August 13th, 2018 at 2:29 pm
Answer: The answer depends on precisely how your situation plays out, but the two most relevant standard forms are C.A.R.’s Buyer Representation Agreement – Exclusive (BRE) and Termination of Buyer Agency (TBA). Sometimes, even just an email exchange with your client documenting that you will not be the “buyer’s agent” for a new home transaction is better than leaving things up in the air.
In a common scenario, let’s say you are working with a buyer who is interested in both new developments as well as existing homes and condos for sale. You can ask the client to sign a BRE to document the creation of an agency relationship with the buyer. The BRE will require the buyer to pay you, for example, 3% if he or she buys a property in a certain area. You can, however, explain to your buyer that if a builder or listing agent ends up paying you 3%, the buyer will owe you nothing under paragraph 3B of the BRE. Yet, the buyer can take the BRE to open houses in new developments, and when needed, show it to the builder’s sales agents to prove that the buyer already has his or her own agent.
If the buyer ultimately wants to purchase a new home from a builder who will only pay you a small referral fee (e.g., property is not in the MLS), you and your buyer can decide what your role in the transaction will be. One option is for you to stay on as the buyer’s agent, in which case, the buyer must pay you the 3% stated on the BRE minus the referral fee (or maybe you’ll renegotiate your commission rate). Another option is for you to terminate your agency relationship using the TBA, but indicate in paragraph 4 that you will be paid as a referral agent only. Even if you didn’t use a BRE to create the agency relationship, you may have nevertheless created one anyway by your mere conduct with the buyer (see last week’s Legal Tip). If so, you should still use the TBA to clarify that you will not be acting as the buyer’s agent for this particular transaction.
-Thank you to Robert Whalen and Susy Thomas (San Diego Downtown Office) for suggesting this week’s legal tip.
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