How to Screw Up Buyer Agency Agreements

A cautionary tale from Texas

In light of the big commission lawsuits, one of the biggest pieces of advice from industry gurus, coaches, brokerage leaders, and others has been “Execute a buyer agency agreement.” My friend, James Dwiggins, has been especially vocal about this issue, making it a central point of his presentation at Inman NY this year:

Among other things, he repeatedly argued that agents need to have their buyers sign buyers’ agent agreements, while brokerages need to push such agreements as a part of their company policies.

“You wouldn’t take a listing without an agreement,” Dwiggins said. “Why would you take a buyer?”

In a similar vein, Dwiggins urged industry pros to “treat your buyer the same way you treat your seller,” including by sitting down with them and having a presentation that explains an agent’s value. And he said that brokers need to teach sellers about the importance of offering compensation to buyers agents.

This is excellent advice, and frankly, buyer agency agreements are something the industry should have been doing all along.

Further, Washington REALTORS recently lobbied their legislature and got mandatory buyer agency agreements enacted into law:

Effective Jan. 1, 2024, the state of Washington will require real estate agents to enter into broker services agreements with both buyers and sellers, changing the way agents and clients form relationships.

These revisions to Agency Law require that brokers enter into a brokerage services agreement with their client before — or as soon as reasonably practical after — the provision of real estate brokerage services. This contract will include stipulations like length of partnership, exclusivity vs. non-exclusivity and the rate of compensation.

Washington is the first state to enact such legislation.

As much as I dislike government interference in commerce, this is a decent one. It helps ensure that no buyer will be surprised that some agent is claiming to be due a commission.

So I am broadly supportive of buyer agency agreements — as James said, treat buyers and sellers the same.

Having said that… there are ways to screw this up. And we get such a tale from the Republic of Texas.