AttorneyRE’s fee agreement is a consumer friendly contract. Please compare it to agreements from other firms. Nearly all Realtor Buyer Broker contracts are drafted by groups of Realtors at their local Realtor Associations. When competitors design fee agreements together, it is called collusion. The results of these potentially illegal gatherings is that the forms they have produced are anti-competitive and anti-consumer. Consumers should not sign these agreements without making major changes to them.
Some things to consider negotiating:
- Right to Cancel – Most Minnesota Buyer Representation Contracts only allow buyers to cancel upon “mutual agreement of the parties.” Guess who isn’t going to agree? Strike this clause and add one that allows you to cancel at any time (except after a valid offer is signed). .
- Commission Due Even if You Don’t Close – Most buyer rep contracts obligate buyers to pay a commission even if the buyer backs out of a transaction. Change this to be ONLY upon a successful closing.
- Do Not Agree to Skip Properties – If your agent encourages you to skip properties where the seller is not offering buyer broker compensation, FIRE THE AGENT. The agent either does not know how to negotiate or is subjecting you to an unfair scare tactic. Instead of the seller offering to pay your agent, the new way is for the buyer to ask for a seller credit to pay for their agent. This seemingly small change allows buyers to negotiate the buyer agent’s fee for the first time ever. The seller can still pay this fee, it’s just a smaller amount. Instruct your agent to negotiate a seller credit in your offer to pay for your agent. If the seller refuses, you can always move to another property (there is no risk).
- Negotiate the Buyer Brokerage Fee – Negotiate a fee with your buyer broker and ask the seller to pay it (just like you might ask them to pay your closing costs). The lesser the fee, the more appealing your offer will be to the seller. Instead of the seller paying the price fixed 2.7% directly to your broker through broker to broker contracts, the seller might only need to pay your agent half (that’s approximately how much AttorneyRE charges) or less.
- Commission Rebates or Refunds. Unfortunately, these may still be necessary under the new rules. If the seller’s broker is offering your broker money on the side, any excess legally belongs to you. Your broker will arrange for you to get a commission rebate at closing. Make sure to notify your lender or this could delay your closing. AttorneyRE has been doing something similar for years.
- Junk Fees – Look carefully in the compensation section of the contract. Most brokers sneak in a substantial junk fee ($300-700). They have all kinds of names for this fee. Don’t let your clients agree to pay this – EVER.
- NO Arbitration and Prohibition on Participating in Class Action Lawsuits. If you are presented with a representation agreement that includes either of these clauses, RUN (don’t walk) away. These agreements strip consumers of important rights. Striking a Prohibition on Class Actions will not help you since many others have likely agreed to this.
- NO Dual Agency – Dual agency occurs if the buyer and seller are both using the same brokerage firm. It also can happen when one agent represents the buyer and seller or two buyers on the same property. This is why you should select a small firm where these conflicts are less likely to occur. Dual agency is one of the worst betrayals possible and dual agency negates all the reasons why you hired the agent. Dual agents are prohibited from advocating or advising their clients. The brokers get a double commission if they can manipulate clients into dual agency situations.
- NO Affiliated Services – Just say no to allowing the broker to select whomever they want to handle the title or mortgage services. Otherwise you may be steered into an overpriced and biased service provider. Instead, instruct your agent to engage in a due diligence search that excludes all firms that are affiliated with them or their brokerage. This is what brokers used to do.
- Home Warranties are Junk – They offer little protection and are some of the most complained about products on the market. Realtors or their brokers often get substantial kickbacks on these and they even have included these awful products right in the Realtor Purchase Agreement forms.