Buyer Rep Contracts -- Cont.

Leap of Faith, Risks for Both Parties

No, it's not "Buyer Rep Contract" week on this blog, and this isn't going to turn into a serial installment.

It's just that the subject is so seldom discussed, and such a fertile topic.

So here's the last thought (to go with my earlier posts, "Real Estate Representation Contracts" and "Parachuting and Buyer Rep Contracts"):

Signing a Rep Contract does represent a risk -- and a leap of faith -- for both parties.

It's just that the risk comes at different points.

Buyer Risk

For the Buyer, it's up front: 'exactly who is this Bozo/Snake oil salesman/[your stereotype here] who I barely know and who wants me to sign an unfamiliar contract tying me to them for the next decade?'

"What if he doesn't know anything about real estate?"

"Or doesn't work hard for me?"

"Or I can't stand him (or her)?"

Realtor Risk

For the Realtor, the risks primarily come later.

That would be after they've invested a substantial amount of time scouring the market for the client, showing them properties, and educating them about how the market works.

Normally, the pay-off for that investment of time is a commission check (and ideally, some loyalty and down-the-road referrals).

However, if the client never buys, or buys from another Realtor they just met . . . all of that investment is for naught.

Yes, it's a commission business, "that's the way the cookie crumbles" -- blah, blah, blah.

But Realtors ultimately just sell one thing: their time.

Wasting it is the surest way to go broke.

Parachuting & Buyer Rep Contracts

The Perils of Overconfidence, Experience

What do parachuting and Buyer Rep contracts have in common?

I recall from my one time parachuting, almost 30 years ago (I knew the experience would prove to be useful in later life), that parachute fatalities actually fall into two groups.

Unceremoniously referred to as "bouncing," the first group -- no surprise -- consists of the greenest, most inexperienced parachutists: people who are doing it for their first or second time, and are presumably too panicked to deal with a parachute malfunction (assuming they even knew what to do) should circumstances require. (And by "require," I mean the 12 seconds or so you have to jettison the snarled chute and open the reserve one in time to break your fall.)

Inexplicably, however, the second group of parachute fatalities consists of the most experienced parachutists.

It turns out that these types are so confident and relaxed, that they lose track of the fact that the (very hard) ground is coming up, faster and faster, to meet them.

So, they simply wait too long to open their chute.

Real Estate "Parachutes"

Thankfully, the consequences of inattention in real estate aren't so high.

But revisiting the topic of Buyer Rep Contracts from yesterday, it seems obvious that agents who rue skipping this important step split into two, similar types.

The first type is the "newbie" Realtor who doesn't know how any of it works.

They don't know what's in the Buyer Rep contract (and so therefore are uncomfortable presenting it), don't know the appropriate time to discuss it, etc.

So they don't.

When, after months or even years of hard work the would-be client buys something from someone else (or never does), they learn their lesson.

However, the second type is the very experienced agent, who knows the contract backwards and forwards.

Frequently, they may even know the client from previous deals.

Which is actually the germ of the problem.

Namely, all that familiarity and experience can breed an undue comfort level, and even -- dare I say it -- a sense of sloppiness.

Different Outcomes?

Unlike the newbie Agent, the experienced agent in this situation often makes out fine . . . precisely because they are experienced.

They know the client, the client knows them, everyone knows their assigned role and performs it well.

But still . . . it just seems that you never hear about the agent who regretted insisting on getting a signed Rep contract, early in the relationship.

But surprisingly often, you do hear about -- and from -- the one who didn't. (And yes, you're not really experienced until you've had it happen to you.)