After perusing Zillow for what feels like an eternity, you finally find a few promising homes you would like to see. How do you go about setting up a showing? Instead of navigating through the difficult real estate buying process on your own, you realize you need representation from a real estate agent.
Now it’s time to call a few agents to set up interviews. As you are interviewing a friend of a friend’s second cousin, the conversation goes well and they drop a Buyer Exclusivity contract on the table without even showing you a single property. Should you sign the contract or run for the hills?
Let’s start by explaining what a Buyer’s Exclusivity Contract is. This contract is an agreement signed by the buyer that authorizes a licensed brokerage firm to represent the buyer in buying a home. This confirms the buyer’s commitment to work with this certain brokerage and agent. Not only is this agreement required by the Colorado Real Estate Commission and needs to be signed before looking at homes, but it is immensely important and is in the buyer’s and agent’s best interest to sign.
Agents work off of 100% commission and they typically spend numerous hours on the buyer’s behalf. This includes meetings, showings, searches, outreach, and much more. Without this agreement in place, the buyer could potentially go under contract with a different agent leaving their previous agent’s work in the dust.
Not only is it important for your agent to have this in place to protect their bottom line but it’s also in the buyer’s best interest to sign. This written agreement outlines the duty of the agent to act solely for the buyer’s benefit. With an agreement in place ahead of time, it takes out the guessing and is a point of reference to go back to come closing time.
But what exactly is outlined in the agreement? There are four main topics covered in the buyer’s exclusivity agreement.
The agent is running a business and works entirely off of commission. This first point of the contract ensures that the buyer will work exclusively with the agent during the length of the agreement. This protects the agent’s time and effort put into finding the buyer a home. There’s nothing worse than showing someone multiple homes only for them to go under contract with a different agent.
Length of Contract
It can take buyers several months to find the perfect home, especially in a hot market. Agents are more than willing to take the ride with their buyers for as long as it takes. In the agreement, there will be a term length that the buyer will need to work exclusively with the agent. This could be weeks, months, or even years. Keep in mind that similar to much of the real estate market, this can too be negotiable.
Having a written contract outlines exactly what percentage the agent will receive in commission. If you’re the buyer you will typically not pay any commission to the agent. The seller pays commission to their agent and the buyer’s agent. However; there may be a clause in there that the buyer may have to pay some commission if the seller’s agent does not pay the full commission. Make sure to read this section carefully.
Buyer’s Property Description
The last section outlines what the buyer is looking for in a property. It may include details such as price range, type of home (house, condo, land, apartment), and general location. For example, if you specify that you are looking for a home in Boulder, Colorado but then find a second vacation home in Steamboat Springs, Colorado you need to make sure your contract clearly states you will use that agent for your home search in Boulder only. Make sure you are as clear as possible in this section to avoid any potential breaches of contract.
While this contract is immensely important to sign upfront, make sure you have chosen the best agent that fits your needs. We always recommend interviewing a few agents before signing the contract. Here are a few things to consider when interviewing.
Read the reviews on the agent ahead of time. Platforms such as Google, Zillow, and Facebook display authentic reviews. These sites do not allow the agent to delete a review unless it is spam so you can rest assured that they do have happy clients.
That friend of a friend’s second cousin that you are interviewing may be lights out during your meeting but do they do business in your area or work in your price range? Take a look at their past buyer representation sales and see if they align with your goals. Just because your friend knows them and they have good reviews does not mean they are familiar with what you are looking for. Also, don’t be afraid to collect some references.
This may be the biggest and most important purchase of your life. You want to make sure you have an industry expert. Some things to consider are – Have they been in business long? Are they posting industry content regularly? Do they have a nice website? Do they communicate well? These are all things buyers should be looking for when hiring an agent.
When it comes down to it, reading the agreement clearly, negotiating the terms when appropriate, and doing your research are all key things to do before putting pen to paper. Once everything is in place and you feel comfortable, it is in everyone’s best interest to sign and start touring those homes you have been drooling over on Zillow.
At Lovato Properties, we always have our buyer’s and seller’s best interests at heart. We have helped countless buyers find the home of their dreams and we have amazing reviews to prove it. We want nothing more than to share our knowledge with prospective buyers as well as helping sellers maximize the sale of their current home. Reach out to our team of experts and we would be more than happy to schedule an appointment.