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Introduction to Buyer Broker Agreement
If you are looking to buy a new home your first step is to find a realtor that is going to represent you as a buyer’s realtor for the entire home buying transaction.
You will interview a few of the realtors and understand which realtor is going to be the best for your home buying process.
A buyer’s realtor has some responsibilities towards you as a buyer. Once you finalize the realtor, the realtor will ask you to sign something called a buyer broker agreement.
In this post, we will learn what is buyer broker agreement is in detail.
What Is A Buyer Broker Agreement?
After you select the realtor that is going to represent you in your home buying process, you are going to go into an agreement with your realtor often signing a buyer broker agreement.
This is agreeing to you allowing the realtor to represent you on your behalf. Once this is signed, no other realtor is going to represent you.
This is going to be the realtor that you agreed to and the brokerage that they represent.
Keep in mind that this is a buyer broker agreement. In most states, the agreement is within the brokerage and not necessarily your realtor.
It will specify your realtor but at the end of the day, that agreement is with the brokerage.
What are the things to Check While Signing the Buyer Broker?
Representation Agreement?
When you are signing the buyer broker representation agreement, you are going to want to look at a few things.
The first thing that you want to look at is the timeline. How long are you under contract with the broker?
Is it thirty days, six months, or a year? The important reason is that let’s say your agreement is for six months and it takes you six months to find a home and you still haven’t found anything yet.
Your agreement will expire. At that point you have two options, you can either renew your agreement with the current agent or you can choose to work with another agent.
The next thing that you need to keep an eye on is the commission structure and what your buyer’s agent is charging for them to represent you.
One thing to keep in mind is that more often than not, the seller is going to compensate the buyer’s agent for their services.
However, let’s say that you have signed the buyer brokerage agreement at a three percent commission for finding you a home and helping you through that process, and the seller is only willing to offer two and a half percent to pay and compensate the buyer’s agent.
We are now dealing with half a percentage that is your contract with your buyer’s agent that is missing from what the seller is willing to pay.
This is something that you want to ask your agent if there is a shortfall of the commission from the seller’s end who is responsible for the deficit amount.
Usually, the buyer is responsible for the deficit amount based on how the contract was written.
Some agents may draft an addendum that if the buyer’s agent commission is different than what is agreed upon in the buyer representation agreement, they will reflect that in the contract so that you as a buyer don’t have to pay the difference amount.
The last part that you need to look into in your buyer broker agreement is that it lays out the fiduciary responsibilities that your agent has to you as a consumer.
This will lay out all of the duties and responsibilities that they need to uphold which are also known as minimum service requirements that they are required to do by law by being a licensed real estate agent.
This is important so that you can ensure that the agent that you are working with is looking out for your best interest.
Conclusion
Every state might have a different buyer broker agreement. You can go to the division of the real estate in your state and download a copy of the buyer brokerage agreement so that you can have an idea of what the minimum service requirement is in your state.
This is an outline of that what a buyer broker agreement is. The purpose of it is to protect you as a consumer and outline the relationship that you have with your agent.
This way you know what you are getting into and work with the particular agent once you choose who you want to hire.
