You're working to overcome the challenges of representing buyers in a listings-centric business, yet a few hurdles remain. Namely, buyers have yet to be trained by the real estate industry to work under agreements as sellers do. How far can you go with a buyer's representation agreement to protect your time and expenses, and should it include FSBO properties that your buyer finds?

One of the real estate industry's biggest acts of tomfoolery is the amount of time and effort that agents are willing to spend on uncommitted buyers. It's even more surprising that many agents continue to represent buyers without the protection of an agreement - and that is with the full support of their brokers! One would assume that brokers would be intensely interested in their agents' productivity as it is the foundation of their profitability, but the nature of independent contracting has produced some peculiar notions of what does and does not constitute good business. Many brokers prefer that their agents take their chances with procuring cause hearings than insist their time and efforts be protected with a buyer's representation agreement.

The result is inconsistent service models across the nation which make it more difficult for brokers to insist that buyers be represented with the same professionalism as sellers. However, despite such impediments, some brokers are at least trying to break new ground and hold it when it comes to protecting their agents' time and efforts.

"Part of my job as a broker/owner of our company is business development," explains Maryland exclusive buyer's broker Lenn Harley. "The hardest part is not getting the business in - deciding when to accept a client. Those we do not accept are those:

1. Who want a lot of information about us but won't give financial info about themselves.
2. Who "bad-mouth" Realtors in general or their last Realtor specifically.
3. Who have recently been working with another Realtor but won't provide a release or copy of the retainer agreement. We don't want to work for nothing.
4. Who want information but aren't "ready to commit to an agent yet."
5. Who are just "starting their research" and when they know enough about real estate, they will be ready.
6. Investor buyers who want to write 50 percent offers in a 110 percent market.
7. Buyers who refuse to sign the agency disclosure on the first visit.

"In short, I have to separate the buyers (90 percent of inquiries) from the lookers (10 percent)," she continues. "Our agents' time is very valuable. I don't want them to waste it on non-serious or troublesome folks."

What makes a buyer serious to Harley is one who is willing to sign a representation agreement.

"In Maryland, if an agent follows the law, it is not possible for a licensee to work with a buyer as a buyer's agent for very long without a written agreement," says Harley. "Our agents don't work with buyers for more than one day without a written agreement.

"Maryland also permits "presumed buyer's agency" and many agents work under this umbrella until the buyer is ready to write a contract. We do not. It is too limiting. You can open the front door, but that's about all you can safely to without a representation agreement.

"Since we are quite amenable to short-term agreements, there is no logical reason why a buyer wouldn't retain us," she continues, "particularly since we point out that a "written agreement" is required by law to perform the duties of a buyer's agent."

Why the hardline? "Most of what most buyers know about real estate they learn from our agents on tours and conferences," explains Harley. "That's part of what they pay us for. If they're going to buy a home during the term of our agreement, we're going to be paid."

How do Harley and her agents work?

"Our procedure is to meet with the buyer for a tour of homes," outlines Harley. "We provide them with the agency disclosure after introductions, and then we know. If they resist signing the agency disclosure, we can sign it and still show homes that day. Our agents are very friendly and knowledgeable and the buyers will usually come around and sign the disclosure before the tour is finished. At the end of the tour, we give the buyer another opportunity to sign the agency disclosure. If they do, we proceed and provide them with a buyer's information packet which contains the retainer agreement and we advise that we will need the retainer agreement signed for our next tour. Most buyers will sign it then.

"If the buyer still refuses to sign the agency disclosure agreement by the end of the tour, we wish them well and that is the end of the relationship. At that point, we don't even provide e-mail or telephone information. Once we have met with a buyer, if they want more information, it involves agency-level service, and we don't provide agency level service without a representation agreement. If a buyer won't sign an agency disclosure, they certainly aren't going to sign a retainer agreement. We will not work without one. This is very, very rare, as I believe that most folks are serious buyers and their time is as valuable as ours."

Harley says she protects her agents where FSBOs are concerned, too.

"Our retainer agreement specifically requires our buyers to inform us of any FSBO homes in which they may have an interest," says Harley. "If a buyer wishes to strike that part of the agreement, they won't be working with us. I wouldn't have our agents out there working to assist a buyer and then have the buyer buy a FSBO without us."

Published: September 11, 2002

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