Sign a contract with a real estate agent?

[Samwise]

Hey all -- met with a real estate agent this morning to look into buying a house.  He seemed good overall.  He mentioned, if we decide to work with him, signing a contract.  Is this typical?  Required?  What are the advantages / disadvantages?  Thanks in advance!

[tralfamadorian]

I would have a tough time not laughing in a buyer's agent's face for asking for a contract. Yes, I've seen them but they're not typical in the places I've purchased. Absolutely not required.

Advantages: None.
Disadvantages: The realtor has a ring in your nose so you cannot go with another agent if you're unhappy with his performance until the time frame in the contract is up.

I would take a hard pass. Buyer's realtors bring very little to the table and you will easily be able to find a competent one who doesn't need contracts to keep clients. 

[JZinCO]

RSG,
I had this discussion with my realtor and signed him as exclusive. He told me he was fine either way and was also okay with backing out of the contract if it wasn't working out. However, not having an exclusive buyer means the agent needn't act as a fiduciary. Is this not meaningful to you?

[Jon Bon]

RSG,
I had this discussion with my realtor and signed him as exclusive. He told me he was fine either way and was also okay with backing out of the contract if it wasn't working out. However, not having an exclusive buyer means the agent needn't act as a fiduciary. Is this not meaningful to you?

Yeah it may say "Fiduciary" on a piece of paper buy realtors ONLY want to close deals so they can get paid. Anyone who says otherwise is likely lying.

Its been established that realtors are usually able to negotiate an extra 5-10% for the better on the purchase price, however they don't do that because there is a chance that will kill the deal. So they take a few dollars less on commission and close the deal. So the fiduciary duty quickly goes out the window.

[Another Reader]

Never do this.  You will owe the agent a commission even if you decide later you want to work with someone else because this agent isn't doing the job.  Find a buyer's agent with a good track record and no unreasonable demands.

[Kl285528]

Real estate broker here. Nothing unreasonable at all about the request to sign an exclusive buyer agency agreement.
Too many times have buyers worked with an agent, the agent has done a good job and spent alot of time with them, and then the buyers cannot get in touch with the agent for a short period of time, they find a house they want, they get antsy, the buyers call another agent, buy that house, and the first agent is SCREWED because they spent a ton of time and effort, and get paid zilch.
FYI, I would not work with a buyer who would not sign an exclusive agency agreement. My time is too valuable for me to invest it into a situation where I am setting myself up to get shafted.
What I would accept would be a clause that the buyer can terminate the agreement with 48 hours written notice to me. Believe me, if someone is unhappy with my service, I'm glad to get away from them.
The buyer's agent is a helper, educator, negotiator. They know about houses coming on the market that the average buyer doesn't. They help the transaction get completed, keeping everyone calm(er) and focused on the big picture. They help with inspections and responses to inspections. Etc.
Commission sales is uncertain enough. Agents shouldn't set themselves up to not get paid.

[Car Jack]

Not withstanding the opinion of the agent above.......

I have never signed with any agent as a buyer and have never been asked to.  We have also bought 2 out of 3 houses from the seller directly with no agent involved on either side.

Where we bought the traditional way, with an agent, we were locating so I could attend college for my graduate degree, paid by my employer.  We flew into town on Sunday to start our house hunting trip.  We had pre-contacted an agent so they knew what we wanted and how much we wanted to spend.  We saw "every" appropriate house in the market.  We are efficient buyers, having gone through a selling bubble, where 10 minutes could lose you a house.  So lots of houses, we eliminated from the MLS listing right in her office or with a drive by.

So sitting there with no real hits, I contacted another agent, somewhat at random out of the phone book (this was late 80's, so phone books existed).  We arranged to go out bright and early Monday morning.  This new agent showed us many houses that the first agent did not show us.  All used the same parameters that we told the first agent.  Of course, houses we already saw were eliminated in his office, looking through the MLS listings.  We saw all the houses, kept some in mind, but committed to nothing.  Monday afternoon, contacted a 3rd agent to go out Tuesday.

Tuesday morning, went through the same routine, eliminating houses on MLS that we already saw.  Agent insisted we look at a condo.  We specifically said we want a house, not a condo.....I did note on the MLS listing, it had in bold....10% selling agent commission.  Anyways, we went out and looked at several houses, one of which was exactly what we wanted.  We put in an offer which was accepted that night and we spent the rest of the house hunting trip at Busch Gardens.

I have no idea why the first 2 agents didn't show us "all" the houses that met our criteria.  But they didn't.  And I'm sure most people don't go in all commando, with the requirement to get an offer accepted before leaving at the end of a week long house hunting trip.

[Another Reader]

Real estate broker here. Nothing unreasonable at all about the request to sign an exclusive buyer agency agreement.
Too many times have buyers worked with an agent, the agent has done a good job and spent alot of time with them, and then the buyers cannot get in touch with the agent for a short period of time, they find a house they want, they get antsy, the buyers call another agent, buy that house, and the first agent is SCREWED because they spent a ton of time and effort, and get paid zilch.
FYI, I would not work with a buyer who would not sign an exclusive agency agreement. My time is too valuable for me to invest it into a situation where I am setting myself up to get shafted.
What I would accept would be a clause that the buyer can terminate the agreement with 48 hours written notice to me. Believe me, if someone is unhappy with my service, I'm glad to get away from them.
The buyer's agent is a helper, educator, negotiator. They know about houses coming on the market that the average buyer doesn't. They help the transaction get completed, keeping everyone calm(er) and focused on the big picture. They help with inspections and responses to inspections. Etc.
Commission sales is uncertain enough. Agents shouldn't set themselves up to not get paid.

You would not be in business for long in any market I am in.  All agents are at risk of not getting paid, no matter who they represent.  It goes with being in a sales job.

[Jon Bon]

Real estate broker here. Nothing unreasonable at all about the request to sign an exclusive buyer agency agreement.
Too many times have buyers worked with an agent, the agent has done a good job and spent alot of time with them, and then the buyers cannot get in touch with the agent for a short period of time, they find a house they want, they get antsy, the buyers call another agent, buy that house, and the first agent is SCREWED because they spent a ton of time and effort, and get paid zilch.
FYI, I would not work with a buyer who would not sign an exclusive agency agreement. My time is too valuable for me to invest it into a situation where I am setting myself up to get shafted.
What I would accept would be a clause that the buyer can terminate the agreement with 48 hours written notice to me. Believe me, if someone is unhappy with my service, I'm glad to get away from them.
The buyer's agent is a helper, educator, negotiator. They know about houses coming on the market that the average buyer doesn't. They help the transaction get completed, keeping everyone calm(er) and focused on the big picture. They help with inspections and responses to inspections. Etc.
Commission sales is uncertain enough. Agents shouldn't set themselves up to not get paid.

You would not be in business for long in any market I am in.  All agents are at risk of not getting paid, no matter who they represent.  It goes with being in a sales job.

car·tel
Dictionary result for cartel
/kärˈtel/

noun

an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.

[tralfamadorian]

...the buyers cannot get in touch with the agent for a short period of time, they find a house they want, they get antsy, the buyers call another agent, buy that house, and the first agent is SCREWED because they spent a ton of time and effort, and get paid zilch.

Straight from the horse's mouth, confirming that contracts solely benefit the agent and not the client.

[Duke03]

95% of all realtors fall into one of 3 categories:  Idiots, Part-timers, or Grandma.  None of these strike me as reassuring when I have hundreds of thousands of dollars riding on the line...….