This blog is more directed towards buyers as opposed to sellers. After all, sellers must sign a listing agreement with a firm before their home is put on the market.
Buyers on the other hand, start their home search, probably online, and then venture out to view homes of interest in-person. Inevitably, the buyer will need to contact a real estate agent to gain access to those homes, unless of course, buyers take note of scheduled open houses and then visit those “open homes” without the assistance of a real estate agent.
It goes without saying, but yes, I’ll say it anyway, unless the buyer knows an agent they’d like to work with, there’s always this initial sense of tension between buyers and agents that don’t know each other when they first meet. This friction will even occur at open houses.
Take the following scenario. An agent is holding an open house and is anxiously awaiting the arrival of visitors. Upon entering the home, the buyers and the agent introduce themselves. At this point, one can imagine the thoughts going through each of their minds. Depending upon first impressions, the buyers could be thinking, “Gosh. I’m going to have to make this quick, this person is a little sketchy. In fact, I’m not quite sure we should be here alone with this character.” The agent on the other hand is thinking, “Gee. I wonder if these folks are already working with an agent? Wonder what their buying timeline is?”.
Let’s dive a little deeper into this scenario. First of all, the buyers are happily, I hope, looking for their next home and as such, are probably in a good mood, and have decided to visit open houses during their “free” time on a Saturday or Sunday.
Agents are working at open houses. In fact, good agents are ALWAYS working. What does working mean to real estate agents? An agent’s most important work activity is the continuous, day in, day out, 24×7 generation of leads. Without leads, an agent will not survive. Let me just rephrase this a bit – “Without the generation of quality leads, an agent will not survive.”
Let’s face it. If you work for a company and you are not part of their sales force, it is NOT your responsibility to generate a customer. Customers of your company already exist and your responsibility is to support that customer in some way shape or form. Your function could be billing, marketing, technical support, product support, inventory replenishment, administrator, research, product design, etc. etc. I’m sure you get the point.
As independent contractors working for themselves, real estate agents do not automatically have “built-in” customers. It’s up to the agents to generate their own customers to earn a living. No customers : no money.
It’s very important that we set that stage because buyers as mentioned previously, are looking for homes during their “free” time however, real estate agents’ main professional objective is to minimize the amount of time they work for free.
So of course, the agent will ask the buyers, either during the introduction or sometime shortly thereafter, whether the buyer is currently working with an agent.
If the buyers are already working with another agent, then all bets are off for the agent standing there in the flesh. A real estate agent is prohibited from working with a buyer who is already represented by another agent. However, if the buyers are currently unrepresented, then they are “open game” to the agent. The agent may start building rapport with the buyers and eventually take them on as clients.
Hence the reason real estate agents will at some point, ask the buyers to sign something. The first document or brochure, depending upon how it’s presented, is the Working With Real Estate Agents Brochure. This is NOT a contract. This is a document required by the North Carolina Real Estate Commission that explains how an agent may work with clients. That’s all, it’s strictly informational in nature.
The next document an agent will ask you to sign is a buyer agency agreement. This is where buyers get all “weirded out” and perhaps rightfully so. (Please excuse me a bit, I’ve never written nor said “weirded out” in my life but inexplicably, these are the words that came immediately to mind.) This document serves as a sort of employment contract between you and the agent. It lays out, amongst other items, the duration of the agreement, compensation the agent expects to earn, buyer’s duties, and the firm’s duties.
Many buyers will not and have no intention of ever signing the buyer agency agreement. Well, if the buyer, for one reason or another, is not comfortable working with that particular agent, then by all means, do not sign an agreement with that agent. Simple enough. I guess the main reason the buyer doesn’t wish to sign is because they don’t want to be tied to one particular agent – they want to shop around. Again, the buyer has all the right to do that. But buyers, keep in mind, as you bounce from agent to agent, you will continually be asked to sign a buyer agency agreement; hence the title of this blog, “Why do agents always want me to sign something?”.
And here’s why agents always ask you to sign. The buyer agency agreement is the only guarantee that an agent will ever get paid. And by the way, it’s not a 100% guarantee either.
Buyers who do sign a buyer agency agreement with an agent become a client of the agent’s firm with the agent having primary responsibility for following through with the firm’s duties. The signing also establishes a fiduciary relationship between agent and client. The client / agent become one-in-the-same and work together to successfully close on a home. And it isn’t until closing that the agent finally gets paid!
In an agent’s mind, a buyer who will not sign a buyer agency agreement may be an extremely low quality lead. Essentially, there’s a high probability that this lead will waste an agent’s time, money, and other valuable resources without ever buying a home from this agent. In essence, the buyer becomes a low priority for that agent.
Can you blame the agent? Why would anyone work for free?