When a seller lists a home he/she signs a listing agreement which gives the agent an exclusive right to sell that home within a period of time – usually 3-6months.   During that time the seller and agent have a formal business relationship and other agents cannot tread on that relationship.   Until recently buyers and their agents had no formal relationship format.   Agents would spend hours upon hours showing a buyer property…using their valuable time and gas only to have that buyer on the spur of a moment have another agent – usually met through an open house when the original agent could not be with the buyer- write a contract for them.   The other agent “steals” the buyer having done very little work up to that point – all because there was nothing in writing formalizing the buyer/agent relationship.

Now all that is changed.  There is a form that we use called a “BUYERS AGENCY AGREEMENT”  and it is the law in the State of Missouri.  When an agent makes first contact they are supposed to have this document signed by the prospective buyer.   Many agents wait until they actually write a contract to have this signed or some will wait until after the first couple of property showings to get it -but by right it should be done right away.   Once signed, the buyer and agent have a formal arrangement and that buyer should not seek out another agent and the agent has then a fiduciary responsibility to the buyer.

Like a listing agreement this arrangement can be made for a period of time 3-6 months and for a specific home search.  Once a home is found, bought and closed, the relationship is terminated.  So signing such an agency is not a forever thing (although as agents we would like to think our clients will use us for their next buy/sell)!    One other thing this agreement does is to appoint a “first runner up” agent.  I like to present this as “if Miss America (primary agent) cannot fulfill her duties… the first runner up will take over for her”….most buyers think this is funny (it is) and understand the implications.   Most agents would need to be dying or dead for this to be invoked, but often if an agent has to be out of town the other agent can step in.    We had an example not long ago of an agent in our office having a stroke on a Sunday afternoon just before her open house.  She was found in the bathroom stall by another agent who was meeting with her client – a doctor!   All was saved and the agent was fine…but as she was being loaded into the ambulance she was admant that she needed to get to her open house!  As if!   We agents don’t bail on our clients easily or for nothing.

Buyers need to get serious and commit to working with an agent.   It is good for the buyer to have someone who is on their side looking out for their interests.  Buyers do not pay commissions in Missouri so it costs them nothing to have an agent on board helping them.   I worked with a family for several months and even told them about a home I was holding open because I thought it was perfect for them.   Suddenly they had listed their home with another agent and bought the house I had sent them to from that same agent.   So all of my work was for naught.  But I didn’t get the agreement from them.  I was newer in the business and didn’t feel confident asking.   Needless to say I lost about 750,000 in business between the buy and sell.   It will not happen again.   If a buyer doesn’t want to sign with you they are probably not serious about buying.

What I like to do is put a copy of the agreement in a folder along with MLS sheets of the property we are seeing the first time I take a buyer out.   I explain to them that I must have the agreement in order to work with them but I want them to feel comfortable with me first – especially if I do not know them- and I allow them to look it over and ask questions if they have any.  Then if they want to continue working with me we can sign it the next time we are together.   Most serious buyers are very happy to do so.

I bring all this up in this edition of my blog because I recently had a situation with buyers that called the office when I was on phones.  I always ask if they are working with an agent and the woman said no.   I have been showing them property and directing them to open houses for a few weeks and when we found a home they wanted to write on the husband brings up the fact that they had been working with another agent.  They had signed an agreement when they wrote a contract that did not go through but it was no longer in force…it was only for 3 months.   This was of course the first I had heard about another agent even though I had asked.   They did not have a buyers agency that was valid with another agent but the husband was feeling guilty because the other agent had helped them before…he wanted me to split my commission!   That agent did not show them the home we were getting ready to write on!  But I had to tell him, you must commit to an agent and work with them.

The agreement protects both the buyer and the agent…but it does help the agent by protecting them from fickle buyers.  Buyers need to understand that agents don’t get paid a cent until a deal closes.   So all the gas spent showing property and time spent is wasted if a buyer jumps ship and signs with someone else.   But if an agreement isn’t in force then it’s the fault of the agent for not getting one signed.