Brett Stomps | Windermere

The Good & Bad of Buyer Agency Agreements

Buyer agency agreements are now required before real estate services can be provided by an agent. Here are my concerns and also why this is a good thing.
Table of Contents
Table of Contents

They’re required to use a buyer agent

As of January 1st, 2024, Washington state now requires buyer agency agreements before any real estate services are rendered by a buyer’s agent. Oregon will follow suit in July of 2024.

How to best position yourself for success

If you are actively looking at properties to purchase and plan to use the services of a buyer’s agent, do not wait until your dream property hits the market to begin interviewing agents to work with. Find an agent you trust now.

About Brett’s Buyer Representation

Agents are required to have buyer agency agreements prior to showings. Buyers who are adapting to these new agreements will be in the best position to secure winning offers vs. buyers who are not adapting to this change.

Buyers who have signed buyer agency agreements will be getting their agent’s top priority vs. buyers who are unrepresented.

Warnings to buyers

There are two types of buyer agency agreements. Exclusive and Non-Exclusive.

Beware of agents who want to tie you into an exclusive agreement with terms that you are not comfortable with. Read the agreement, or have the broker explain it to you.

If you sign an exclusive agreement with one agent in say, Klickitat County, and you bought a property with another agent that you only had non-exclusivity with in Klickitat County, you may owe commission to both agents, or only a commission to the agent that you have exclusivity with (and not the agent who actually helped you).

Lastly, beware of budget agents who offer the world and cannot deliver on their commitments. Ask a friend for a referral. Budget agents are going to enter the market as a means to compete for buyer agreements. That’s not to say that an expensive broker won’t let you down either. Ask a friend and look at the agent’s reviews.

View my buyer guidebook to learn what I do for my buyers: Buyer Representation Guidebook.pdf

These changes are good

Your options have not changed. Buyer agency agreements have existed for years, but were not required. Now they are, and they’re used to define the relationship and commission structure in advance and allow buyers to customize their services and fees. It is also removing the expectation that a seller has to pay for the buyer agent’s fee on behalf of the buyer.

Now, it is entirely possible that sellers going forward will opt not to offer a BAC (buyer agent commission) which has been customary for years. If this is the case, you will have to decide: Do you want to pay your buyer’s agent directly, request the seller to pay part or all of your buyer broker’s commission, or pass on the property all together?

With me, you won’t ever be forced to pay my fee directly without your permission first.

Caution for new buyers

My fear is for the first time buyers and first time investors who want to self represent. These parties do not know the complexities of a real estate transaction (which all are different) an they can easily get themselves in over their head financially with one wrong decision.

Let me explain…

Let’s say a buyer is purchasing a $500,000 home, and say a 2.25% commission (for example) is due to the buyer agent’s firm for services rendered at closing. That is $11,250. This fee might include 1 year of labor on the agent’s part, lots of business expenses and education costs to even be an agent, and a month of highly in-depth transactional care for a buyer that only comes from experienced agents who live and breathe real estate. So, what might happen to this fee?

I reckon sellers are not going to lower their price by this amount. They are simply going to toss it onto the buyer because they think they will save / earn more money. In some cases (for cream puff properties) this will happen. A well funded buyer will pay for their agent’s fee and the seller’s top dollar. For the rest of sellers, they will of course be notified of the challenges buyers already face with financing and down payment costs, and encouraged to offer a BAC. Because in most cases, buyers will be inclined to ask for the seller to pay for their buyer agent’s fee becasue of financing restraints.

It’s this additional financial pressure that will lead buyers to self represent and cause themselves more harm than good.

How a good buyer’s agent earns their commission

As a professional, I find more times than not that I can find my commission in each transaction. Meaning, I save my client my commission, and sometimes more each time they use me. Just in the transaction alone, without any regard to the days, months, and sometimes years of time and effort spent teaching them the process and showing them property. It’s my experience and guidance that saves them from buying a dud or missing out on a costly repair or price reduction that could have been negotiated.

If you are a new buyer, it is advised to use a buyer’s agent to understand the process. This means signing a buyer agency agreement.

Unrepresented buyers will receive little to no attention

Additionally, buyers who don’t understand these changes and who don’t hire the services of a buyer agent will not receive top quality service and follow ups. Buyers who want assistance from buyer brokers, but who are not willing to commit to a buyer broker will be left behind. This is becasue agents will be focusing their efforts on the clients to commit to them and their time.

In my practice, those who sign up for an exclusive or non exclusive agreement receive all of my attention.

If your reason for not using a buyer broker is out of fear of having to pay your broker, remember, a seller can pay your broker for you. Besides, I can help negotiate my fee into your loan, potentially having it be paid by the seller, or guide you in ways that save you money worth more than what my commission is.

So, don’t be a tire kicker.

For seasoned buyers

You’re the lucky ones here, you’ve been through this process before, and you are in the best position of all. You may be able to save more on your buyer’s commission depending on how much help you are going to need from your agent and what you are searching for.

You may also consider to work with limited representation agents (budget agents) allowing you to negotiate better offers with sellers because your buyer’s agent’s commission is less.

Or you might choose not to sign a buyer agency agreement at all and self represent.

In closing

The market is mostly going to change for new buyers. Which is a major bummer given the challenges they already face.

Whether you are a new buyer or a seasoned buyer, if you want to buy before it gets any harder in the Columbia Gorge, speak to me. I am highly passionate about helping those who commit to form a team together.

Buyer agency agreements are no different than a listing contract for sellers, and no different than any other high end service professional. Your doctor has you sign paperwork before they begin services, your plumber wants to ensure they’re getting paid, and the same goes with your lawyer or CPA.

I work in this industry everyday so when you want to buy, my skillset is ready. I earn my money by saving you more over the course of your ownership than what I take in. And who knows, maybe the seller is going to pay my commission anyway on your behalf.

Disclaimer

The information provided on brettstomps.com is intended to be educational and accurate. However, information on brettstomps.com does not substitute as buyer and seller due diligence when transacting real estate. Buyers and sellers are advised to work directly with a licensed real estate professional, seek additional professional services when applicable, and to inquire at the state, county, and city offices for their due diligence.