Avoid Additional Costs with Your Buyer’s Agent
The real estate landscape is shifting, with new practices like mandatory buyer’s agreements becoming the norm. While these agreements aim to provide clarity and protection, they can also create unexpected complications.
Imagine signing a buyer’s agreement with an agent, then stumbling upon your dream home during a casual open house visit. This seemingly innocent scenario could lead to a costly mistake, potentially leaving you on the hook for thousands of dollars in out-of-pocket fees.
As the industry evolves, it’s crucial for homebuyers to understand the implications of these agreements and the potential pitfalls of going solo after signing one.
Contacting Listing Agents Directly
Visiting open houses on your own or calling the listing agent is a quick way to discover information and what you like and dislike. Be sure to register with the host agent and inform them if you are currently working with an agent. Keep your excitement in check, as the host agent represents the seller. It’s best to keep your intentions discreet, as anything you say or do can be used against you in negotiations!
Builder Homes
Creating your dream home is an adventure. Many buyers are surprised to learn that a builder’s role is very similar to that of a traditional home seller. Your buyer’s agent will represent you as a buyer and use their expertise to ensure you have the best possible experience and get the best deal. Many builders budget for a buyer’s agent commission regardless of whether you have one, so take advantage of my experience and understanding by following their policies when visiting developments.
For Sale By Owner
If you find a For Sale by Owner property, let your agent know so they can help you maximize the process. They have the expertise to make contact, negotiate, and ensure the entire transaction goes smoothly. Your agent can help you save money in the transaction and, more importantly, save you the headaches of managing the purchase on your own.
Example
When a buyer who has signed a written buyer’s agent agreement contacts another agent, it can lead to a complex situation regarding procuring cause and commission payments. Here’s how it might unfold:
The buyer signs an exclusive buyer’s agent agreement with Agent A, establishing a legal relationship and potentially agreeing to pay a fee for their services.
The buyer then contacts Agent B, perhaps at an open house or through another listing, without informing them about the existing agreement with Agent A. Agent B shows the buyer a property, and the buyer decides to purchase it through Agent B.
A dispute may arise between Agent A and Agent B over who is the procuring cause of the sale. This dispute would typically be resolved through arbitration by the local real estate board.
If Agent B is determined to be the procuring cause (for example, if they showed the property and facilitated the sale), they may be entitled to the selling portion of the commission from the transaction.
However, the buyer may still be liable to pay Agent A’s fee separately, as per their written agreement. This is because the buyer’s agent agreement is a contract between the buyer and Agent A, independent of the outcome of the procuring cause dispute.
In this scenario, the buyer might end up effectively paying two fees: one indirectly through the sale (which goes to Agent B as the procuring cause) and one directly to Agent A as per their agreement.
This situation underscores the importance of clear communication between buyers and agents, and the need for buyers to understand their obligations under a buyer’s agent agreement. It also highlights why agents should always ask potential clients if they’re already working with another agent to avoid such complications.
For more information, download our Buyer’s Agent Guide. You should be comfortable talking with a real estate professional how this works and your available options.