6 Tips for Introducing a Buyer's Agreement

by Jenny Rose Spaudo

^Disclaimer:^{The contents of this article are industry best practices which were sourced from StreetEasy data and interviews with our Agent Advisory Board, unless noted otherwise. Any scripts provided are only meant to act as examples and are not required. Nothing in this presentation is intended to be legal advice. For specific questions about any duties or obligations arising out of a real estate transaction, check your local and state licensing laws and regulations, contact your broker, or an attorney.}

In light of the recent National Association of REALTORS® (NAR) settlement, many NYC agents will need to make changes to the way they do things, including how and when they introduce a buyer's agreement.

Buyer's agreement is a catch-all term for a written agreement between an agent and a buyer client. One type of buyer's agreement is a touring agreement, which many agents now need to have prospective buyers sign before touring homes with them. Another type is a buyer's representation agreement, a long-term agreement covering the broader real estate services provided by the agent as well as representation, compensation, and payment terms.

While buyer's agreements may seem like an additional hurdle to landing clients, we believe introducing one early on is an opportunity to promote transparency and build much-needed rapport - when done correctly. In this article, we're sharing our best tips for discussing buyer's agreements with potential clients so you can win their business, and their trust.

1. Make sure you thoroughly understand the agreement

Even if your brokerage provides a buyer's agreement for you to use, it's a good idea to read through it carefully so you understand every clause and stipulation. After all, if clients have questions (and they likely will), you want to make sure you can answer them.

You can also sit down with someone at your brokerage who can walk you through the agreement, and explain any sections or company-specific policies you have questions about. Also, consider taking advantage of any training sessions or resources offered by your brokerage or real estate organization to learn more about buyer's agreements.

Some buyers might hesitate to sign an agreement because they think it only benefits you. To help shift that mindset, try framing the agreement as a mutually beneficial partnership, which does things such as:

Setting clear expectations regarding your services and each party's responsibilities
Protecting the buyer's interests by stating you won't represent them and the seller on the same deal (unless mutually agreed upon, and all required disclosure forms are signed)
Granting the buyer access to your expert guidance in NYC's notoriously challenging real estate market
Assuring you'll negotiate the best possible price, terms, and contingencies on the buyer's behalf

3. Use simple, clear language

When discussing a buyer's agreement, you'll want to avoid legal or industry jargon that could be confusing.

Here's an example of technical language to avoid: “The duration of the agreement establishes an irrevocable right of representation for me as your agent, binding you to the brokerage for the procurement of real property within the specified term.”

Instead, consider saying, “This section means I’ll be your agent for a set time, so I can focus on helping you find the right home.”

4. Explain your fee structure upfront

Likely as a result of the NAR settlement, many consumers are more aware of how buyer's agents are paid. Still, some buyers might be concerned or confused about how much they'll owe you. Introducing a buyer's agreement is a great way to clearly explain how your fee structure works, that your fees are negotiable, and what happens if the seller pays part or none of your commission.

Addressing compensation upfront can help alleviate any confusion and allow the buyer to better determine if you'd be a good fit for them.

5. Offer a short-term, non-exclusive agreement before touring homes

Early on, potential clients may be hesitant to sign an exclusive buyer's agreement - especially if they're not yet sure it's the right fit. You can put their concerns to rest by offering a short-term, non-exclusive agreement they can sign before touring homes with you. For example, StreetEasy’s Touring Agreement is non-exclusive and only lasts for seven days, after which agents and buyers can enter a longer-lasting, exclusive agreement if they wish.

You can use StreetEasy's Touring Agreement, or a similar agreement provided by your brokerage, to keep clients from feeling locked into anything before they're ready to commit.

Can you think of past clients who benefitted from signing a buyer's agreement with you? Perhaps you helped one make a winning offer on a home matching their specific criteria - all because of your expertise and personalized attention. Or maybe you helped another client negotiate favorable terms on a co-op and nail the board interview. Sharing real-life success stories when introducing a buyer's agreement is a great way to build trust with potential clients and help them feel confident about working with you.

Introducing a buyer's agreement is a crucial step for agents. By implementing the tips above, you should be better equipped to turn a potential obstacle into a strong foundation for a successful agent-client relationship.

^{StreetEasy is an assumed name of Zillow, Inc. which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy Concierge team members are real estate licensees, however they are not your agents or providing real estate brokerage services on your behalf. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property.}