Buying a Home in Salt Lake City, UT


Wussy Disclosure - A black mark on the real estate industry


Buyer Broker AgreementI just read a blog entry by an agent who was reacting to a recent article about REALTOR's rejected request for commission from a buyer who, according to the story, was hurriedly asked to sign a Buyer-Broker Agreement because it was necessary in order to submit an offer on a house. According to the story, the details, terms, and responsibilities of the Buyer-Broker Agreement were not clearly explained to the buyer. The deal didn't work out and they went on their way, later purchasing a home directly from a builder.

I read the article and it sounds like the agent did not take the time to sit the buyers down and explain what they were signing. It sounds like he threw the agreement in with the rest of the offer documents and *perhaps* gave a few second blurb about it.

This is a REAL and known problem in the industry and it bothers me. The attitude of professional real estate agents who commented on the blog entry also bothered me... a lot. They vilified buyers saying things such as "buyers are liars", and calling buyers sleazy, saying buyers go behind agent's backs to stick it to them. Wow! Our company works only with buyers and that has not been my experience with buyer-clients at all!

All agreements and contracts should be discussed clearly and understood completely before a buyer is asked to sign them. This means the responsibilities of both parties must be clearly communicated and should be clearly understood. The length of representation should be understood. Whose responsibility it is to pay the brokerage the buyer-brokerage fee should be clear. How a buyer interacts with builders and FSBOs should be clearly understood.

From the agent's post in response to the article, it clearly sounds like they too may also be glossing over some of the more difficult important parts of agreements. This should not be. If the buyer may be responsible for the Brokerage Fee, they should know this UP-FRONT before signing the agreement... NOT told that the agent will "address the topic further if anything changes". (I got that phrase from the agent's blog entry.) That's a weak way to get them to sign the agreement today, clearly NOT understanding the full ramifications of what they are being legally bound to in writing.

Clients of our brokerage know that they are responsible for the Brokerage Fee. This is what our agreement says, so this is what they are told. (Many traditional agents tell consumers that working with a buyer's agent is free. That simply is not true in many cases.) The contract clearly states that any compensation received from another party will be credited toward what the buyer owes. If that compensation covers the Brokerage Fee in full, great! But the buyer knows that if it doesn't, they are ultimately responsible. Everybody is clear up-front. 

I understand that most buyer-brokerage agreements state that it is the BUYER'S responsibility to pay the Brokerage Fee, and that any compensation from a listing brokerage or seller, or other source (builder, etc.) will be credited toward the Buyer-Broker Fee. (I know buyer-broker agreements vary, so I know there are some out there that are different.) This should be clearly explained to all clients, yet it is known that many agents skirt around such "ugly" details or avoid them altogether.

The judge in this case is making a point. There is a real problem in the industry. Agents routinely do not properly disclose terms, responsibilities and details of legal contracts they ask consumers to sign.

The judge is saying that as professionals, we cannot continue to get away with asking consumers to sign something that says one thing legally, but explaining it differently or not explaining it at all.

Many real estate agents have no problem glossing over the details of a Buyer-Broker Agreement... and then they publicly whine and complain when a buyer doesn't live up to their side of the agreement. Their side which was NEVER clearly represented or explained to them by the professional they trusted at the point of signing. The professional who is asking them to accept them as their FIDUCIARY agent. Some fiduciary.

Lack of disclosure is one of the biggest marks on this industry. I would dare say it is one of the largest sources of lawsuits between consumers and professionals. We would all be better off if we wouldn't skirt around parts of contracts that may bring questions or objections. Disclose material facts. State the terms. Explain the details. Address concerns. Asking consumers to sign legal contracts that haven't been clearly explained to them leaves only the professionals to blame if the consumer then acts contrary to what they agreed to in writing.

The buyers in the article said they thought "the only reason they had to sign the Buyer Agreement was so that they could put on offer in" on the first house. We ALL know this type of "wussy disclosure" is rampant in the industry, if disclosure happens at all. This is sad and must change.

The outcome of this case could have been different. If clear and proper disclosure had taken place, I doubt we would be reading this story today. The buyers either would not have signed the agreement, the agreement would have been amended to cover JUST that house, or the Buyers would have clearly understood that they had a responsibility to continue to work with the agent regardless of which house they bought during the agreement period. I bet the judge would have ruled differently had clear explanation and full disclosure of details taken place and the issue still arose.

Shame on agents who skirt around the details of the legal agreements, especially the facts and details of agreements they are asking CLIENTS to sign.

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Comment balloon 25 commentsBenjamin Clark • July 24 2012 01:50PM


Just wait until the CFPB gets wind of the buyer broker agreement. They'll handle it most likely by making it several pages longer. This may be their avenue into the real estate side of housing.

Seriously, I can say nearly ALL of the borrowers who come to me for a loan have no idea whether they are being represented solely or understand remotely the dual agency conundrum.

Posted by Dora Griffin, NMLS 6380 (D A Griffin Financial.LLC) over 6 years ago

Dora - Thank you for your comment! It is a sad truth.

I wish we didn't need some government entity to come in and enforce what we have been asked to self-regulate, and what the public expects. The problem is that we are not self-regulating. I believe there is still time to clean things up. But it requires that all of us act more professionally.

Clear, frank, direct conversation and unadultrated disclosure. No distorting of facts or responsibilities. And not JUST regarding the agency relationship and agreement disclosure, but in all contracts and agreements and in all phases of the transaction.

Buyers (AND sellers) deserve to know what they are signing and doing, and what the ramifications are.


Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Maybe...if the story is true. But I think that at the end of the day people need to be responsible for what they sign. It's insane to sign anything without reading it.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 6 years ago

I have not heard of problems like this arising out of using a buyer's agreement.  However, they are not commonly in use here.

Posted by Margaret Goss, Chicago's North Shore & Winnetka Real Estate (Baird & Warner Real Estate) over 6 years ago

As someone who used exclusive buyer broker agreements, it is my resoonsibility to make sure the buyer understands what they are signing...

Buyer broker agreements are not the norm...they are unusual to use and consumers are not familiar with fact most agents do not understand them either (and mistakenly think that agreement makes them an exclusive buyers agent)

Most consumers do not read what they sign and even if they read it, typically do not understand it, so they have a blind trust that the agent did not slip anything bad into the bunch of papers they are asked to sign.

The problem with the case that you are speaking of is that the agent worked with the buyers without an exclusive right to represent contract and when they made an offer, (at night while putting the kids to bed)  and agent was in a hurry, the agent slips in the BBA with the offer paperwork.... Offer goes no where and buyers are unaware of signing a "committment"

I used to teach agency disclosures and there is something called "informed consent"...the buyer has to be clearly informed before they can give their consent.

Eve in Orlando


Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) over 6 years ago

Karen - I do agree that you shouldn't sign anything without reading it. I just spent an hour in a hangout with my screen shared with a client going over their offer line by line. (They are across the country)

THEN, I sent them a pdf they could review again prior to my setting it up for electronic signatures. We don't wussy disclose around here. My clients know things about their contracts and transactions I dare say many buyers never know.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Hi Benjamin, we should always explain to buyers what they are signing, and ask them if they understand it, even if they have no questions.

Posted by Sandy Acevedo, RE/MAX Masters, Inland Empire Homes for Sale (951-290-8588) over 6 years ago

Margaret - Unfortunately, consumers don't know about implied agency either, let alone potential procuring cause issues... and then when the buyer signs a written agreement with someone else, the "professional" who didn't explain any of this has the nerve to say bad things about them? It's not right!

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Eve, your comment is RIGHT ON! Glad to see some support on this side!

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

I always go throught the buyer agency agreement line by line and then ask if the buyer has any questions.  I also encourage them to consult with an attorney.  I rarely have a buyer decline sigining the agreement.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 6 years ago

Straight talk with the client-buyer or seller-about the stuff that's hard to talk about is the measure of a professional.  Understanding what they're signing prevents misunderstandings in the future and it also reduces agent stress.  Good for you, I'm sure you'll continue being very successful.

Posted by Lloyd Binen, Silicon Valley Realtor since 1976; 408-373-4411 (Certified Realty Services) over 6 years ago

Benjamin - When I do broker buyer agreements, I typically ask the buyer to take it home, think about whether they want me as their broker, and read it first.  Then we go over it.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 6 years ago


I agree with you everything should be clearly explained to the buyer and the buyer agreement signed before you go to preview the property.  That said though, I think that many times the buyer is too excited by the prospect of house hunting to really pay attention.  I have heard that some agents are starting to use buyer's agreements for specific properties that they show the clients.  This clearly won't work for you but it does offer some protection, epsecially on a house that's nearing the expiration date of the listing.  Sometimes it's not the buyers you have to look out for, it's the sellers who are looking to save the commission check.


Posted by Tamara Elliott-Deering (Central Metro Realty) over 6 years ago

I think back when I was taking the Real Estate exam and how the questions appeared to be in ancient Aramaic...a lost language. I thought how would I ever get through this? Fast forward many years. I present a 20 page small print agreement to people who hired me and I see the look on their faces of how I once felt.....It is a lot to take in under any conditions...good post

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 6 years ago

Your perspective, of course, is accurate and commendable. But, surely, if you work solely as a buyer's broker, you've come across plenty who are not telling you the truth.

Posted by Jill Sackler, LI South Shore Real Estate - Broker Associate (Charles Rutenberg Realty Inc. 516-575-7500) over 6 years ago

A quick fix for these situations is to have the buyer agency agreement prepared specific to that particular transaction and no other. If the deal does not go through the buyer agent can spend the time soliciting the buyer to be his/her client. This way there is no misunderstanding or subterfuge.

Posted by Richard and Jean Murphy, (207) 712-4796 (Harborview Properties) over 6 years ago

I agree with everything you have stated here.  I also think the general public is unaware of the laws of agency, how they work, and how we work within them.

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) over 6 years ago

Joan - We don't have problems getting them signed either. Maybe it's because our clients actually want to hire us? I don't know.

Agents need to quit acting squirrely and maybe people will want to work with them too.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Thank you Lloyd! There is certainly less stress and confusion when everybody knows what is taking place.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Christine - That is great!

In my opinion, the time to be hired should be up-front. Not after showing homes and writing an offer. 2 different transactions. 2 different meetings. 2 different contracts.

Letting them take it with them after we've gone over it is something we do alot too. What's the rush? If someone doesn't understand the value we add to their transaction, we may not want to work with them anyway! Let them consider their alternatives and make an educated decision. 

Most email or fax it back pretty quickly... within a day or two.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Benjamin -- the lack of explanation can be a very big problem.  Some will try to skim/skip over stuff, just to get through everything -- when doing as you do, and thoroughly explaining things will not only solidify your dealings with the client, but also make them more likely to refer others to you and come back the next time they want to buy.

Hope the weather is behaving there in SLC.

Posted by Steven Cook (No Longer Processing Mortgages.) over 6 years ago

Jill - I don't know how I do it, but somehow I must screen out all the "liars" that everyone else works with. My clients are good, smart people who do a lot of due diligence before hiring me. They are open and honest with me, as I am with them. We don't have any surprises regarding credit, income, debts, down payment, intentions, schedules, etc.

If I get the impression someone doesn't "get it", which to me means, "understands the value of hiring an agent to represent them and only them in their real estate purchase", I will wish them well or refer them to a "standard level" real estate agent or brokerage. They will be a better match for each other.

I have a system in place that helps THEM determine if they "get it" or not, saving me from even having to talk with most buyers who don't "get it".

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Richard - That would be the safe thing for an agent to do if they haven't had the opportunity to come to an agreement regarding representation previously. I don't typically run out to meet people at homes, etc. The first meeting is usually via phone, hangout, or in my office where we first talk about whether or not we are a good match for each other.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Gary - You are right that we know much more about agency than the general public. And it is our responsibility to explain it to them before we ask them to agree to representation.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) over 6 years ago

Benjamin - What interesting responses you have received to this post. So many good points and it also sounds like things vary by area. Sounds like we are really in need of a uniform national agency disclosure. That way, we could all be educating the public on this same things. 

Posted by Dana Hollish Hill, Lead Associate Broker (Hollish Hill Group, Keller William Capital Properties) over 6 years ago