Q: If I sign a "Buyer Representation Agreement — Exclusive" (form), can I cancel it at a later date? –Igor, California
A: That depends. Every year, more and more buyer’s brokers require their clients to sign an exclusive buyer representation agreement before they invest lots of time and gas money into the enterprise of helping them house hunt.
Sometimes this is because the agent has been burned by disloyal clients seeing a home with them, but then writing the offer with their cousin the agent, or with the listing agent, in an effort to get a rebate.
Other times, it’s because the broker’s office requires it, or because the agreement (like the California form you reference, the "Buyer Representation Agreement — Exclusive" form) very clearly specifies the things an agent does and doesn’t do, and allows the buyer and broker to agree in advance to forms of alternative dispute resolution, like mediation and arbitration.
In other cases, agents simply use these forms as a convenient, logical entree to the discussion of how agents get paid, why it’s important for the agent to actually write the offer, and other details of the buyer-broker relationship, so that the buyer is clear on exactly how it all works (and many homebuyers are not clear on this at the outset!).
On my very first transaction, the buyers (friends of mine) decided to go window shopping at open houses one Sunday when I was going out of town. I offered them a stack of my business cards, but they said, "No, no, we’re just looking. We’re not serious yet." They went out and — pursuant to Murphy’s Law — found the home of their dreams.
Despite their expression that they had an agent, the listing agent wrote up an offer on their behalf. Immediately, they left and ran to call me in their excitement!
They were thrilled, and knew I would be, too — they didn’t have the faintest clue that, by writing the offer with the listing agent, they had essentially decided they would no longer be working with me. They were flabbergasted, dismayed and apologetic when I explained what had happened to them.
They didn’t get the house, so it ended up being a non-issue. But forever after, I informed my clients up front how real estate relationships and compensation worked.
Perhaps the best feature of the form you’re considering whether to sign is its flexibility. In the first paragraph, it allows you and your agent to enter start and end dates for the contract. I’d encourage you to start out with a very short-term agreement, especially if you have doubts as to whether this agent is "your" agent.
To satisfy your agent’s (realistic) concern about being used to show houses, and then you buying a house with another agent, why don’t you sign the first agreement with a very short term — a weekend, say, or even a couple of weeks.
That way, you can have a clear conversation that this is really a trial, relationship-building period for you both. Then, when you feel a bit more comfortable, you can sign one for a longer period of time.
Most agents I know who use these agreements agree that they would never want to work with a client who decided not to work with them, and they have a professional policy of releasing clients upon request.
However, I’d encourage you to negotiate and sign an addendum that gives both you and the broker a 48-hour exit clause. If either one of you feels like breaking up with the other, you give a notice. That would provide 48 hours for the disgruntled party to cool off and make an effort to work it out, but would not bind either of you unreasonably to someone you don’t want to work with.
Happy house hunting!
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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