Code Talk: The Case for Buyer-Broker Agreements

Posted on May 1, 2013 by AAR

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 “If you want to work less and make more money, it’s essential,” said West USA Vice President and Associated Broker Jon Kichen. Kichen is talking about the Buyer-Broker Exclusive Employment Agreement (BBEEA). The BBEEA is a signed contract between the buyer and the broker that gives the broker/agent the permission to locate property and negotiate terms and conditions acceptable to the buyer for the purchase or lease of a property. While not a required document, some agent’s wouldn’t start a relationship without it.

Kichen isn’t out “on the street” like he used to be. Nowadays, he spends the majority of his day assisting agents and reviewing files. However, this 30+ year real estate veteran and instructor knows a thing or two about what can happen when you don’t have a BBEEA. “I tell my students that I wouldn’t put a buyer in my car if they refused to sign the agreement,” said Kichen. “[The BBEEA] takes the uncertainty out of who you work for, procuring cause and how you get paid.” Kichen also believes that as salespeople, the BBEEA shows clients you’re serious about meeting their needs and you’re serious about your business.

Cara McGuire, CDPE, ePRO, GRI, SFR and REALTOR® with RE/MAX Professionals echoes Kichen’s enthusiasm for the BBEEA stating, “I’ve used it consistently for the past four years, since the downturn.” When McGuire first started using the BBEEA, it was to ensure that her clients knew she was on “their team”. McGuire started utilizing the BBEEA as a conversation starter with her clients, laying all her cards out on the table, setting expectations and showing off her ability to negotiate at the get-go. “I’ve only had one client question me about it,” said McGuire. “He said, ‘No other agent has ever asked me to sign this, why should I?’ But, after I explained my reasons, he had no issue signing it.”

Lauren Overton, a first-time home buyer and director of operations at Allison-Shelton Real Estate Services, AMO®, signed a BBEEA with her REALTOR® and says that she’d absolutely do it again. “I would never be opposed to this – but I could see where some buyers would be,” said Overton. She added that she could see how some home buyers would be “hesitant to sign right away in fear that the agent might not find something right away and they’d be stuck with them. But if it’s not working out, I think the agent should be ok with rescinding the agreement and let the buyer go elsewhere.”

While many brokerages in Arizona don’t require the BBEEA, Kichen believes that if one did, a domino-effect would take place. “That’s what happened on the East Coast. One broker started to require it and now many do. It just takes one.”


The BBEEA and the Code of Ethics
By Carole Ridley, AAR Professional Standards Administrator

Quite a few complaint calls and complaint filings cite a member’s alleged lack of adequate explanation with regards to the Buyer-Broker Exclusive Employment Agreement. The most common issue purported is that the BBEEA was signed at the same time as a lot of other papers and the agreement’s purpose was not adequately explained.

Allegations of this nature frequently result in a claim by the complainant that they have not been treated fairly, they have been misled, and they were not provided with a copy of the fully executed agreement until it is presented with a request for compensation. These allegations can support a violation of the Code of Ethics, Articles 1, 2, and 9.

Take a few extra minutes to explain the purpose of the BBEEA with the buyers so that buyers are not blindsided when they receive notice to compensate the REALTOR® per the terms of the BBEEA, and so that REALTORS® are not blindsided when they receive an ethics complaint. Let the buyer ask questions and then provide examples of how the agreement obligates you to perform in their best interests.

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5 Responses to “Code Talk: The Case for Buyer-Broker Agreements”

  1. Mike Waling says:

    I am a little concerned with Jon Kichen’s statement when talking about the Buyer Broker Agreement when he said: “[The BBEEA] takes the uncertainty out of who you work for, procuring cause and how you get paid.” We don’t want any misunderstanding that the BBEEA confirms procuring cause. It absolutely doesn’t. However, it may be one item a panel may use when deciding procuring cause.

  2. Mike Waling says:

    I would really enjoy a few of my colleagues that successfully use the BBEEA share their dialogue they use when explaining why their buyer should sign this. I believe it would really be enlightening & helpful. Thanks!

  3. Pat J Leach says:

    I explain to them that by signing this agreement between them & me that I will be working for them. I find the less I say, the easier it is for signatures. Less is better.

  4. Pat J Leach says:

    I also agree with Mike on the fact that the BBEEA is not a guarantee that you get a commission. Also, I have seen a couple without a beginning & ending date. That does not make it a valid agreement.

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