Finding a Property For Your Buyer

March 7th, 2022 at 1:50 pm

Fact Pattern: You are an agent working with buyers who are very interested in buying a home in a certain neighborhood that has virtually no properties for sale. You decide to get a farming package and solicit the homeowners in that neighborhood to see if any of them are interested in selling to your clients. Sure enough, one of the homeowners expresses an interest in selling to your clients. The homeowner also expects your buyers’ offer to be very good, so he even agrees to pay you a commission off the top.

Multiple Choice Question: What C.A.R. form should you get the seller to sign to bind the seller to that agreement? Pick the best answer:

A. Residential Listing Agreement (RLA).
B. Single Party Compensation Agreement (SP).
C. Commission Agreement (CA).
D. Any of the above. 

Answer: Answer A is not wrong, but it’s not the best answer. In this particular Fact Pattern, the seller appears to only be willing to pay you if your clients buy the property. The seller does not seem interested in entering into a listing agreement with you to market the property for sale and pay you a commission for any buyer you procure. That said, if you can, during your discussions, convince the seller to enter into a full-fledged listing agreement with you, that will usually work out better for you than getting the seller to sign an SP or CA.

Answer B is the best answer. You should generally use an SP when a seller agrees to pay you a commission if you bring an acceptable buyer.

Answers C and D are not wrong, but they are not the best answers. C.A.R. drafted the SP for use in situations described in the above Fact Pattern. C.A.R. drafted the CA as a “catch-all” commission form to use when none of the other forms will work.

Stay Tuned Next Week: Use of the SP has become more prevalent in the current housing market, given the low listing inventory and the strong demand from prospective buyers. Stay tuned next week for some more ins and outs on using an SP.

Copyright© 2022 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of March 7, 2022. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.

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