You’ve just starting look for properties and you find a real estate agent that is willing to work with you, but they produce an exclusivity agreement that prohibits you from working with other agents. Is that something that is normal? Does every agent ask you to sign this kind of agreement?
First of all, this is not standard operating procedure for most real estate agents. In addition to running the Castle Rock Funds, we opened a real estate sales division to handle our sales in the Tampa Bay area. We do work with several investors to not only find and sell property, but our in-house designer assists those clients with renovating the properties. It is rare that we would request a buyer’s agreement that included exclusivity, but there are instances where we would require one.
Not long ago, we had a very demanding client that requested some very time-consuming and, quite frankly, unusual work from our agent. As the size of the deal was over $2 million, we did all we could to accommodate the client’s requests. Our team spent countless hours catering to the client. We eventually found a perfect home for the buyer and, shortly before closing, the client started to find excuses not to close. Through some of our contacts in the area, we discovered that the client had been looking for homes with multiple agents and had entered into multiple contracts with multiple agents who were all oblivious to what the client doing. The client seemed to not be concerned with the deposits that they put down on the properties and all of the properties fell through.
This scenario is not normal, but it is one where if we ever were to work with this client in the future, we would require a buyer’s agreement with exclusivity.
Although the buyer’s agreement with exclusivity might be great for the agent, it’s rarely helpful for the customer. One of the reasons that we chose to start a real estate sales arm is that we couldn’t find realtors that wanted to actually work. Agents that we listed our properties with didn’t return calls in a timely manner and did a poor job responding to prospective buyers. Once an agent gets you to sign a buyer’s agreement, they might not provide you with the same level of service that you might get if the realtor new that you could walk away from them at any time.
All of this being said, signing an agreement with a listing agent is universal. An agent that lists your property will be spending money from their pockets on advertising and professional photographs. It’s only fair that they have some protection in order to recoup their investment.
In short, it is unusual for a buyer’s agent to request that you sign a buyer’s agreement. Whether you sign one or not is entirely up to you, but if you do, insist on a clause that allows you to get out of the agreement if they are not performing up to your expectations.