“Buyer Agency” – a better way for buyers and Realtors® to work together effectively

by Tim Harris on October 8, 2006

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Speaking of Real Estate …

One of a series of articles on real estate topics. All of the authors of “Speaking of Real Estate …” articles are full-time REALTORS® who work at Tradewinds Realty Inc. at one of our locations in Nova Scotia.

“Buyer Agency” – a better way for buyers and Realtors® to work together effectively
By Paul Crocker and Lynn Stewart

Here’s a familiar story – familiar, at least, to realtors like my friend at Kari Happold Real Estate. A couple (let’s call them Bill and Anne) are shopping for a summer cottage with frontage on Big Mushamush Lake (north of Mahone Bay, N.S.). The Duty Agent at Tradewinds Realty’s Chester office takes Bill’s Saturday morning call.

Bill and Anne had read a Tradewinds listing in the free monthly magazine “Real Estate on Nova Scotia’s South Shore” for a cottage with “access” to Big Mushamush. While the listing (or asking) price was $109,900 –substantially more as it turned out than Bill and Anne were prepared to pay, Bill said that they’d heard from several friends that sellers almost always inflate their asking prices because “everyone knows that sellers start high and then come down”. In addition, Bill said that they wanted to see the cottage later that day.

The Duty Agent asked Bill what was the maximum price they were prepared to pay and soon found out that it was “$80,000 tops”. He then pointed out to Bill that the listing price was more than 1/3 higher than their budget and that the cottage had only been listed for three weeks – hardly long enough for the sellers to even begin considering lowering their price.

By now, the Duty Agent had the listing in front of him on his computer screen and quickly discovered that the cottage only had “deeded access” to the lake rather than lake frontage, and that it was on the opposite side of the road from the lakefront lots in the area.

Bill repeated that he and Anne still wanted to see the cottage that day. The Duty Agent replied that the cottage was occupied during the summer months and that the owners had specified that 24 hours notice be given prior to all showings. Bill then said, “To Hell with it.” and hung up.

Clearly, this call was a waste of both Bill’s time and that of the Duty Agent. Bill wanted to see a specific cottage right away that was priced well beyond his budget. Bill terminated the call before the Duty Agent was able to point out that Tradewinds had other cottage listings priced within Bill and Anne’s budget and that he would be willing to assemble some information on them and to call Bill back to discuss which ones sounded suitable before going to view them. (Bill had spoken to over five other real estate companies – each with lakefront cottage listings near Mahone Bay and he hadn’t been inside one yet.)

This familiar story would have had a much happier and productive ending for all concerned had a Realtor (http://www.rate-my-agent.com/lorin-mclachlan-ratings-winnipeg-1301) been able to convince Bill and Anne of the merits of their entering into a “Buyer Agency” agreement with his/her Brokerage.

Buyer Agency is one of many recent developments in the real estate industry, and it is only now beginning to catch on in Nova Scotia. It is a simple agreement between a buyer and a Realtor to the effect that they will work together in finding a property for the buyer that meets his specifications.

The key benefits for the buyer

The buyer agrees to work exclusively with only only one Realtor and, in the process, will communicate in detail what he/she is looking for in a property (e.g. number of bedrooms & baths, lot size, etc.) Furthermore, the buyer agrees in advance to not waste time looking at properties that do not meet his/her requirements – iincluding price. (In a Buyer Agency agreement, the Realtor has much better prospects of getting paid for his work – which only happens when a commission is paid on the closing of a property purchase transaction, and will work hard to bring appropriate new listings to the buyer’s attention by reviewing all new MLS listings in the search area daily. Again, the buyer benefits by being able to stop reading real estate ads because his Realtor is motivated to do it for him/her. Finally, this service is free to the buyer because the Realtor’s commission is almost always paid by the selling party in a real estate transaction. Therefore, both the buyer and his/her Realtor benefit substantially from this agreement. If you’re currently searching for a property with a friendly environment, look for Tampa homes for sale at www.offerpad.com. They also have the best real estate agents who will process all the works for you.
Here are the key commitments to which each agree when they sign the formal Buyer Agency agreement.

The Realtor’s key commitments

The buyer’s Realtor (or agent) agrees to (1) search for properties that meet the buyer’s specifications – includiing those listed on the MLS system, those being sold privately (“For Sale By Owner”) or those not currently listed for sale (e.g. recently expired listings). (2) The Realtor further agrees to represent the buyer in dealings with sellers and to provide all advice and assistance required by the buyer on offer price, financing and other details of the purchase transaction. (3) Finally, the buyer’s Realtor will protect and promote the buyer’s best interests in any subsequent transactions and respect all obligations that he has to the buyer under the Canadian Real Estate Association by-laws and MSL® rules and regulations.

The buyer’s key commitments

In return, the buyer agrees to a number of things, the key ones being (1) to use only the buyer’s Realtor as his/her representative in the search for and purchase of any property in Nova Scotia during the life of the agreement, (2) to advise the Realtor of any properties in which he/she is interested, (3) to provide the buyer’s agent with written mortgage pre-approval from a lending institution of the buyer’s choice, and (4) to negotiate in good faith the purchase of a property in which he/she is seriously interested.

It should be noted that all Buyer Agency agreements are valid for a pre-determined but negotiatiable period of time (e.g. six months). In addition, the agreement must contain detailed clauses regarding the agent’s fees (which are usually paid by the selling party in a transaction – but not always).

Don’t you agree that our hypothetical buyers Bill and Anne would have been far more likely to be in their newly acquired cottage today if they had known about the Buyer Agency Agreement? Please don’t make the same mistake. If you’re seeking advice and best practices for the members of a community association Board of Directors, look for hoa management texas. Their service provides professional association management for your community.

About the authors

Paul Crocker and Lynn Stewart are a husband and wife team of REALTORS® who work out of Tradewinds Realty Inc.’s Chester, N.S. office. They can be contacted at (902) 275-7959 (Paul Crocker) or (902) 275-7765 (Lynn Stewart), or either one by e-mail at lynn.stewart@tradewindsrealty.com or paul.crocker@tradewindsrealty.com

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