As you may remember from my last post “Before You Sign That Realtor Agreement, Here Are 5 Things You Should Consider!”, I touched on signing an “Exclusive Right to Buy” contract and why these are terrible. I will share with you my story as well as how and why you should avoid this real estate mistake.
Last summer I closed on a house in Lone Tree that took me over 18 months and 6 real estate agents to find. The process was a nightmare and I had almost reached my limit with buyers fatigue. The first few agents I worked with were very brief. The Denver market is so hot that they were not interested in working with me until I was ready to make an offer. The next set of agents were a little more patient. They took me on some showings but after a few weeks, I would hear nothing from them and their response time went from instant to hours if not days.
The final agent I had was a little better and spent a solid few weeks working with us patiently. This agent was responsive but very reactive. We noticed that we lost out on many offers based off his advice. We were becoming increasingly frustrated and that is when I decided to take matters into my own hand and negotiate an off market deal. I asked the agent I was working with if he would like to represent us in the deal and we would pay him cash out of our own pocket. I offered around 4K which I thought was very fair considering I did all the work. The agent was insulted and told me that I owed him a full commission and that he was owed this because I signed an “Exclusive Right to Buy”. Luckily I knew that I did not sign this document and that the agent was mistaken. He realized this and walked away from the 4K (which was just mind boggling to me).
The one thing that almost all of these agents had in common was they were fixated on forcing me to sign a contract rather than provide me with a great experience that resulted in us finding our dream home. An exclusive right to buy is just that. When you sign this document, you are stating that no matter what, this agent and this agent ONLY can represent you in buying your home. So before you sign that document, just remember, DON’T!
Important things to know about the “Exclusive right to buy”:
- In Colorado, you DO NOT need to sign this to work with an agent. Only at closing will you need to sign an agreement.
- An exclusive right to buy can last up to 6 months or even a year!
- Agents that want you to sign this rely on legally binding contracts rather than superior service and strategies
- Agents will try to justify this with statements like “I want to know you are as committed as I am” etc. If an agent is committed they will work hard with or without a contract. A great agent knows their weight in gold. There is NO justification for this document!
- If an agent will not work with you unless you sign this document, that agent is probably not worth working with in any capacity.
If you find yourself tangled up in one of these contracts, we wish you the best and hopefully your agent does a great job. If you are contemplating signing one, run. Run as far away from this document as you can.