Buyer's Agent Agreement

[moiwl]

Good day !

I was wondering if anyone here with knowledge of BA agreement shed some light on the questions/doubts I have, then that would be most appreciable.

To start with, I am a fresh meat in the investment property world. I've my finances approved and I am ready to plunge. As this is a 'Seller's market', I have decided to take help of the BA to find me a suitable IP based on my criteria - this may potentially help me to save me some $$$ too on the property prices depending upon his/her expertise to negotiate the price down. In my pursuit to find a BA with whom I can comfortably deal with, I have talked to three BAs so far. I must say, all them were very helpful and each one seemed to have their own nuances and mindset in finding the right property and growing the property portfolio.

After few days of thinking, I decided to hire one of those three BAs' service based on their exceptional track record in spotting the BMV properties. So, I asked for a copy of their BA agreement to go through their terms and conditions before I sign.

1. I was asked to sign Agency agreement factsheet -

http://www.fairtrading.nsw.gov.au/F...ty/Using_an_agent/FTR32_Agency_agreements.pdf

Is this normal and fair practice ? I find this document unusual given that it's for the Seller who engage the REA to sell his property NOT for the buyer who engages the BA to buy the property. When I called them to clarify this, I didn't get satisfactory answer and instead they insisted me to sign it, if I need to hire their service, citing their company policy.

2. Apart from the agency agreement factsheet, there is a master BA agreement where other conditions are set out - in this agreement
- there is an upfront fees of $9900, without refund clause though
- BA is authorised to exchange the contract and bid at auctions - I find these conditions bit scary as there is nothing else written in the agreement like under which situation they would proceed further and if so, would they take my consent to proceed further ? I sought clarification on these two matters - all they said was that you would be given chance, but I note that since it's not written in black & white there may be a room for arguments if the situation was to turn upside down and most likely in that instance I would be at the loosing end.

3. In their disclaimer, they have denied taking ANY responsibility on the presented property and put an onus on me to do my due-diligence/number crunching/strategy check before proceeding further - Is this is a normal practice ?

Overall, I felt that their customised agreement insulated them from any shortfall/error/misrepresentation (if at all) on their part and made me liable for losses arising due to that.

---OR---

Sometimes, I also wonder that I am reading too much or over analysing the agreement/possible situations. On an another note, I feel that I lack faith here given that the agreement is not clear and $10k is a substantial amount. Question also come to my mind that, how come many other investors have dealt with this company and made decent sized equity or property portfolio in 5-7 years time frame ? Did they overlook or didn't care and just took a leap of faith ?

Thank you for reading thus far and I look forward to see your valuable feedback.

 

[jrc77]

I would be very concerned about the non refundable $9900. I used a well regarded BA for a purchase and paid a non-refundable retainer upfront that was about a quarter of that amount. The rest of the fee was then payable when the purchase went unconditional.

Regards,

Jason

 

[D.T.]

Where are you looking to buy? If in Sydney, there's a couple BAs on here that u might like to get a 2nd opinion on, just to be sure

 

[moiwl]

I would be very concerned about the non refundable $9900. I used a well regarded BA for a purchase and paid a non-refundable retainer upfront that was about a quarter of that amount. The rest of the fee was then payable when the purchase went unconditional.

Regards,

Jason

Thanks Jason .. I found this condition very unusual too. I didn't get satisfactory answer in writing - most of the discussion about my clarification given was based on their unique business model and their business policies, which was hard to argue with.

 

[D.T.]

Thanks Jason .. I found this condition very unusual too. I didn't get satisfactory answer in writing - most of the discussion about my clarification given was based on their unique business model and their business policies, which was hard to argue with.

I wouldn't deal with someone with that level of transparency.

 

[moiwl]

Where are you looking to buy? If in Sydney, there's a couple BAs on here that u might like to get a 2nd opinion on, just to be sure

Yes, in Sydney Metro/Greater Metro - upto Wollongong, Penrith and Newcastle boundaries. Few conditions were bummer to me and despite my lack of experience in the property investment, I found them ambiguous. I will certainly chat with other BA and see if they have same conditions or not in their contract especially about fees and agent document i.e this one.

Thanks

 

[Scott No Mates]

The oft doesn't have a counterpart document for buyers agent at least they have taken the initiative to give you the oft information.

Is their fee a flat charge or incentivised based on savings made?

 

[DaveM]

Alan (Propertunity) and Jacque (House Search Australia) are the two people you should be talking to. Both on the forum and both transparent and ethical.

 

[Propertunity]

NEVER pay all the money upfront for ANYTHING.

Most reputable BAs would only charge a non-refundable retainer of 20-30% of the full fee with nothing more to pay until you unconditionally exchange.

The only time we would seek to sign & exchange a contract on a client's behalf, would be where the client is absent (interstate or overseas) and no relative holds a POA AND the client has authorised us specifically to do that on a particular property.

 

[Aaron_C]

10k upfront? Hell no.

 

[moiwl]

The oft doesn't have a counterpart document for buyers agent at least they have taken the initiative to give you the oft information.

Is their fee a flat charge or incentivised based on savings made?

If it was for informational reading then I don't mind. However, I was asked to sign it and return back to them along with the main BA agreement. Their fees is flat irrespective of property price, but it was an upfront payment with whatsoever no refund clause.

 

[moiwl]

NEVER pay all the money upfront for ANYTHING.

Most reputable BAs would only charge a non-refundable retainer of 20-30% of the full fee with nothing more to pay until you unconditionally exchange.

The only time we would seek to sign & exchange a contract on a client's behalf, would be where the client is absent (interstate or overseas) and no relative holds a POA AND the client has authorised us specifically to do that on a particular property.

Thanks Alan for this info. Most appreciated. Do you know if it's a normal practice in BA industry to have this OFT document signed - I am especially concerned with the wording of this document - it's for the seller not for the buyers.

 

[Propertunity]

Thanks Alan for this info. Most appreciated. Do you know if it's a normal practice in BA industry to have this OFT document signed - I am especially concerned with the wording of this document - it's for the seller not for the buyers.

Sounds wacko to me.

 

[monalisa]

3. In their disclaimer, they have denied taking ANY responsibility on the presented property and put an onus on me to do my due-diligence/number crunching/strategy check before proceeding further - Is this is a normal practice ?

You need to be sure that the property they have found for you stacks up numbers wise as you know your finances better, and you are in a better position to make a call on how much cash flow shortfall (if any) you are able to sustain - In my view no one else can determine this, but you.

As a buyer, I would want to be across the numbers rather than just relying on someone else to tell me how much a property will cost to hold.

 

[Jacque]

Hi Moiwl

Hopefully I can assist in clearing up some facts here. Firstly the OFT link that you've provided is NOT an agreement contract for buyers agents but a factsheet about selling agreements and is very generalised. I'd like to draw your attention to the OFT factsheet specifically pertaining to buyers agents (which we worked with OFT in consultation with the REINSW BA Chapter- it has taken us many months to get this info up alone as the BA industry is relatively small nationally)

http://www.fairtrading.nsw.gov.au/f...property/Using_an_agent_to_buy_property.page?

Secondly, the BA Agreement can either be the REINSW standard agreement (which we use and is available for purchase if you are an REINSW member only) or else an individual one that the buyers agency has in place. With any contract, I recommend that you read carefully before signing and ensure you are comfortable with the terms. It is a contract between 2 parties, after all. I am unable to post a copy of the REINSW BA Agreement on a public forum however please feel free to email me and I can send you a draft copy FYI if interested.

Thirdly, and I'm with Alan here, why pay the entire fee upfront? This doesn't make sense and I would baulk at this type of fee system. A retainer and final success fee are the most common fee system utilised by the overwhelming majority of BAs nationally. For further information on fees see the REBAA website here. Naturally fees are going to vary, depending on the level of service, search area size, specific criteria etc but it at least provides you with a general idea: http://rebaa.com.au/buyers-agent-fees/

As Alan has rightly pointed out, BAs can only act for buyers with a written agreement and, if signing anything on their behalf, a Power of Attorney document. Even bidding on behalf at auction or exchanging requires your signature and an authority form so don't be concerned that they can sign for you willy-nilly. This is simply not the case. Perhaps you have misunderstood them here?

Another thing that I'd like to point out is that a BA should be working for you as an individual client. This means that they are conducting the search based on your criteria and budget and NOT TAKING ON ANOTHER CLIENT AT THE SAME TIME WITH THE SAME CRITERIA AND BUDGET. Unfortunately, there are a few buyers agencies out there who take on multiple clients with very similar briefs and I would be questioning how they handle this when the time comes to buy. One super-duper property arises that would suit 3-4 of their clients-who do they offer it to? Clear conflict of interest? Absolutely. Ask any BA you're considering how they handle this as it can become a real issue. Our policy is not to take on two clients with the same criteria and budget, thus serving our clients very much in a personalised way. This does mean that sometimes there are wait periods, as we need to find something for an existing client before commencing a search for a new one, but it is a point of difference that works for us in ensuring that there is no conflict at any time.

Re: disclaimers. This is another entire topic of it's own but basically as long as the BA has sufficient PI insurance you are protected if they act improperly.

I also note you have a HUGE search area to cover- was the BA OK with this?
It seems way too large to justify being able to do a thorough search job...

Hope the above helps in some small way anyway

 

[PropertyWizards]

Hi Moiwl

1 Factsheet
I agree with the others that the OFT agreement they have supplied you applies to sellers but it is just a fact sheet and asking you to sign it should only be an acknowledgement that you have been given the information. I?m wondering why they aren?t giving you the buyer?s agent version that Jacqui mentioned?

2 Upfront fee
I agree that the upfront fee is way too high. The upfront is to ensure clients are serious and not just tyre kickers, but the agent should have to earn the bulk of the fee by finding you the property you want and successfully acquiring it for you.

3 Exchanging and bidding
If it would make you feel safer, I?d suggest note in your agreement that they can only sign a contract or bid at auction with your written authority specifying the price.

4 Disclaimer
The buyer?s agents should research the property well, conduct thorough due diligence and give you enough information to make an informed decision. You should be able to rely on the quality of research but in the end you would need to weigh it up and decide if the property is right for you and if you can afford it.

Good luck, hope this helps a little.

Liz Sterzel
Buyer's Agent - Perth
www.propertywizards.com.au

 

[baby blue eyes]

Use one of the BA's posting.

I originally looked at an agency sounding similar to the one you are looking at. I could not agree with their charging policies so moved on. Paying for any service upfront in full Without any clause allowing refunds I could never agree to. The responses I received from the staff were that this is the way it is, plenty of other people are happy to pay this amount.

Move on there are good professionals on here.

I have used Prop for two purchases recently and am happy with the service. I am an experienced investor with multiple properties, I was lacking time to research adequately. I had many properties presented to me, the search took a couple of months for the right property. I am very happy with the outcome. I was never pressured at any stage during the selection process.

Jacque is well respected too.

If you are on here questioning the policies of the current BA, you are obviously not comfortable. You should move on too and look for another BA.

 

[ToGetProperty]

Funny about BA.

I was buying in Brisbane few months ago. And have located few properties. I ask my agent who sold and managing my properties to act as my BA to negotiate the price. All of them are unsuccessful and the properties sold soon.

Eventually, my agent asks me to talk to the selling agent directly.

Even though I talked directly with agents and took the quickest action by putting up the full price for one property, I was still missing the deal. It should be much harder to secure a deal if a BA is involved in the hot market with a good deal.

I am still thinking the best BA is yourself unless you won't buy any property without a BA. In this case, you do need a BA.

 

[moiwl]

Hi Moiwl

Hopefully I can assist in clearing up some facts here. Firstly the OFT link that you've provided is NOT an agreement contract for buyers agents but a factsheet about selling agreements and is very generalised. I'd like to draw your attention to the OFT factsheet specifically pertaining to buyers agents (which we worked with OFT in consultation with the REINSW BA Chapter- it has taken us many months to get this info up alone as the BA industry is relatively small nationally)

http://www.fairtrading.nsw.gov.au/f...property/Using_an_agent_to_buy_property.page?

This is such a warm and supportive community. Thanks Jacque for this detailed response. I appreciate your invaluable time and information.

I understand that OFT FTR32 is not an agreement. This PDF was customized by the BA agency, they put a box down (by PDF writer or something else) on each page and asked me to sign. I looked at this same OFT link before and requested something similar from the BA to sign, but since there is no PDF version for a buyer, they asked me to sign something which seller signs - I had problems with that as I believed I was signing something irrelevant and my solicitor also confirmed that I needn't have to sign that - yes, I spent $ for my solicitors' time to review their master agreement and this factsheet.

I wouldn't have even thought for a second time, if the title wordings were for the buyer.

Secondly, the BA Agreement can either be the REINSW standard agreement (which we use and is available for purchase if you are an REINSW member only) or else an individual one that the buyers agency has in place. With any contract, I recommend that you read carefully before signing and ensure you are comfortable with the terms. It is a contract between 2 parties, after all. I am unable to post a copy of the REINSW BA Agreement on a public forum however please feel free to email me and I can send you a draft copy FYI if interested.

I wasn't given standard REINSW contract, for sure. If that was the case I might have settled one property with this BA by now. I will drop you a line for a draft copy of agreement.

Thirdly, and I'm with Alan here, why pay the entire fee upfront? This doesn't make sense and I would baulk at this type of fee system. A retainer and final success fee are the most common fee system utilised by the overwhelming majority of BAs nationally. For further information on fees see the REBAA website here. Naturally fees are going to vary, depending on the level of service, search area size, specific criteria etc but it at least provides you with a general idea: http://rebaa.com.au/buyers-agent-fees/

I was quite keen to hire their service at one point in time that I ignored this condition, despite knowing that it's not fair. However, lack of refund clause in their agreement put me off.

As Alan has rightly pointed out, BAs can only act for buyers with a written agreement and, if signing anything on their behalf, a Power of Attorney document. Even bidding on behalf at auction or exchanging requires your signature and an authority form so don't be concerned that they can sign for you willy-nilly. This is simply not the case. Perhaps you have misunderstood them here?

May be true. My solicitor advised me to talk to them to take off exchange contract and bid at auction wordings from the master BA agreement - as anticipated, BA didn't agree to it.

Another thing that I'd like to point out is that a BA should be working for you as an individual client. This means that they are conducting the search based on your criteria and budget and NOT TAKING ON ANOTHER CLIENT AT THE SAME TIME WITH THE SAME CRITERIA AND BUDGET. Unfortunately, there are a few buyers agencies out there who take on multiple clients with very similar briefs and I would be questioning how they handle this when the time comes to buy. One super-duper property arises that would suit 3-4 of their clients-who do they offer it to? Clear conflict of interest? Absolutely. Ask any BA you're considering how they handle this as it can become a real issue. Our policy is not to take on two clients with the same criteria and budget, thus serving our clients very much in a personalised way. This does mean that sometimes there are wait periods, as we need to find something for an existing client before commencing a search for a new one, but it is a point of difference that works for us in ensuring that there is no conflict at any time.

Couple of other BAs with whom I didn't proceed, gave me criteria sheet to fill in first. However, this BA wanted me to first sign the contract, pay $10k and then they would present me sheet for my criteria - I found this very unusual. Perhaps, they already had some properties and they wanted me to fit with one of them.

Re: disclaimers. This is another entire topic of it's own but basically as long as the BA has sufficient PI insurance you are protected if they act improperly.

When I asked about PI insurance, again the answer was not straight forward.

I also note you have a HUGE search area to cover- was the BA OK with this?
It seems way too large to justify being able to do a thorough search job...

Our discussion didn't go that far, given that they have a process in place where sign on the agreement and payment is required first.

Hope the above helps in some small way anyway

Infact Immensely Thanks so much

 

[moiwl]

Use one of the BA's posting.

I originally looked at an agency sounding similar to the one you are looking at. I could not agree with their charging policies so moved on. Paying for any service upfront in full Without any clause allowing refunds I could never agree to. The responses I received from the staff were that this is the way it is, plenty of other people are happy to pay this amount.

If you are on here questioning the policies of the current BA, you are obviously not comfortable. You should move on too and look for another BA.

Thanks Vicki. Infact, I have decided to move on - perhaps I may not be able to grow as fast as their clients have grown. But that's fine by me as I was just not ready to sign whatever they have put on the paper.