Buyer Agent Agreement Items to Consider When Purchasing a Home
If you are getting ready to buy a house, though, this may be a term you’ve come across. And – like most contracts – it might seem a little intimidating. If you sign one, what exactly does that mean and what are you getting into?
Well, fear not. We’ll answer those questions for you below as well as give you some pointers on what to keep an eye out for.
What Terms Does a Buyer Agent Agreement Include?
Have you ever heard of a buyer agent agreement? I’ll be truthful in saying that, until recently, I had not. It’s not a new thing – it’s just not something I had come across before. That’s because every property we have ever bought was done so directly through the seller, so we never had a need to work with an agent.
What is a Buyer Agent Agreement?
In short, a buyer agent agreement simply lays out the terms of the working relationship between you and the agent. It lays out terms that help ensure your agent is working for you, and to protect both you and the agent.
While there may be some variations, you will likely see a minimum of the following on your agreement.
Length of Term
This section lays out the length of time that you and the agent agree to work together. Many agreements last about 90 days, but it may be more or less depending on what the two of you agree upon.
It’s usually better to keep this term fairly short – six months or less. That’s because the natural end to an agreement is the easiest way to get out of working with the real estate agent should you feel that they are not a good fit for you.
Think about it: If you still haven’t found a home to suit your needs within a six-month period, you might feel as though the agent isn’t doing their best. This, of course, is not always the case. Sometimes, it can just be a challenge to find that “perfect” home.
However, if you feel that another agent might be able to help you more, you want to be able to switch over to them without too much fuss. It’s easier to do this once the agreement has concluded. If you like your agent, you can always sign a new buyer agent agreement, but it’s best to sign agreements on short terms.
Keep in mind, though, that if you really feel your agent doesn’t suit you during your agreement term, you can speak to the broker they work for. Often, they’ll be happy to assign you a new one. So if you’re really unhappy, you do have that option.
Property Description
The property description section will list clearly the basics of what you are looking for in your home. It should state things like the number of bedrooms and bathrooms, price range, type of property, and similar details. This is to ensure everyone’s on the same page.
Compensation
In most cases, the seller takes care of the commissions for all agents involved. However, sometimes they refuse to do so. The compensation section will lay out what you’ll be responsible for if the seller does not take care of the commission. It should also state any fees you’ll be responsible for if you decide to break the contract.
Exclusivity
Most agents ask that you agree to work with them exclusively. Why would they do that? Well, let’s take a look.
If you’ve ever worked in any type of sales position, you know what it means to work from commissions. This is exactly how agents make their money.
If you agree to work exclusively with them, they know that they will receive the commission, and work even harder to help you find your home. If, on the other hand, they think that another agent might swoop in and close the deal, they are less likely to work with you.
I spent a good deal of my adult life working in different restaurants and grills, and I worked hard for every single table I served. Most tables would be there at least an hour, during which time I kept them as happy as I possibly could.
Imagine if I had a coworker check on them one time while I was in the back getting ice or napkins. When it came time to pay their bill, they tipped my coworker instead of me, even though they only checked on them once. Would that be fair?
Of course, it would not be fair. Likewise, it would not be fair that one agent spends their time and energy researching homes for you, calling you about one they think is perfect, and then you meet a different agent at that house. Since they are paid strictly on commissions, that would literally be them throwing away their paychecks.
You don’t have to agree to work exclusively with One agent
In fact, you can work with every single licensed real estate agent that you can find. The agent will still work with you, but you are giving something important up: some home options.
Going back to my example above, why would the agent call you about a perfect home if you’re open to working with another one? They wouldn’t. Instead, they’ll call the people who signed on to work exclusively with them – the ones where they are sure to get the commission.
You have a choice to make. Basically, you can agree to complete loyalty to the agent to receive complete loyalty in return, or you can take the chance of missing out on some pretty great housing options.
If you’re thinking, “Yeah, but what if I don’t like the agent? I have to agree to be stuck with him?” Well, no, let’s go back to some previous points.
- Keep the agreement term short, so you can more quickly and easily get out of that contract
- If you’re really unhappy – again – call the broker. They’ll likely help you get a new agent within their firm
Bottom line, think the exclusivity section through thoroughly and be sure the term does not go on for too long. If you are not happy with the term put before you, negotiate it with the agent.
Agent Duties
You can expect your buyer agent agreement to list exactly what the agent will do for you. It should list tasks like:
- Finding and showing you home options
- Negotiating prices and terms of purchase
- Ensuring all buying contract terms are met
These are the basic duties, but you and your agent can add other tasks if you choose.
Termination Rights
So what do you do if your agent doesn’t stand up to their part of the agreement? Or if you decide you’re not ready to buy a home? Are you still bound to the contract?
In the buyer agent agreement, you should find a section that outlines your termination rights. It should list grounds for termination, such as the agent isn’t doing what they agreed to. It should tell you exactly how to go about terminating the contract, making it a bit easier.
As far as changing your mind about buying, most agents are reasonable in this area as well. Your termination rights section should give you information on such events, including how much notice you should give if you need to cancel.
Again, it’s important to remember that commissions are how agents make their money. Therefore, it’s not unusual that part of this section mentions a fee if you decide to terminate the contract for certain reasons.
For Instance
If you suddenly choose not to buy a home at all after they’ve spent two months working with you, that means they’ve just invested two months and got nothing in return. Keep this in mind if you notice any cancellation fees. It’s not uncommon or unfair in most cases that they expect this compensation, which is why it’s important you make sure you are ready to buy before committing.
However, the terms of this section can let you know a lot about the agent. Clearly listing out the terms of cancellation with or without fees is not a problem.
What is a problem is when the language seems aggressive and signing it would basically leave you no way out. When this happens, it’s a fairly good sign that the agent is pushy and may employ tactics that result in you buying a home you don’t even want. If the buyer agent agreement seems a bit too aggressive, it might be best to look for another agent.
Don’t Just Rely On Your Agent
As a side note when buying a home, it's important that you don't rely solely on your agent for information on a home. This is not an attack on real estate agents at all. As a whole, they are a great bunch that wants to help you find the home of your dreams.
Still, we’re talking about your dream home – not theirs. You want the perfect place, and you want it at the perfect price. No one wants to pay more than they need for anything or be negatively surprised by issues after you've bought it, right?
This is why it’s important that you do a little research on any property that you or your agent find as well as the local real estate market at that time. By joining Accury, you can find the accurate valuation of the home and get a property report that provides details your agent might not have access to. Don’t take chances with it – get your member key today to get informed.
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Conclusion
A buyer agent agreement is a completely normal contract between a home buyer and a real estate agent. It’s nothing to be intimidated by. However, it’s important that you thoroughly read the agreement before signing to ensure you understand the terms and negotiate anything that doesn’t suit you.
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