Jakemann Racing

What is the reasoning behind the buyer’s agency agreements?

When a buyer has been working with an agent for a period of time, short term or long term, the agent will typically assist the buyer with the following:

• Email listings to the buyer that parallel the buyer’s requirements
• Phone the selling agents of properties that peak the buyer’s interest
• Advise the buyer about lenders and help in collecting preapproval loan letters
• Make appointments with the sellers to show homes
• Taxi the buyers around viewing homes, sometimes this accounts for many miles

So when the agent gets a phone call or email stating that the buyer has found the home of their dreams through someone else and signed a contract, the agent can be devastated that they did all that legwork and will receive nothing in return.

Generally a buyer will sign a buyer’s broker agreement or a buyer’s broker contract with their real estate broker in advance to writing a purchase agreement. A buyer broker agreement is an often overlooked aspect to home buying. These agreements detail specifically who will represent the buyer and the rights and duties of both parties. Although these agreements may differ in many ways, they are all designed to protect the buyer as well as the agent.

Sellers have formal listing agreements with the seller’s agent. The buyer agents expect to have formal agreements as well. Buyer’s agents are entitled to payment for their work just as seller’s agents are.

The Exclusive Right to Represent is the most commonly used form in California according to Elizabeth Weintraub in her Buyer’s Broker Agreements and Buyer’s Broker Contracts article in About.com. In the U.S., many different types of agreements are used.

The Exclusive Right to Represent buyer broker agreement says the buyer has the right to demand single agency. The buyer agrees to select one broker or agent to work with. In this agreement, the buyer is not responsible for the commission if another party pays it, and the commission is negotiable. If the buyer is informed, the broker or agent has the right to receive a bigger commission from the seller if the seller chooses to pay more.

Exclusive buyer representation means the buyer has hired the broker or agent and they will vigorously in the name of the buyer. Only through exclusive buyer representation can the broker or agent negotiate with unrepresented sellers, like FSBO (for sale by owner), for the buyer. When a buyer’s agent uses their negotiation skills to get the buyer a great deal, then the buyer’s agent has warranted their compensation.

There are a few things buyers should specifically look for in an agreement. Both parties should make sure they have a right to end the contract. Sometimes people just are not made to work together. Asking for a trial run of 1-2 days with the agent before making a decision to work with them is a smart move. Both the buyer and the agent should have listed responsibilities and duties to each other. This contract should be designed to protect the buyer and the buyer’s agent.

Finding a buyer’s agent to work with is an important and crucial detail to home buying.