This form is used by a buyer’s agent when entering into the employment of a buyer as their sole agent retained for a fixed period of time, to negotiate the acquisition of a specific property.
Specific property acquisitions
Most real estate transactions involving a buyer’s agent include a commitment of the agent’s time locating qualifying properties for the buyer. However, the buyer’s agent bypasses the initial step of locating a property when:
- they register a buyer they represent at a real estate auction;
- the buyer has already located a specific property to purchase without the assistance of the agent; or
- the buyer and agent have already located a property of interest and no prior written employment agreement exists which assures payment of a fee to the broker. [SeeRPI Form 103]
When the buyer has selected a specific property and no prior fee agreement has been agreed to in writing, the agent needs to enter into a written single property fee agreement with their buyer.
The Buyer’s Listing Agreement – Specific Property Acquisition published by RPIis used by a buyer’s agent when employed by a buyer as their sole agent retained for a fixed period of time, to negotiate the acquisition of a specific property that has already been located. The agreement safeguards the agent’s time spent on behalf of the buyer by assuring collection of a fee if the buyer acquires the identified property. [See RPI Form 103-1]
When the agent’s duties do not include locating a suitable property, the specific property agreement lists the particular tasks the agent is to do pertaining to the described property to receive their fee, such as:
- evaluating theeconomic suitability of the price and terms of payment proposed;
- attending anopen house with the buyer prior to an auction or submitting a written offer;
- obtaining andanalyzing a title profile on the property;
- examiningpest control reports;
- obtainingplat maps of the area surrounding the property;
- checking the property’sproximity to schools, markets, financial institutions, etc.; and
- developing an opinion of theproperty’s fair market value (FMV). [See RPIForm 103-1 §3.1]
When the buyer has already identified a suitable property, either prior to or while working with an agent, the buyer’s agent needs to enter into a single property fee agreement with the buyer as soon as possible. With the signed writing in hand, the agent holds an enforceable fee arrangement with the buyer. This formally employs the agent to commence negotiations and also assures payment of a fee if the buyer acquires the property, whether it is the buyer or the seller who eventually pays the fee. [L. Byron Culver & Associates v.Jaoudi Industrial & Trading Corporation (1991) 1 CA4th 300]
Use of the single property fee agreement is particularly critical in a real estate auction situation. At an auction, a buyer’s agent has absolutely no assurance their buyer will be the highest bidder who acquires the property. Thus, a buyer’s agent under a regular buyer’s listing agreement calling for a fee to be paid on the buyer’s acquisition of the property runs the risk of receiving no compensation for their time, effort and talent performing due diligence investigations and assisting in the bidding.
When the buyer does successfully acquire the property as the highest bidder, the single property fee arrangement is structured as a percentage of the price paid, such as 3%, or a fixed dollar amount, to be paid by the buyer (unless the terms of the sale include the amount of fee the broker expects to earn). [SeeRPI Form 103-1 §5.1]
However, when the buyer is not the successful bidder, the buyer’s agent is still paid a fee. The fee under the single property agreement calls for compensation based on an hourly wage for the agent’s time spent investigating and assisting the buyer prior to the auction event. Alternatively, the agent can state a flat fee be paid for their services rendered when the buyer fails to acquire the property at auction. [See RPI Form 103-1 §5.3(a), (b)]
Form navigation page published 12-2015.
Last revised 12-2014.
Real Estate Practice: The buyer’s listing agreement
Real Estate Practice: Operating under a buyer’s listing
Article: Real estate auction regulations