It’s officially here! Real Estate Agents in Ohio now have 8 different representation forms offered by the State covering Exclusive vs Non-Exclusive relationships and different methods of charging for your services (hourly rate, flat fee, percentage of the sale or a combination of the three).
As a real estate agent, understanding the nuances of buyer agency agreements is crucial. There are two types of agreements you need to be familiar with: exclusive and non-exclusive. Let’s break down the differences and how they impact your work with clients.
About Buyer Agency Agreements
Buyer agency agreements define the relationship between you and your client. Similar to a listing agreement, these contracts outline the location, term, compensation, and services to be provided.
Exclusive Vs. Non-Exclusive
When working with clients, it's essential to explain the types of agreements to avoid conflicts. You don't want your clients to owe two commissions or get tangled in legal disputes, do you?
Here’s how to prevent those conflicts by understanding the difference between exclusive and non-exclusive agreements, their pros and cons, and how they’re typically used in our industry today.
Exclusive Agreements
An exclusive buyer agency agreement means your client agrees to work only with you in the defined area of the agreement, usually lasting 6 months to a year.
However, if your client signs an exclusive agreement with another agent, the new agreement won’t overwrite the previous one. But if they have a non-exclusive agreement and then sign an exclusive one, the exclusive agreement takes precedence. Be mindful that if you did significant work under a non-exclusive agreement, you might still be owed a commission if your client makes an offer through the exclusive agent.
It’s a bit complex, right?
Avoid Overlapping Exclusive Agreements in the Same Area
While clients can have multiple exclusive buyer agency agreements, ensure they don’t overlap in the same area. Educate your clients on the importance of clear terms and be wary of using broad language like "Cincinnati metro & surrounding areas." Vague terms can indicate a lack of understanding or care for their best interests.
Negotiate a Comfortable Term
Exclusive agreements are ideal for committed relationships with clients. Think of it as a temporary partnership. While both parties can terminate the agreement, clients may still owe you a commission if they buy a property you showed them with another agent. Encourage clients to sign an exclusive agreement once you’ve built a solid rapport.
Supercharge Your Service
Clients who sign an exclusive agreement with you will receive your utmost attention. Since you’re assured of getting paid as long as they buy in the defined area, you’re incentivized to provide top-notch service.
Non-Exclusive Agreements
Non-exclusive agreements allow clients to work with multiple agents. However, if they sign an exclusive agreement with another agent in the same area, it voids your non-exclusive agreement. Be cautious of the legal obligations tied to non-exclusive agreements, especially if you’ve shown them a property they later purchase with another agent.
Term Length
Non-exclusive agreements typically have shorter terms by agent preference. Although longer terms are possible, using non-exclusive agreements can offer clients a trial of your services. If the relationship works well, you can transition them to an exclusive agreement for 6 months to a year.
Commitment Levels
While non-exclusive agreements are flexible, they often mean less commitment from both sides. As an agent, your loyalty lies with clients who commit to you exclusively. The more committed your clients are, the more dedicated you can be.
In Summary
The key is to help clients avoid overlapping exclusive agency commitments in the same areas. Educating them on the differences between exclusive and non-exclusive agreements empowers them to control their real estate journey. Whether they choose to work with one agent per area or prefer the flexibility of multiple non-exclusive agreements, clear communication is essential.
Buyer agency agreements are here to stay, and by understanding and explaining their nuances, you’re not only protecting your clients but also positioning yourself as a knowledgeable and trustworthy agent. Learn how Nekst can help you win more Buyer Representation Appointments using our Active Buyer Roadmap & Portal feature.
