Why You Should Insist on a Buyers' Agreement When Buying a Home
Recently I had a person who has been in the real estate industry for many years tell me, buyers interested in purchasing high end properties, single family homes or condos above the million dollar range have no interest in signing a Buyers’ Agreement. Instead for them, it is a matter of trust.
Well, I couldn’t disagree more. In fact, it is my opinion a Buyers’ Agreement in the high end market may be needed even more. Not to say those specializing or working in markets less than a million dollars need the arrangement any less but I liken it to a prenuptial agreement.
Both wealthy individuals and those of modest means still need the protection such contracts can afford them. It may be for different reason. The wealthy to protect themselves from predators perhaps and those of less means to protect them from being devastated by the product of an ill tempered divorce. The point is people have different needs. Who is to say one group of people wanting to protect their assets out weights those of any others. Both can be hurt equally as bad if their interests are not safe guarded.
Here is an additional analogy worth considering. Many industries get a bad rap for being unsavory and may be rightfully so. Perhaps the reputation may not be deserved. It might be the result of superficial reasoning. Professions that immediately come to mind are car salesmen, building contractors, lawyers and yes real estate agents to name a few.
The problem is there are many sides to every story. It is not just the people in the industry that need to raise their level of professionalism and fairness. The people seeking the use of these services should stop playing the victim. Yes in an ideal world everyone should consider themselves their brother’s keeper. However, it is still our responsibility to adopt a concept of due diligence when approaching a decision that will have a major impact on our lives.
Every industry has basic rules and operating procedures. It is incumbent upon us to familiarize ourselves with what is rudimentary. I am not saying we need to be experts in all things but to consider yourself competent at the very least you need to be an informed consumer. If you are not then you are part of the problem and not the solution.
Having said that let me tell you why having a Buyers’ Agreement is so important. There is a saying in real estate pre-licensing seminars, “Buyers are liars”. Is this a fair characterization? Probably not, here are a few examples of some buyers and their attitudes. What they exhibit causes real estate agents to be less than the gracious service providers.
First there is the client who I like to call the “Chocolate Guy”. He is sweet at first. Exhibiting all the qualities of someone an agent would enjoy working for. Then Mr. Hide sets in. He becomes a buyer who believes without question real estate agents are there to rip-him-off. It does not matter how sincere you are or how professionally you conduct yourself. This individual has a hard time hearing. If you tell them the property is a good buy. They hear, he will say anything to get me to buy. If you tell them it’s in a nice neighborhood. They hear, only before sunset. If you tell them the community has a good school system. They hear, by your standards.
The “Chocolate Guy” is impossible to please. He is always trying to teach you a lesson rather than relying on your expertise. The interesting thing is you don’t have to be a real estate agent to have confronted the “Chocolate Guy. He is lurking about ready to pounce on any service provider. It is his appointed duty to remind everyone of their short comings. Show them how much they do not understand what they are doing. He is there to let you know you are un-reputable and can not be trusted or relied upon. The Chocolate Guy knows everything there is to know about real estates and always ends up dissatisfied with the results he gets.
Then there is the “You are so below my Station Guy”. He is the one who comes to an Open House or calls to see a listing. Then once in the agent’s presence begins to put on all these airs. He sometimes shows up with an expensive fancy camera. Does not ask any questions about the property because he is too consumed by his on brilliance and has to let you know how successful he is. They never leave any contact information for follow up because they in no uncertain terms don’t want to be bothered.
Often this type of individual ignores when they are asked a direct questions. They find it threatening. For example they will never admit they need financing. Instead will always give the impression if they purchase, it will be cash. They will often contradict themselves. Touting their great investments and a like; but say at the same time they are not willing to make a purchase because of poor market conditions. Even though, we are currently in the best buyers’ market in decades.
Then there is the person I call the “Owner of a Lonely Heart”. This is a person we in the real estate industry call a professional looker. I have met people who have been buying for ten years and are waiting to see that magical property that kicks them off the fence.
These people are harmless when visiting and open house. Where the problem comes into play when they find someone they are drawn to who is willing to take them around looking at homes. I know picking on such a person may sound a little callous but with the price of gas these days let me just say, give me a break!
Then there is Art, the “Art of the Deal Guy”. He loves the process. Likes to feel he is in the game. For him it’s all about having the agent look for a certain deal but they psychologically never have any intention of following through. This is the big teaser and one of the most frustrating people to work with. They are like vampires who suck the energy right out of the agent. They are always a bridesmaid and never a bride. They are easy to spot. As a friend of mine in the mortgage business said, all you need to say to them is, “show me the money”.
They do everything in their ability not to talk about finances and are never willing to fill out a mortgage application. They are tricky and smart and have played the game for so long. They more than any of the rest may be able to teach you something about the industry you don’t already know. They will send you twisting and tumbling down the rabbit whole until you firmly say “Show me the money”.
Finally, there is the “This Crap is Over Priced Guy”. This is the rudest of them all. In some cases when an agent confronts this attitude in an open house it is recommended to politely ask the individual(s) to leave. If they call to ask to see a listing and they start up with this attitude it is best to cut the presentation short. The “This Crap is Over Priced Guy” is all of the above and then some.
They could not care less about your expertise and what you have to offer. They certainly believe they know more about the business than the agent. From the start they feel insulted to be at the location and to a certain extent feel the same way about being in your presence.
In every case if an agent convinces any of these characters they could show them other properties that might be of interest without getting a Buyers’ Agreement here is what is almost guaranteed to happen. A lot of time will be spent doing research to please them, to find them a property that from everything they mentioned should satisfy them.
The agent will select those properties and setup appointments and then will end up taking them around. They will also end up reliving that first experience so memorably enjoyed the time they so graciously made your acquaintance. I hope my sarcasm is obvious.
The most disheartening thing about working without a Buyers’ Agreement is finding out that all the work you have put in with any individual when it goes unrewarded and you have to accept the fact they have gone ahead and made a purchase using another agent. This does not happen often because most of these types do not end up buying but when it does occur it’s hard not to let bitterness settle in.
Here is what the Buyers’ Agreement allows one to do. It helps identify the unique needs of the client. It helps the agent and client bond and establishing and understanding of trust and a commitment to accomplishing a common task. The goal is no lest than finding a satisfactory property that is designed to fit the buyer’s needs.
It lets the client know the agent is not in this business alone. Not only are they there to support them; but have an enormous amount of resources, technology as well as talented coworkers both may draw upon without fear of abandonment or betrayal.
On the purchase side of the transaction, the Buyers’ Agreement is the first step in lifting and sustaining the professional standards of the industry. It tells competing realtors, sellers and other buyers that you believe in providing a professional service to those who are willing to commit.
It is worth noting as a real estate agent it is only possible to provide a limited level of quality service to a handful of buyers at any given time. You should explain to your clients that this is in fact the case.
If they do not have an urgent need or at a minimum have a serious sense of purpose about buying at this time then the height of immediacy can be tailored to their specific requirements and priority can be given to others. Communication is tantamount. This is the degree of trust that must be worked out. So the agent can provide the utmost service within their capability.
Asking the client to sign a Buyers’ Agreement helps avoid the pitfalls all the above divested personalities represented. The scenarios cause the industries’ professional quotient to digress. Having a Buyers’ Agreement prevents all from reinforcing the stereotypical preconceived notion the lay person has about the industry. It helps make the process become more results oriented and raises the level of everyone’s expectations.
There are those that justify some of the above behavior. Some well intended. They do not understand they are abusing other people’s time and money. They want to quote “shop around”, unquote.
There is nothing wrong with shopping around but it should be done without wasting the time of professionals. Asking a doctor for a second opinion is okay in the medical profession. You are going to pay for that but asking for a second opinion in the mortgage industry or real estate industry is a waste of your time and the time and money of the person you are imposing on. It tells those to whom you are talking, you do not quite understand what you are doing.
In real estate and the mortgage field everyone has access to the same information. When looking for a professional realtor it is best to “shop around” by going to someone you trust, a friend or family member and ask them to refer you to someone who they in fact trust or know to be good at what they do in that particular industry. This should be the extent of shopping around.
When you venture out into these waters unprotected don’t be surprised if people start fighting for or over your business. If you just thought what is wrong with that or I like being fought over. Then when this begins to happen remember you are at the root of the problem.
I know I have used stereotypes to make my point. There is one saving grace. At least I admit it. So let’s chalk it up as an education tool and move on. So when the next time you are in the real estate market to buy, please shop around for a realtor via a referral system and when you find the right one don’t wait to be asked. Let the agent know what your expectations are. Make sure they are willing to commit and work with you. Don’t take this the wrong way but consider their acceptance of you as a client a compliment. I am sure they are flattered because you chose them. So you can have a great buying experience insist on signing a Buyers’ Agreement.