Real Estate Broker Agreements for Buying a Home
in Santa Rosa and Sonoma County

The Personal Relationship is Very Important with a Real Estate Broker

One of the most important aspects of your relationship with a Realtor© is the quality of the personal relationship you have with that person. You are going to spend a fair amount of time with this person and it should be enjoyable. You also need to be comfortable trusting your agent, so it is important that you and the real estate Realtor© “click” personality-wise. See my article on “How to select a buyers agent”.

And, … so is the Written Agreement !

Another very important part of your relationship with a Realtor© in the Santa Rosa area, is the written agreement between you and the Realtor©. Nobody, except perhaps lawyers, enjoys legal agreements. They are long, wordy and often hard to follow. But the written agreement spells-out the Realtor’s responsibilities to YOU and allows you to authorize the them to act on your behalf. Once you have selected a Realtor© you want to work with, you should meet with them and determine the type of agreement that is mutually beneficial. This is called the “Buyer/Broker” agreement.

If You Want to Buy a Home in Santa Rosa Ca, You Need your Agreement in Writing

The Buyer-Broker Agreement provides the authority for the Realtor© to act for you (the client) and this must be in writing. As with all contractual agreements, it is imperative that you understand each clause in the agreement before you sign. If you are uncomfortable with certain language in the agreement or are unsure of its meaning, ask the Realtor© to explain the document, and consult a legal professional.

For buying and Selling real estate in Santa Rosa and Sonoma County, I personally prefer to use the agreements written by the California Association of Realtor’s© (C.A.R.). I like them because I think they were created to protect both the client (that would be you) and the Realtor© (that could be me). Half of the Realtor’s using the C.A.R. forms represent the Buyers and half represent the Sellers, so C.A.R. was careful to make these agreements fair to BOTH the buyer and seller. I think they are pretty good. Additional information can be obtained from the California Association of Realtor’s© website: Buyer-Broker Agreements: Q&A for Consumers. (Note: Some links on the C.A.R. website are available to members only).

There are basically two “flavors” of Buyer/Broker agreements

The two most common types of Buyer/Broker agreements are called “Exclusive” and “Non-Exclusive” agreements. Both “flavors” are commonly used by people buying or selling real estate in Santa Rosa ca, Windsor and the surrounding area, but NEITHER document taste good. Sorry, read on...

Using an Exclusive Buyer Representation Agreement
to Buy a Home in Santa Rosa

This agreement would typically state that your Realtor© has earned a commission if you purchase any home during the term of the agreement. This is true even if the Realtor© did not introduce you to the property. With this agreement, you would owe the Realtor© a commission if you found the property on your own, or even if another Realtor© found it for you.

This is the most common buyer-broker agreement being used in Santa Rosa, Windsor and the surrounding area. Because the agreement prohibits you from using two agents at the same time, the Realtor© is usually comfortable investing the amount of time required to identify the correct property for you. This is a good thing because you want your Realtor© to work very hard finding you that perfect home, and not spend time wondering if they will ever be paid for all of their hard work. The Realtor© knows that if they identify a property that truly meets your needs and you decide to buy the property, they will be paid for their efforts. Pretty simple.

I often use this type of agreement with my clients, but the one thing that I don’t like about this agreement is that if you do NOT like the performance of your Realtor©, you are kind of stuck. This is because the agreement will typically state that the “term” of your contractual agreement with the Realtor© will last for as long as six months, or more. For you to use a different Realtor©, you either have to pay TWO Realtor’s, or wait for the term of the buyer/broker agreement to expire.

This type of agreement is fine if you have prior experience with a particular Realtor© and you felt they did an exceptional job for you in the past. If they were great last time, it reasonable to believe they will be great this time too. If you are considering using this agreement with a Realtor© you have never used before, you can ask for an "Early Termination” clause which allows you to terminate the agreement early. Another solution is to require that the duration of the agreement be fairly short, which limits the time you might be stuck with a bad Realtor©. Be somewhat cautions here, because some real estate agents may agree to a short term contract, but not really put much effort into the deal. I am not saying that some real estate agents are lazy, …well, OK, that’s exactly what I am saying. Be cautious.

Using a Non-Exclusive Buyer Representation Agreement to Buy a Home in Sonoma County

This type of agreement typically states that your Realtor© is only due a commission if, during the term of the agreement, the Realtor© introduces you to a home, and you then purchase that particular home. A non-exclusive agreement technically allows you to work with more than one Realtor© at a time, should you choose to do so. The fact is, most people do not have enough time to juggle more than one Realtor© at a time (they can be a handful) and there is still the potential that you could end up having to pay two Realtor’s. If you are buying a home in the Santa Rosa area, I don’t suggest that you use two agents at the same time.

The real value from a nonexclusive agreement is that it allows you to stop using a Realtor© at any time if you do not like their performance. You are then allowed to immediately select another Realtor© to show you different properties. You do not have to wait for an agreement to expire. If you decide to change Realtor’s, let the first agent know that you are changing and ask them for a list of the properties they have introduced you to. Be sure and provide this list to the next Realtor© so you can avoid the possibility of paying two Realtor’s for one property.

If this is the first time you have worked with a particular Realtor© in the Santa Rosa area, a nonexclusive agreement can be a good way to hedge your bet until you determine that you have selected the right agent. Some Realtor’s in Santa Rosa , or Windsor and the surrounding area, will refuse to use a non-exclusive Broker agreement. They tend to be suspicious of the clients’ motivation and are worried that they will invest lots of time searching properties for you, only to find out that some other Realtor© was “faster” and found a property first. Personally, I have no problem using nonexclusive buyer agreements, they do require a bit more paperwork to keep track of the properties viewed, but generally I tend to be the “faster Realtor©”. I am very confidant of my skills and abilities and have never had a broker agreement issue with a client. I can afford to be flexible.

So, you are Buying a Home in Santa Rosa; The First Question a Realtor© Should Ask You…

Regardless of what type of agreement you decide to use, if you are interviewing a Realtor© to use as a buyer’s agent one of the first questions they should ask you is “Are you currently working with another Realtor©, or have you worked with another Realtor© in the last 6-months”? Answer this question truthfully; it is for your protection. They may also ask for a copy of the previous agreement, or the other Realtor’s contact information. Truthfully answering this question will allow the Realtor© to help you AVOID the possibility of paying twice for your services. Allowing two agents to show you the same property can get very messy for everyone involved, especially you.

If you are buying a home you want your Realtor© to be excited about working for you. Listen carefully to the agent’s responses about the kind of agreement that works best for YOU. If you feel that the agent is willing to use your favorite type of agreement, but is not very excited about it, then perhaps you do not have the right agent.

Watch Out for Dual Agency with a Buyers Agent

The default language for many buyer-agency agreements used in the Santa Rosa area, will allow your Realtor© to enter into a Dual Agency relationship with you and the seller of the property. Simply put, you're Realtor© could quickly become a "dual agent". This is a bad thing. In my opinion, you do not want a dual agency relationship, you want your-very-own-special-just-for-you Realtor©(see my topic on Agency) If you are buying a home in Santa Rosa or Windsor, you want someone looking out for your best interests exclusively and not sharing this requirement with the seller. To avoid a possible dual agency, some agreements have a paragraph that you can select that prohibits your Realtor© from entering into a dual agency relationship. Mark that little check box, then do the “Down with Dual Agency” dance.

All Real Estate Commissions Are Negotiable

Once you have selected a buyers agent, it is very important to have a conversation with the agent about commissions. The vast majority of homes offered for sale in Sonoma County are offered through a listing agent and in most cases the seller will pay the cost of the buyer’s agent. You can guarantee this by having an agreement with your Realtor© stipulating that any commission they earn must be paid for by the seller of the property. This kind of agreement is quite common, but it does of course mean that your Realtor© probably will not show you properties where the seller is unwilling to pay the Realtor's commission. This is probably a non-issue because (in most markets) there are very few of these properties out there. In Santa Rosa, Windsor and the surrounding area, the most common type of property in this category is the For Sale By Owner properties (FSBO). FSBOs represent a very small percentage of the homes for sale in Sonoma County, and over the years many For Sale By Owner properties have realized that it is extremely difficult to sell a home unless you offer a commission to the buyer's agent. For this reason, these days even many FSBOs in Santa Rosa, Windsor and the surrounding area will pay for the buyer’s Realtor©.

Even if the FSBO does not offer a buyers agent commission, your Realtor© could still approach the owner of the property with a "Single Party Compensation Agreement". This agreement basically says to the Seller of the property; “I have a buyer who is interested in your property and if you agree to pay me a commission I will hook you up”. With the Buyer’s Market we have right now, in many cases the owner of the property will decide that they would rather have their property sold then-and-there, even if they have to pay a small commission to make it happen. Might be worth a shot, but again, there are not a lot of these out there anyway.

The point to all of this, is that it is important to have a conversation with your Realtor© in the very beginning so that both of you are on the same page with regards to the amount of the commission, how the commission will be paid and any restrictions that may be placed on it. Not only is the dollar amount of the commission negotiable with your Realtor©, but so is every other aspect of it as well.

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