Q. I didn't have a buyer-broker agreement when I bought my last home... Why do I need one now?
A. At your first scheduled meeting with any real estate licensee in Maryland, you will receive a form titled Understanding Whom Real Estate Agents Represent (sometimes referred to as the "Agency Disclosure") which you must sign. No obligation on your part is implied when you sign this form; it simply acknowledges that you received a copy of this information from the agent.
The Agency Disclosure provides very clear and comprehensive explanations of the relationship between real estate licensees and consumers in Maryland. In the meantime, here's a much briefer explanation that will help answer your question.
Agents Who Represent the Seller -
- A Listing Agent is the real estate licensee hired by the seller of Maryland real estate to represent the seller's best interest.
- A Co-operating Agent is a real estate licensee who simply assists the buyer but represents the seller (not affiliated with the listing broker).
Agents Who Represent the Buyer -
- A Presumed Buyer's Agent is a real estate licensee with whom you have no formal representation agreement. He/she is presumed to be working in the buyer's best interest, provided they are not affiliated with the listing company. However, a presumed buyer's agent cannot prepare an offer or negotiate on your behalf without a written agreement outlining both parties obligations to the other (A Buyer-Broker Agreement).
- A Buyer's Agent - An agent hired by the buyer of Maryland real estate to represent the buyer's best interest. This requires a written agreement outlining both parties obligations to the other in the search for and purchase of a home. (A Buyer-Broker Agreement)
Dual Agents -
- A Dual Agent does not exclusively represent either the buyer or seller, because both agents are associated with the same broker/real estate firm. This is explained in much more detail on the required Agency Disclosure form and a separate form titled Consent for Dual Agency, which the buyer and seller must both sign when the listing and selling agent are affiliated with the same broker/real estate firm.
No matter which type of agent you choose to work with, you have certain rights and responsibilities that are outlined on the Agency Disclosure, including this one:
- All agreements with real estate brokers and agents should be in writing and should explain the duties and obligations of both the broker and the agent. The agreement should explain how the broker and agent will be paid and any fee-sharing agreements with other brokers and agents. (That's word for word, straight from the form.)
This written agreement is the Buyer-Broker Agreement which formally makes you a "client" rather than a "customer" of the agent. Yvette Chisolm, a colleague at Long & Foster Real Estate, Inc., addressed this topic in her post Client or Customer - Does It Really Matter?, and I encourage you to click through and read it. Together with the brief descriptions of the different types of "agency" in Maryland you see here, I think Yvette's post will help clarify why you need a Buyer-Broker Agreement in Maryland.
Information in this post should not be construed as legal advice. Be sure to consult with a Maryland-licensed attorney for information about any legal matter, including the sale or purchase of a home.