ie, I did not sign it before seeing houses/etc as some companies tried to force. |
Anonymous
The $300 is just a throw away admin fee - agents trying to be cute claiming the need to reimburse for paperwork, utilities, etc, as if 3% isn't enough! We had a terrible experience with two buyside agents. I'll stop there... OP, you're definitely right to vet this stuff. And spend time finding the right agent! 
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Anonymous
| If you do sign it, definitely ensure you have a time limitation on it. |
Anonymous
| Contracts aren't contracts without a time limitation. |
Anonymous
| Don't let that scum bag take 6% |
Anonymous
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Read this website. www.lawyers-realty.com
Mentioned on here a few months back. Informative read about brokerages. |