What is a Non-Exclusive Buyer Agreement?
A non-exclusive buyer agreement is a type of contract entered into between a buyer and a real estate licensee and whereby the buyer agrees to give his/her agent the right to represent them as a buyer agent for a specific period of time. Unlike an exclusive buyer agreement, the buyer under a non-exclusive arrangement is not obligated to use his/her agent only for all real estate buys or purchases. Rather, the buyer acknowledges that the licensee will work diligently with them—but the relationship is such that the buyer can legally decide to purchase a property without regard to their agent’s role in that transaction. This could be because the buyer or seller of a property does not like or respect the buyer’s agent. The buyers would not be required to work with their agent in these circumstances, and could instead work with a different licensee.
In most cases, the buyer agreements also do not require the buyer to pay their agent a real estate commission. Often this is the case because the commission is paid to the agent by the seller (or the selling party) of the property, being the person(s) , people, organization, or group who list their property for sale with the agent.
A non-exclusive buyer agreement allows the buyer to work with multiple real estate agents in their search for a property. This may help the buyer find a property more quickly, if multiple agents are searching for them at the same time. However, if you want an agent to work solely on your behalf, and to represent your interests, you probably should only work with one agent on your property search—unless you have reason to believe that the agent is not doing enough to find a property for you, in which case, you could insist on working with multiple agents. It is not recommended that you work with multiple agents as it can lead to "turf wars" where multiple agents "poach" each other’s potential clients—and this could lead to problems such as with respect to the payment of commissions.
A non-exclusive buyer agreement is typically used when a property buyer is not sure that they want to work with a particular agent, or if they do not want to be tied to a particular agent for any length of time.
Advantages of a Non-Exclusive Buyer Agreement
Both buyers and agents can gain from a non-exclusive buyer agreement. For buyers, they have the freedom to scope out various real estate agents. This offers them the chance to find an agent that they’re comfortable with selecting and with whom they have a strong relationship. As alluded to before, a good relationship will spur greater communication, which is key to a buyer/seller/agent connection. And a mutually beneficial relationship with their agent may provide buyers with discounts, such as up to 1% off on a multiple buyer agreement when the buyer closes on a home with the seller’s agent.
Agents can also benefit. When a potential buyer signs an exclusive agreement with an agent, then that agent knows they’ll receive a commission if the person purchases a home. An agent might then rush through a process or push a sale because they know they’ll be compensated. With a non-exclusive agreement, an agent knows they won’t be paid unless a house is purchased, so they may take their time to ensure that everything goes as it should.
Cons to a Non-Exclusive Buyer Agreement
One of the primary drawbacks of non-exclusive buyer agreements is the lack of commitment from either party. From a buyer’s perspective, it means you aren’t devoted to one agent and are free to work with other agents as you see fit. This may cause some problems when it comes to actually purchasing a property, as you could burn bridges with agents you’ve agreed to work with in the past.
The lack of commitment is a disadvantage for the Realtor as well, who often functions under the assumption that they will be your primary agent. When conflicts arise due to discrepancies between your various Realtor relationships, the entire system can break down, or worse – implode.
Without exclusivity, you don’t always have the security of the broker’s commitment to you. You may find yourself at the mercy of the broker’s assessment of your ability to purchase a property, responsible only for the purchase price.
How to Write a Non-Exclusive Buyer Agreement
These agreements should have a time period within which the agent must be successful in order to receive a commission. The clock starts ticking from the date you enter into the non-exclusive buyer agreement. The search and fulfillment of the non-exclusive buyer agreement should be on a broker-to-broker basis. You should be able to go to any other broker in the area and be shown property by that broker.
A non-exclusive buyer agreement should have a clause verifying that the buyer is aware that the broker is a licensed broker in good standing with the State of California and that the broker will fully comply with all real estate disclosure requirements .
A non-exclusive buyer agreement should have a clause stating that it is understood that you have been serviced with the necessary disclosure forms, as required by California law, and that you have read the disclosure forms.
In most cases you’ll want to have the non-exclusive buyer agreement signed by each party involved in the transaction even if the parties are married. If they’re married, the S.O. (significant other) or spouse could look at that signature as giving away community property prior to any distribution by the court.
There will be some exceptions to this. A good example is a married couple who is separated. As long as the seller is made aware that you represent a separated couple, all representation can be done with only one spouse signing a non-exclusive buyer agreement.
Fine-Tuning The Legal Angle
Parties entering into a non-exclusive agreement should consider the following legal implications:
Statute of Frauds
Non-exclusive buyer agreements may be considered contracts and, as such, are subject to the Statute of Frauds. To be enforceable, contracts must be written if:
- The value of the transaction exceeds $500.00.
- The contract is not performed within one year.
- The sale of land or any interest in land is involved.
- The consideration is an executor bill or promise.
- Any promise made upon consideration of marriage.
- A sale of goods amounting to $500.00 or more. This includes any agreement for sale and purchase of merchandises, wares and other personal chattels.
- A lease or sale of real property or real estate for a term of more than 3 years or for a consideration of $100 or more.
- A promise to answer for the debt of another.
- A promise to pay a sum of money to a third person, which is to be paid in whole or in part from the profits of a commercial transaction.
- A promise in consideration of a promise which is only enforceable if in writing.
- A promise to compensate a finder, business broker, or real estate broker for the finding, or the attempted finding of property or goods for another person.
Disclosures
While there are no specific disclosure requirements, it is the practice of counsel to encourage the sellers and buyers to seek legal counsel before executing any offer or agreement to assist in the oversight of legality of the agreement. Further, all parties are best served by keeping records documenting the transaction.
Typical Provisions of A Non-Exclusive Buyer Agreement
The parties to a non-exclusive buyer agreement typically include a duration clause, a termination clause, and a confidentiality clause. The duration clause sets out how long the agreement will remain in effect. The duration of the agreement may be as brief as six months, or as long as five years. A common duration clause provides that the agreement shall remain in effect until either party gives the other notice of termination of three (3) months or longer.
In the termination clause, the length of the notice required for termination is defined, together with a further provision in the event notice is provided prior to the expiration of the duration period . For instance, in the event either party gives notice of termination before the expiration of the duration period, the duration period will be automatically extended for an additional period of time, for instance six months.
The parties to a non-exclusive buyer agreement will typically have a confidentiality clause, prohibiting the disclosure of any confidential information, except that which is required by law to be disclosed. The confidentiality clause should also set out the information that is deemed to be confidential.