When buying a home, it's easy to get caught up in the excitement of finding the perfect property, but there's a crucial aspect of the process that should never be overlooked—being careful about what you sign. Recently, I experienced a situation that perfectly illustrates why buyers must be vigilant and fully understand the agreements they enter into. Here's what happened and why it’s so important to be aware.
A Real-Life Scenario: Two Brokers, One Buyer, and Potential Trouble
I recently had a listing where the buyer's agent wanted to clarify something on an addendum to the contract: the buyer was going to pay the difference between their agreed-upon fee and what the seller was willing to pay. The buyer and their agent had agreed on a 3% commission, but my seller was only offering 2.5%. The buyer’s agent wanted my seller to sign an addendum stating that the buyer would cover the remaining 0.5% commission difference.
I informed the buyer's agent that since my seller was not a party to the agreement between the buyer and their agent, there was no need for the seller to sign such an addendum. Instead, the agent should simply provide the agreement signed by the buyer to the closing agent.
The Underlying Problem
Later, I received a call from the buyer's agent, who agreed with my advice but explained why this situation had arisen in the first place. Here’s what happened:
- Two Different Brokers Involved: The buyer had previously signed an exclusive buyer brokerage agreement with another real estate broker (let's call them Broker A).
- A Second Agreement Signed: The buyer claimed they were unaware they had signed an agreement with Broker A because it was never fully explained to them. They then went on to sign another agreement with Broker B, who went under contract with me and my seller for the sale of my listing.
- Conflict and Resolution: Once Broker A found out that the buyer was under contract, they contacted Broker B. The buyer was caught in a situation where they had committed to two different brokers. To resolve the issue without legal complications, Broker B agreed to pay Broker A 1.5% of the commission to settle the matter, releasing each other and the buyer from any further liability.
The Lesson: Be Careful What You Sign
This situation highlights a critical lesson for all homebuyers: always be careful about what you sign. Understand every agreement's terms and implications before committing. If you sign an exclusive buyer brokerage agreement, it is legally binding. If you’re unhappy with the service you’re receiving from your broker, don’t just sign with a new broker—take the proper steps to avoid future complications.
What Should You Do If You Want to Change Agents?
If you’re considering changing agents, follow these steps:
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Review Your Current Agreement: Understand the terms of your existing agreement. What is required to cancel or modify it?
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Request a Cancellation or Modification: If you are unhappy with your current agent, ask them to sign a modification to the exclusive buyer brokerage agreement or a showing agreement that officially cancels the original contract. This step is crucial to avoid being obligated to pay multiple commissions.
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Document Everything: Ensure that all agreements, cancellations, or modifications are documented in writing. Keep a copy for your records to avoid any misunderstandings or legal issues down the line.
The Risk of Not Cancelling Previous Agreements
Failing to cancel your original agreement with a broker could result in you being liable to pay commissions to two different agents if you purchase a property while under both agreements. This mistake can be costly and stressful, and it's easily avoidable by understanding what you sign and ensuring all parties are on the same page.
Final Thoughts
Buying a home is one of the most significant decisions you'll ever make, and every step of the process matters. Always be cautious about what you sign and review any agreements thoroughly to understand the commitments you're making. If you find yourself in a situation where you need to change agents, be sure to handle it properly by canceling previous agreements. Protect yourself and avoid paying multiple commissions by staying informed and vigilant.
Ready to Work with a Trusted Real Estate Professional?
Don’t leave your home-buying journey to chance. Work with a real estate broker who prioritizes transparency, protects your interests, and guides you through every step of the process. With my extensive experience, I’ll ensure you’re never caught off guard and always feel confident in your decisions.
Contact me today at www.labradarealty.com, email me at albert@labradarealty.com, or call me at 786-290-3594 to start your journey with confidence!