In Melina's response to Dean regarding dead horses:
"I hope you feel thoroughly chastised by the group for not having a buyer agency agreement"!
At what point in any real estate transaction does the seller contribute anything other than the deed and keys? And at that same point in time does the buyer offer anything other than consideration for the deed and keys? Is there really a difference in compensation being offered or extracted from a transaction that doesn't require somebody to pay for it, whether it's out of the seller's equity or just a kindness on the part of the buyer?
We use Listing Agreements so cooperating agents understand the playing field and responsibility of the seller and the amount of compensation offered for a cooperative buyer through our local MLS. We use a Buyer's Broker Agreement for the same reason with the exception we do not disseminate that openly as we do through the IDX Listing Information. In the past the only way a buyer could get <<information>> about a listed property was to call the listing broker or call a member (sub-agent) of the MLS. We don't do it that way any longer. Why? Because the WWW does it for us without the aid of a questionable Sub who is obligated to the seller's interest because of "agency relationship".
There is a great gulf between buyers/sellers and agents of both parties. It's the Listing Agreement and the Buyer's Agreement that keeps the representation segregated and at the same time allow negotiation to happen between the parties and their agents. If there is no Listing agreement then how does a buyers agent know they will get paid? If the buyer is not willing to trust there agent to do there job then how does the buyer's agent prove a procuring cause, after all the buyer only needs to beware? The only solution that guarantees payment is an exclusive right to sell agreement regardless of who represents who and to what degree representation is provided. However, when disagreement arises in regard to compensation owed for services a Buyer's Broker Agreement is the first document the Arbitration Officer wants to see subsequent to an MLS Listing Agreement! It's called good business to get your buyer's and seller's agreements in writing. Which brings up the real question! What does <<Representation>> mean??? I can understand what representation means to the seller, "Highest and Best Price". I can understand what representation means to the buyer, "Lowest and Best Price". Everything else is in the contract written by legal beagles. If you actually think about it, isn't representation the same for both parties, "how do I get the most for the least"? Remember the interest of the buyer and seller is how to get to closing with the least amount of aggravation. So who do you Trust!
We all want to lay claim to the self serving position, the commission is not an issue, even NAR claims representation is not determined by compensation. So where does the commission come into the scenario? It depends on who provides the funds to close? Last time I checked the only money on the table on the day of closing is the buyers. I've never known a seller to pay a dime out of their own pocket to sell a home!! I've seen them take less equity, but that's always been determined by the offer from a cooperating buyer. The issue boils down to the fact, is the seller willing to fork over a portion of the equity to get a buyer at the cost of a listing agreement or through their own efforts (FSBO). So how does a Realtor(s) get paid regardless of the amount of commission being offered or requested, regardless of whether there is a listing agreement or not? If there is no listing agreement then it's a FSBO, you are on your own. But if there is a listing agreement, then it all boils down to the Type of Listing we are discussing.
If the listing agreement is an Exclusive Right to Sell then the cooperating agent is protected by the MLS Agreement based on the information disclosed in the MLS. Now if the listing type is anything other than an exclusive right to sell, then the offer of compensation is determined by procuring cause and any agreements between the parties. I contend that a Buyer's Brokerage Agreement would be difficult to enforce if the listing is not an Exclusive Right to Sell agreement. I'm not saying that the agreement is not enforceable. But if the buyer claims that their interest was not being served with a provable explanation, then the only recourse would be to fight or flight. Who takes a buyer to court and wins, if the buyer can prove their interest was not being served? This is when buyer beware becomes important to the buyer. This is when due diligence becomes important to the agent. The agent is going to have to prove based on the evidence presented by the buyer that they did not breach their relationship and representation. The board of realtors is not going to come to your aid unless there is a listing agreement, then it would boil down to the TYPE OF LISTING. The board is only concerned with Listed Properties through members. That's why the Exclusive Brokerage (Agency) listing or limited service listing, and or non-represent seller must be disclosed in the MLS information sheet. Unfortunately not all boards of real estate require that information to be disclosed, that's a REAL PROBLEM especially when you have cross pollination of information from different boards of real estate across counties and local jurisdictions. If you'll notice that <<information>> is NEVER exposed to the buyer over the WWW!!!! Why? Because we are all working to close!!!! Once the buyer becomes aware of the fact they are providing all the funds to close then the game is up! You see, regardless of how much we all think we are worth, we aren't worth anything if we can't produce a closing!!!! That is the fact and the real world, nothing virtual about that!!! So until we all find agreement between the parties we are all just hoping the property closes with no strings attached and belligerent attitudes flaring up, especially at the closing table where the rubber does meet the road. Buyer's Brokerage Agreements are as important and as enforceable as Listing Agreements and necessary to prove your worth. If you are not using them then you will be doomed to selling used cars only, where the buyer knows their interest is not being served but still purchase cars from the Used Car Salesman! (no gender specificity intended)
Robert King
Broker/Consultant
Charles Rutenberg, Realtors
Clearwater, Florida
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