There is a lot of work involved with buying a home. Buyers need to get pre-approved for a loan, search for the right house, set up viewing appointments, and more. Even once you find a home you love, you need to craft an offer, get funded, and read and sign copious documents during the process. Thankfully, you don’t need to handle all of this work and an unfamiliar process on your own.
Working with a real estate agent or broker can take a lot of work off of your plate. Not only that, these agents and brokers can have a ton of knowledge and ensure you end up with a great deal.
While this isn’t always the case, some brokers and agents will request that you sign a buyer’s broker agreement when beginning a working relationship with them.
What is a Buyer’s Broker Agreement?
A buyer broker agreement is an agreement between you and your broker or agent that simply establishes the working relationship between both parties. This agreement is often requested by agents to protect themselves during the home-buying process. Without a contract being signed, there is nothing to stop you from using one agent to help you find a home and do all the heavy lifting, and then switch to another broker at the last minute.
This agreement simply protects the agent and ensures they receive compensation for the hours and hours of work they do for their clients if they end up buying a home. It generally outlines what the agent will do, what the buyer is responsible for doing, how the agent will be compensated, and more.
What is Included in a Buyer’s Broker Agreement?
Now that you have an overall idea of what a buyer’s broker agreement is, what is included in one? While it depends, there are several situations that are usually covered in these sorts of agreements.
First and foremost, these contracts will state the duties that both you and your agent will have. The agent will help you find properties, answer your questions, assist you in making offers, and more. Yours will often include that you read all documents, act in good faith, and cooperate and communicate with the agent.
These agreements will also cover the termination rights, as well. If the working relationship needs to end for one reason or another, this section of the agreement will dictate how that is done. It will cover the grounds for terminating the agreement, how much notice needs to be given, and if there is any compensation required.
There will also be a property description included in the contract. This section will describe the type of property the buyer wants to buy and the approximate price range for the purchase. The agreement will also have a term length, which is simply how long the contract is active for and what happens if it ends before you find a home.
Things to Know Before You Sign a Buyer’s Broker Agreement
However, before you jump right in and sign one of these agreements, there are a few things you should know. Knowing these things can protect you and make sure you know exactly what you’re getting into.
First of all, you want to make sure that you understand and can comprehend everything outlined in the agreement. This goes for how long the contract lasts, what the terms are, the compensation, and more. If you are struggling, consider reaching out to another real estate professional to read it over and make sure it all makes sense.
Additionally, it is a good idea to know whether it is an exclusive vs. non-exclusive real estate contract. While many are exclusive as the agent only wants you to work with them, there are some non-exclusive options that permit you to work with multiple professionals if you deem it necessary.
The quality of the agent is also an important factor to be aware of. The last thing you want to do is sign an exclusive agreement to work with an agent who is not very good at their job. Always take time to do your research and find the right agent and ensure you trust them before signing anything official. Once you understand the contract and agree with all of the included terms, feel free to sign.
FAQs About Buyer’s Broker Agreements
How long does a buyer’s broker agreement last?
You and your agent can come together and set whatever term length you desire. They can be one month, three months, or whatever you think makes sense. In many cases, agents will want them to be long, to give them the best chance of being your exclusive agent once you finally find a home.
Are these agreements legally binding?
Yes, buyer’s broker agreements are legally binding. If you or the agent don’t abide by the outlined terms, enforcement from the other party is possible. This is why it is so important to know the ins and outs of your agreement before signing it, so you don’t do anything that breaches the contract, which could lead to legal trouble.
What benefits do buyers get from these agreements?
The main benefit is actually being able to work with an agent. Most trustworthy and quality agents today will require some kind of agreement, so if you don’t sign one, finding an agent to work with may be challenging. Also, this can give you peace of mind that the agent is working their best for you, and these agreements protect you and your best interests, too.
How can I get out of a buyer’s broker agreement?
If you want to get out of the arrangement, the first thing to do is to speak to the agent. In some cases, they may agree. However, if they don’t, it is a good idea to speak to a lawyer. In some cases, there may be terms of language in the contract that dictates ways for you to get out, but this isn’t always the case.
You will almost certainly encounter a buyer’s broker agreement during a home search, so it is worthwhile to learn what they normally entail to ensure you are as prepared as possible to sign one.
