What is a Buying Agency Agreement?A buying agency agreement, sometimes called a buyer's broker agreement or a buyer representation agreement, is a legal contract used in real estate between a potential home buyer and the buyer's agent. Show
This agreement is used to protect both parties that sign the agreement. The home buyer is guaranteed that the agent will be committed to them and be held responsible for the work they do. The buyer's agent is expected to work with the buyer's best interests in mind. The buyer's agent is ensured that they are not wasting their time with a potential home buyer who may leave and work with another agency. A buying agency agreement will provide a buyer's agent with some compensation for any time, effort, and expenses they expelled while working with a home buyer if they choose to purchase a property with a different agent. Check out this article for more information about buying agency agreements.
Types of Buying Agency AgreementsThere are three different types of buying agency agreements. These agreements must include an expiration date, a fair housing statement, a blockbusting statement, and a signature line for both the broker and the seller. Below are the different types of buying agency agreements: Exclusive Right to Sell: The exclusive right to sell, sometimes called a lease listing agreement, is the most common type of agency agreement. This agreement grants the buyer's agent the exclusive right to represent the seller. This means the buyer cannot go and hire another agent while under contract. The agreement also ensures that the broker will be compensated if the sale is completed during the duration of the agreement. Exclusive Agency Agreement: The exclusive agency agreement is similar to the exclusive right to sell agreement, but it differs in how the broker is compensated. Under this agreement, the broker must produce the purchaser or tenant. If the property is sold through the efforts of the seller, the broker doesn't get compensated. Exclusive Buyer Agency Agreement: Under an exclusive buyer agency agreement, the broker is granted the exclusive right to represent the buyer. The broker is entitled to compensation when the property sells unless the property is specifically exempted. This agreement will specify who is entitled to compensation, and sometimes the broker receiving payment differs from the broker representing the buyer. Buying agency agreements allow flexibility and negotiation so both parties can come to an agreement that suits them. Sometimes buyers choose to waive specific broker duties in an agreement called a flat fee listing or limited-service agreement. In this case, the buyer would complete a waiver of obligations statement that details the broker's duties they are waiving. Meet some lawyers on our platform What's Included in a Buying Agency Agreement?The terms included in a buying agency agreement will vary based on the type of agreement and the needs of both the buyer's agent and the buyer. These agreements are flexible and able to be custom-tailored to fit the needs of each party. Although the agreements vary, they should include the following basic terms and information:
This section allows the broker to look back and refresh their memory to find properties that fit the buyer's wants and needs.
It is crucial to go over all sections of the buying agency agreement with your broker to ensure you are on the same page and all expectations are clear. For an example of a buying agency agreement, click here.
Image via Pexels by Kindel Should I Sign a Buying Agency Agreement?Buying agency agreements are not mandatory for purchasing a house, so if you don't feel comfortable signing a contract , you shouldn't. However, you should understand the advantages you may benefit from if you choose to enter an exclusive agreement with a buying agency. Buyers who sign buying agency agreements are usually treated with top priority. This contract doesn't only protect the broker; it protects the buyer as well, ensuring that the broker will act in their best interest. When a contract is signed with a buying agency, that agency cannot represent the seller in a transaction. This avoids any type of conflict of interest between the buyer and seller during a real estate deal. A buying agency ensures that the person purchasing a home has an advocate on their team. The broker knows common issues to look for in a walk-through, writes and negotiates offers, and is familiar with closing. Typically, the seller is responsible for paying all commissions, so a buyer really can't lose when working with a broker. Getting Out of a Buying Agency AgreementAlthough buying agency agreements are legal contracts , there are some ways to get out of this agreement. If a buyer isn't satisfied with the service they are receiving or would like to work with a different broker, they have a couple of options. All buying agency agreements are required to have a set term length. This term is generally 90 days. The easiest way to get out of a buyer agency agreement is to let the term length expire. After the term, the buyer can work with another agent and has not breached the contract. This only works, however, if the buyer isn't under a time crunch. Sometimes, the buyer is in a rush to purchase a house and cannot afford to wait out the agreement term. Most buying agency agreements have termination clauses that give instructions for each party to terminate the contract . The buyer should contact the buyer's agent in writing to inform them of their intent to terminate the agreement. In these cases, the buyer will most likely be obligated to compensate the broker as laid out in the termination clause. Get Help with A Buying Agency AgreementDo you have questions about buying agency agreements and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in buying agency agreements. Which of the following is a role of an agent who's assisting the buyer but representing the seller?The subagent works for a real estate company different from the company for which the seller's agent works. The subagent can assist a buyer in purchasing a property, but his or her duty of loyalty is only to the seller.
Under what circumstances can a buyer representation agreement be terminated early in Maryland?Under what circumstances can a buyer representation agreement be terminated early in Maryland? If the buyer finds another buyer to replace them. If the buyer finds out that their agent is representing other buyers.
Why has buyer representation increased since the late 1980s?Why has buyer representation increased since the late 1980s? Buyers have become more aware of who works for whom. Claudius has some trust issues; he's been to three different brokerages already and still refuses to sign an agency agreement.
Which of the following is an advantage of scheduling an in person meeting with potential buyers?Which of the following is an advantage of scheduling an in-person meeting with potential buyers? Because they have invested time with you, they'll be less likely to want to start all over with another broker.
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