The buyer s listing agreement

Transcription

1 Chapter 16: The buyer s listing 143 Chapter 16 The buyer s listing After reading this chapter, you will be able to: solicit and enter into a written employment with a prospective buyer for payment of a broker fee when the buyer acquires property; and understand the due diligence promise given to locate and negotiate the purchase of property as the buyer s exclusive real estate agent under a right-to-buy-listing. Learning Objectives exclusive agent exclusive right-to-buy listing Key Terms When an owner decides to sell a property, they tend to first look for an agent to assist in disposing of the property and completing the work needed to field a buyer. Rarely do sellers attempt to find buyers themselves. The cyclical exceptions are for sale by owner (FSBO) sellers, who venture out alone during boom-time seller s markets. FSBO sellers market their property in an effort to locate buyers, as do agents. Their sole intention is to avoid retaining brokerage services and paying fees. The nurturing and grooming of a buyer s agent In contrast, when an individual decides they might like to own a home, they start the search by driving through neighborhoods and visiting online multiple listing service (MLS) publications to see what is available. They do not first think about brokers and agents as helpers in this pursuit. Their search is not initially for an agent who they might like to work with retain to locate a property. Instead, they investigate a listed property they have located (or drop in at an open house). That is typically their first encounter with a real estate agent.

2 144 Real Estate Practice, Seventh Edition Thus, by some sort of history or training, owners seeking to sell a property turn to real estate agents, while buyers seeking to locate a property do not. As a result, the first agent a buyer contacts is a seller s agent, a quasiadversarial individual their duty being honesty, not advice and assistance with selling a property on their mind and not locating a property for the prospective buyer of the listed property. During one of these contacts, an owner s agent may suggest to the buyer that they can help find them the property they are looking for. Here, the owner s agent transforms themselves into a buyer s agent. The triggering event is the buyer s lack of any further interest in the listed property the agent is giving them information on. Opportunity first, then commitment A buyer who feels comfortable with the agent will talk and answer questions about their property requirements, size, location and pricing property information sought by the agent. Here, the discussion has dramatically shifted from selling a property to finding a property, as described by the buyer. At some point, with this agent or another, the buyer acquires the confidence to involve themselves with a particular agent in the search. For the moment, they have an agent. A commitment? Possibly, but this is not yet known to the agent. The agent lacks the solicitation by a thoughtful presentation of a written authorization a buyer s listing to be entered into by the buyer before the agent starts the hunt. exclusive agent An agent who is acting exclusively on behalf of only one party in a transaction. So far, the agent has only enough information to determine whether they have a reasonable opportunity, if they go to work for this buyer, to locate a suitable property, make an offer which is accepted and receive a fee on closing. The agent may need to counsel the buyer more before asking for the commitment to retain the agent as their exclusive buyer s agent. The solicitation of an exclusive representation exclusive rightto-buy listing A written employment by a broker and a prospective buyer of real estate employing and entitling the broker to a fee when property is purchased during the listing period. [See ft Form 103] The exclusive right-to-buy listing is used by a broker and their agents when counseling with a prospective client who needs to find and buy a property. It is prepared and reviewed as the agent s offer to render services on the buyer s behalf as their exclusive agent for a fixed period of time. [See Form 103 accompanying this chapter] On signing and exchanging copies, the broker is employed to locate property sought by the buyer. In exchange for the buyer s promise to pay a fee to the broker directly or indirectly through the seller if the buyer acquires the type of property sought during the listing period, the broker promises to use due diligence in the search for that property. [See Chapter 21] Formal documentation of an obligation to pay a fee a written signed by the buyer is the legislated and judicially mandated requisite to the right to enforce collection of a broker fee for a purchase transaction closed by the buyer.

3 Chapter 16: The buyer s listing 145 Without the buyer s written promise to pay a fee, a broker is entitled to nothing when their buyer goes around them and acquires property on which the broker provided them with information or even negotiated the transaction for. Likewise, without the buyer s written promise, no fee has been earned which is collectable from anyone, unless the buyer s broker arranged a fee-sharing with the seller s broker documenting the buyer as their client a condition which presents other risks. [See first tuesday Form 105] Each section in the buyer s listing has a separate purpose and need for enforcement. The sections include: Brokerage services: The employment period for rendering brokerage services and the broker s due diligence obligations are set forth in Sections 1 and 2. General provisions for enforcement of the employment and broker fee-splitting arrangements are included in Section 3. Broker fee: The buyer s obligation to either pay a broker fee or assure payment of the broker fee by the seller or a seller s broker, the amount of the fee and when the fee is due are set forth in Section 4. Property sought: A general description of the type of property to be located for the buyer is then entered. Signatures and identification of the parties: On completion of entries on the listing form and any attached addenda, the buyer and the broker (or agent) sign the document consenting to the employment. Buyer s listing The following instructions are for the preparation and use of the Buyer s Listing Agreement Exclusive Right to Buy, Lease or Option, first tuesday Form 103. This form is used by a buyer s agent when entering into the employment of a buyer as their sole agent retained for a fixed period of time, to locate and acquire property. Preparing the buyer s listing Each instruction corresponds to the provision in the form bearing the same number. Editor s note Check and enter items throughout the in each provision with boxes and blanks, unless the provision is not intended to be included as part of the final, in which case it is left unchecked or blank. Enter the date and name of the city where the listing is prepared. This date is used when referring to this listing. 1. Retainer period: 1.1 Listing start and end date: Enter the date the brokerage services are to commence. Document identification:

4 146 Real Estate Practice, Seventh Edition Form 103 Buyer s Listing Agreement Enter the expiration date of the employment period. The expiration needs to be set as a specific date on which the employment ends since an exclusive listing is being established. 2. Broker s obligations: 2.1 Broker s/agent s duty: The broker and their agents promise to use diligence in their effort to locate the property sought by the buyer. The agency duties a broker and their agents owe the buyer are always implied, if not expressed in writing. 3. General provisions: 3.1 Agency Law Disclosure: Acknowledges receipt of the Agency Law Disclosure Real Estate Agency Relationships, which is to be attached as an addendum to this. [See Form 305 accompanying Chapter 7]

5 Chapter 16: The buyer s listing Authority to share fees: Authorizes the broker to cooperate with other brokers and share with them any fee paid on any transaction. 3.3 Mediation : States the parties agree to non-binding mediation after 30 days of informal negotiations prior to filing a court action. 3.4 Attorney fees: Entitles the prevailing party to attorney fees if litigation results from the buyer s failure to pay fees or the broker s breach of an agency duty. 3.5 Choice-of-law provision: States California law will apply to any enforcement of this employment. 4. Broker fee: 4.1 Fee amount: Enter the fee amount negotiated to be paid as a percentage of the sales price or a fixed dollar amount. This amount will be paid when any one of the following conditions occur triggering payment: Fee provisions a. Fee on any sale: States the broker fee is earned and due if the buyer acquires, exchanges for or options property during the listing period. [See Form (c) for fee due on post-listing period sales] b. Termination fee: States the broker fee is earned and due if, during the listing period, the buyer terminates this employment or withdraws from pursuing the purchase of real estate. c. Safety clause fee: States the broker fee is earned and due if, within one year after the listing expires, the buyer enters into negotiations for the purchase, option, or exchange of property the broker exposed them to during the listing period. Within 21 days after expiration of the listing period, the broker needs to provide the buyer with a list of the qualifying properties reviewed with the buyer during the listing period. [See first tuesday Form 123 accompanying this chapter] 4.1 Fees paid by seller: The buyer will not owe any fees if the seller pays a fee or the seller s broker shares a fee in an amount acceptable to the broker. If the seller or the seller s broker do not agree to pay or share a fee with the broker, the buyer is to pay the broker fee in addition to the purchase price. Fee provisions cont d

6 148 Real Estate Practice, Seventh Edition Form 123 Identification of Qualifying Properties 4.2 Hourly fee: Enter the negotiated dollar amount of the broker s per hour fee. The hourly fee is earned for time and effort spent on behalf of the buyer if property is not optioned or acquired by purchase or exchange after a diligent effort is made to locate property.

7 Chapter 16: The buyer s listing 149 Property description: Enter a description of the type of real estate sought by the buyer, including its size, general location, purchase terms, and property requirements. Type of property sought Broker s/agent s signature: Enter the date the listing is signed. Enter the broker s name and California Bureau of Real Estate (CalBRE) license number. Enter the agent s name and CalBRE license number. Enter the broker s (or agent s) signature. Enter the broker s address, telephone numbers and address. Signatures Buyer s signature: If additional buyers are involved, check the box, prepare a Signature Page Addendum form, reference this listing, and enter their names and obtain their signatures until all buyers are individually named and have signed. Enter the date the buyer signs the listing and the buyer s name. Obtain the buyer s signature. Enter the buyer s address, telephone numbers and address. The exclusive right-to-buy listing is used by a broker and their agents when counseling with a prospective client who needs to find and buy a property. It is prepared and reviewed as the agent s offer to render services on the buyer s behalf as their exclusive agent for a fixed period of time. Chapter 16 Summary On signing and exchanging copies, the broker is employed to locate property sought by the buyer. In exchange for the buyer s promise to pay a fee to the broker directly or indirectly through the seller if the buyer acquires the type of property sought during the listing period, the broker promises to use due diligence in the search for that property. Formal documentation of an obligation to pay a fee a written signed by the buyer is the legislated and judicially mandated requisite to the right to enforce collection of a broker fee for a purchase transaction closed by the buyer. Each section in the buyer s listing has a separate purpose and need for enforcement. The sections include: Brokerage services: The employment period for rendering brokerage services and the broker s due diligence obligations are set forth in Sections 1 and 2. General provisions for enforcement of the employment and broker fee-splitting arrangements are included in Section 3.