The Exclusivity Question Explained
Courtesy of Realtor.com
When are you committed to a real estate agent? That’s a good question to ponder if you’re shopping for a home, since you can’t just hopscotch from one agent to the next indefinitely. Still, if you’re in the very early stages of the home-buying process, it’s often unclear when you and your real estate agent are “going steady.” So when does exclusivity kick in?
As with all relationships, making assumptions on this without clear communication can end up awkwardly. So, we’re here to help you navigate this tricky territory. Here’s the deal on when you’re legally and ethically bound to your buyer’s agent—or, if you’re unhappy, how to consciously uncouple and move on.
Why agents demand exclusivity
Why would a buyer’s agent need to work with you exclusively, anyway? Because unlike most professionals who receive a steady paycheck, agents typically get paid only by commission—in other words, a cut of the real estate deal if it goes through. So when showing you properties, answering your questions, and negotiating on your behalf, a buyer’s agent is essentially working for free. As such, in order for him to devote the time and energy it takes to see this through, he’ll want to know you won’t bail and switch to another agent to get you through the final leg of closing—right when the first agent is expecting a sweet payback for all his work!
“As a Realtor®, we feel like we put a lot of time and effort into making sure you see properties,” says Lana Lavenbarg with Re/Max Ideal Brokers in Grants Pass, OR. “So if you go to someone else, we have just wasted a lot of time.”
Did you sign a buyer’s agent agreement?
Some agents will ask you to sign something called a buyer’s agent agreement before they start showing you homes. This is basically a contract between you and the agent in which you both agree to an exclusive working arrangement for a period of time, typically six months.
Once you sign a buyer’s agent agreement, you are legally obligated to work with that agent. So, it’s wise to read this document carefully. If you try to switch to a different agent during this period without canceling this contract, you could land in legal hot water.
“The first agent has the right to the full commission in mediation court,” says Beatrice Stambulski, an agent in Sherman Oaks, CA.
How to terminate a buyer’s agent agreement
Bottom line: If you signed a buyer’s agent agreement, you should stick with that agent if you’re generally happy with him. That said, if you’re unhappy with your agent, you are by no means stuck.
If you signed a buyer’s agent agreement and don’t want to continue your relationship, you can ask the agent to cancel the contract, says Lou Sansevero, a Realtor at Reynolds Realty Gulf Coast. Generally speaking, an agent doesn’t want to continue working with a disgruntled client. Here’s more on how to terminate a buyer’s agent contract.
What if you haven’t signed a buyer’s agent agreement?
If you didn’t sign a buyer’s agent agreement, you are not legally tied to that agent, and can move on whenever you please. That said, after meeting an agent more than once, some (less experienced agents usually) might think (or at least hope) you two are together until closing. To avoid such an awkward misunderstanding, it’s best if you voice your expectations upfront—ideally before the agent has shown you a home.
“Having an agent show you properties first is like putting the horse before the carriage,” says Rosanne Nitti, a Realtor with RMN Investments & Realty Services in Laguna Beach, CA. Instead, if you’re unsure about using his services, “Tell the Realtor you are ‘interviewing’ him.”
If you aren’t sure you want to stick with a particular agent after an initial meeting, simply let him know you are undecided. Then interview several more agents and decide on one that you like working with.
“We all have access to the same information, so it’s just a matter of who you are most comfortable with,” Nitti says.
“Once you’ve found this special agent, you should sign a buyer’s agent agreement to make it official. This means you can both move forward with confidence—which is important when you’re embarking on something as huge as buying a home.
“Buyer loyalty is always an issue with agents,” says Nitti. “You wouldn’t want to work for free, and neither do we. Time, effort, and even gas should be respected.”