Exclusive Buyer Agreements Aren’t Impossible—They’re Essential

As everyone in the industry knows, there’s a lot going on with commissions right now. Last week, a court ruling came down that could completely change the way buyer’s agents get paid. There will be appeals, so it may take years for a final decision to come through, but the bottom line is this…

If you’re not paying attention, you will end up taking a pay cut.

These lawsuits are creating urgency around this issue, but I’ve been talking about it for years.

Most agents never bother to sign an exclusive representation agreement with the buyer. They just do the work and hope the buyer chooses one of the homes they’ve shown them.

Usually, this works out. But once in a while, you spend 6 months working with a buyer only to have them call and say they bought a home through another agent, or they found an off-market property through a friend, and they don’t need you anymore.

If you haven’t been burned like this yet, it’s only a matter of time. And if the result of these lawsuits is that sellers are no longer obligated to pay a commission to the buyer’s agent, the risk of getting stiffed will go way up.

This is why you need a signed representation agreement, every single time.

You’re probably thinking buyers won’t go for it. But the truth is, agents who make this their standard practice get these agreements signed all the time.

Every buyer’s agreement should do three things:

1. Outline your fiduciary responsibility to help potential buyer find, purchase, and close on a home
2. Clarify that if the the buyer buys any home during the agreement period, they will do so through you
3. Set your minimum commission (this is an opportunity to start getting 3% on the buy side)

It’s true, some buyers will object to this…and those are the exact people you want to AVOID.

They’re the ones who are most likely to waste your time and never pay up. They object precisely because they don’t believe you’re the best person for the job, and they want to hedge their bets by working with other agents or conducting their own search at the same time.

Everything we’ve talked about on the listing side applies to the buy side.

If you’re the Favorite, they’ll sign. If you’re the Fool, they’ll string you along. This is true at least 80% of the time. 

So, you have to find out if you’re the Favorite or the Fool.

You can give the buyer one free date—that’s all. After that first showing, you have to have an honest conversation.

It’s simple: “One of my standard practices is that I ask every buyer to sign an exclusive buyer representation agreement. It does three things…”

If they’re serious about buying and about working with you, they won’t object. They may ask questions about the agreement to clarify what it means, but they won’t criticize you for asking for it.

If they want to play the field, they will object because they don’t want to miss out on any off-market listings. (What they don’t realize is that an agent who has inside info will give it to their loyal clients first. The free agent buyer isn’t anyone’s first phone call.)

I know, you’re afraid that if you ask for a commitment, they’ll go work with someone else.

If they do, that shows they don’t trust or value you…and why would you want to work with someone like that? They will waste your time, ignore your advice, and probably leave you high and dry in the end.

Don’t let your fear of rejection dictate your choices. Don’t give in to the fantasy that something is better than nothing.

It’s not a sin to lose business—it’s a sin to take a long time to lose business.

And while it may seem scary to start asking buyers for signed agreements, here’s what really happens when you do…

You cut out 98% of the stress because you’re only working with serious buyers, and you know you’re getting paid…

You don’t have to worry about whether your buyer will go directly to a seller, or hear about an off-market property at a party, or work with another agent behind your back…

AND you raise the quality of your service and your entire client base.

This commission issue is a BIG DEAL. It’s your livelihood at stake, so we’ll be talking about it a lot in the coming weeks and months.

What I want you to realize is that when it comes to commission the buy side is no different from the sell side. Everyone says it’s impossible to charge 6%, it’s impossible to get buyers to sign exclusive agreements.

That’s just not true—and in fact, when you commit to doing these things, you elevate your entire business.