The concept of requiring buyers to sign an exclusivity contract is a hotly debated one - and for good reason. There are lots of pros and cons - both for the agent and for the buyer.
Pros & Cons of Requiring a Buyer's Agent Exclusivity Agreement:
Protects your time:The main reason buyer's agents choose to require their buyers to sign an exclusivity agreement is to protect their time. As you know, working with a buyer requires a large time commitment and a lot of effort. You're looking for potential properties, driving around to dozens of viewings and are on call anytime questions or concerns come up. No one wants to work for free - and requiring an exclusivity agreement assures that you won't.
Keeps buyers from making a last minute switch:The last thing you want is to put in a ton of work hours only to have your would-be client jump ship in the eleventh hour and work with another agent. I've spoken with agents that require exclusivity agreements and many of them haven't personally had this happen, but have seen it happen to fellow agents and aren't willing to take that risk.
Lets your buyers know you're committed to them:Having a semi-binding agreement commits your clients to you, but it also shows your commitment to them. If you're in a contract for a set period of time, they can rest easy with the confidence that you will work hard for them for that period of time and won't get distracted by other clients and transactions.
Can be a turn off for new buyers:Why would a new buyer work with an agent requiring a contract when they can work with one who doesn't? The truth is, there are a number of reasons having a contract can be a good thing (see above). However, there are some issues that can also come along with requiring a contract. It essentially takes the risk of a potentially unhappy working relationship off the agent and puts it on the buyer - and some buyers may not respond well to that idea. A way to work around that is to include an expiration date or a mutual dissolution clause.
Can create a sense of mistrust:Many buyers are not anticipating the possibility of having to work with one agent exclusively. The concern is, if the agent starts to provide poor service or begins to shift their focus to a client with higher commission potential, the buyer is locked in. If you do use an exclusivity agreement, be sure to disclose all the terms upfront, explain what your buyer's options are if things go south and give them your word that being exclusive won't have any negative impact on the service they receive. Providing buyers with testimonials from satisfied past clients can also help alleviate this fear.
Use our free Real Estate Testimonial Template to simplify the process.
Buyers may feel limited on number of properties to choose from:One of the biggest concerns that buyers may have is that working with one agent exclusively will limit the number of properties they'll have access to. Many buyers don't understand how listings work and that agents have access to all active properties. Be sure to discuss your access to all available listings beforehand to ease your buyer's mind.
Consider all the potential outcomes that come along with requiring a real estate buyer's exclusivity agreement before you decide whether it's a smart move for you and your business.
Do you use an exclusivity agreement? Why or why not?