TRANSACTION POLICY UPDATE:Effective 11-13-2023
Buyer Representation Agreements
All City has updated our transaction policy to require a buyer representation agreement on all buy-side sales transactions. We have also discontinued using the “All City Buyer Representation Agreement.” Texas agents may use the TXR version or any real estate board-published version (for example, the ABOR Buyer Representation Agreement).
WHY THE POLICY CHANGE?
We are experiencing an increasing trend of other brokerages contacting us claiming “Procuring Cause” on some of our buy-side deals. For us to successfully fight these claims, we must have in place a buyer representation agreement that 1) establishes an agency relationship with the client and 2) provides a sworn statement from the client that they are not a party to another buyer or tenant representation agreement with another broker for the acquisition of property in the market area.
Having a buyer representation agreement will not guarantee we prevail in a dispute, but not having one makes winning nearly impossible.
WHAT’S THE BENEFIT OF HAVING A BUYER REP AGREEMENT WITH MY CLIENT?
First and foremost, it adds clarity and definition to the Broker/Client relationship. It defines Broker and Client obligations in the relationship, defines our service, adds transparency to what and how we get paid, and it establishes agency. Having a buyer representation agreement formalizes that fiduciary relationship with our clients.
Secondly, it is professional. This is a professional business relationship, and having the proper documentation demonstrates that you take your business and your time with the client seriously. In any professional relationship, whether one hires an accountant, a lawyer, or a contractor, the expectation is that there will be a formal agreement to engage in services. Not having one opens the business transaction up to confusion and false expectations and could ultimately lead to a nasty breakup.
Finally, it offers a bit of protection. For your client, it establishes that you are acting in their best interest as their fiduciary and formally makes them your CLIENT, not a CUSTOMER. For the agent, it defines your fiduciary duty to your client and helps to protect your time and earnings.
WHAT BUYER REPRESENTATION FORM CAN I USE?
We have discontinued the All City Buyer Representation Agreement for use. Its current version does not offer our agents adequate protection. We may choose to revise it and authorize a different version. Still, agents can use the (TXR-1501) Residential Buyer/Tenant Representation Agreement or any real estate board-published Buyer Representation agreement. For example, the Austin Board of Realtors Buyer Rep agreement.
WHAT IF I AM ALREADY UNDER CONTRACT? DO I HAVE TO GO BACK AND GET A BUYER REP SIGNED?
The short answer is no. This policy will begin immediately on all NEW buyer-client relationships beginning on November 13, 2023. But we highly encourage you to talk with your existing clients. If you don’t have a formal agreement with them, get one. Your business will be better for it.
DO I NEED A REPRESENTATION AGREEMENT FOR MY TENANT CLIENTS?
No, we are not requiring an agreement for tenant representation. We understand that having a representation agreement signed by a tenant is not a common practice in the leasing world. But should you? YES. We see far more commission disputes and client confusion surrounding representation and agency in lease deals than in sales.
WORKSPACE IS REQUIRING THIS DOCUMENT ON A DEAL THAT HAS BEEN IN THE WORKS BEFORE OCTOBER 21, 2023. HOW DO I SUBMIT MY DEAL FOR REVIEW?
Simply request an exemption for this document and state that it was established before 11/13/2023.
Our promise to our agents is that we will never mandate a policy that makes no sense or doesn’t have sound reasoning behind it. We don’t want to waste your time with more work. Please know that we have a thorough transaction policy for our client’s protection and your protection. If you have any questions, please contact our central office at 866-277-6005. Thank you for your attention.