What is a Buyer Agency Agreement?

A buyer’s agency agreement is a contract between a home buyer and a real estate agent that defines how the two agree to work together. 

The agreement outlines both parties’ terms, responsibilities, and obligations. This is created to protect both parties during the home-buying process.

Why is it important?

A buyer agency agreement is important for several reasons:

➧➧ Clarity of Relationship
The agreement outlines the relationship between the buyer and the real estate agent. It establishes the agent's fiduciary duty to the buyer, meaning they must act in the buyer's best interests.

➧➧ Commitment from the Agent
Signing a buyer agency agreement ensures that the agent is committed to working exclusively for the buyer's benefit. This commitment can lead to better service and dedication from the agent.

➧➧ Clear Expectations
The agreement defines the terms of the relationship, including the scope of services provided by the agent, the duration of the agreement, and any compensation arrangements. This clarity helps avoid misunderstandings or disputes later on.

➧➧ Confidentiality
The agreement typically includes provisions for confidentiality, protecting sensitive information shared between the buyer and the agent.

➧➧ Legal Protection
Having a written agreement in place provides legal protection for both parties. If there are any disputes or disagreements, the terms of the agreement can serve as a reference point for resolving them.

➧➧ Negotiating Power
With a signed buyer agency agreement, the buyer may have more negotiating power when it comes to terms and conditions of the purchase, as the seller knows the buyer is represented by an agent committed to their interests.

➧➧ Access to Listings
In some cases, certain listings may only be available to buyers represented by agents with signed buyer agency agreements. This can give the buyer access to a broader range of properties.

What is included in a buyer’s agency agreement?

Buyer Agency Agreements can vary depending on the area you are in and which brokerage you are working with. But they should all have the same outline: 

➧➧ Buyer Exclusivity and Representation 

This is an agreement between you and your broker that you are only going to work with the agent or brokerage that you are signing with, until the term length is up. This is a commitment that you will contact them first to schedule showings for you, for existing and new build homes. 

➧➧ Compensation
It’s well-known that the seller normally pays both the sellers and buyers agents’ commissions. But, in the event that the seller does not agree to pay for the buyers agent’s commission, it is important to understand what you as the buyer are responsible for paying. Buyer agent fees are generally a percentage of the final sale price. They range from 2-3% of the purchase price.

In most cases, iIf you are ever viewing a property in which the seller is not paying the commission, the agent will notify you of this fact before viewing the home and can discuss the options for compensation at that time, or you may choose not to explore options where the seller is not paying a commission. 

➧➧ Term Length
This is the period of time that your contract is active. These normally range from anywhere from 90 days to a year. There are a few things that might vary with this, one of them may be your home buying goals and when you plan to be in a home.

➧➧ Termination
In the event that the buyer or the broker needs to end the working relationship, the termination rights explain how the termination should be handled. Every buyer agency contract should cleary define the conditions under which either party may terminate to protect both parties.