These are the kinds of agreements (formally called an Expressed Buyer Agency Agreement) on how ‘you’ as the buyer and an agent will work together in the purchase of the property you desire. There are four options, and the choice you make will affect (1) how much freedom you as buyer will have in your property search, (2) how the agent will be compensated, and (3) the level of service you are entitled to.
· Open Buyer Agreement. This is the least restrictive agreement that you can have with a Real Estate agent. You have the right to work with as many agents as you wish and to pursue “For Sale by Owner” situations on your own. An agent will receive compensation on a purchase you make only if they are the Buyer’s Agent for the contract you sign. While this option gives you greatest freedom, it also brings the lowest level of service on the part of the agents you work with.
· Exclusive Agency Agreement. Here you agree to only work with one agent. In this option, you may pursue “For Sale by Owner” properties as long as no other agent represents you. Should, however, you violate this agreement and you purchase property for which another agent gets compensated, the contracted agent will be entitled to receive from you the same compensation as the other agent. Why agree to this? If you choose an Exclusive Agent, they in turn promise to work much harder for you than they would in an Open Buyer agreement.
· Exclusive Buyer Agreement. This is like the Exclusive Agency agreement except that the agent is entitled to compensation on any purchase you make—even if you buy a “For Sale by Owner” on your own. This level of agreement normally applies if you are a first-time buyer or for whatever reason need or want a large amount of support.
· Exclusive Buyer on Retainer Agreement. This is an Exclusive Buyer agreement as previously described but with the addition of a retainer paid up front. You will get 100% of the retainer back at closing if within a specified period you buy property through this agent, but you lose the retainer if you don’t. This option is not common, but some searches warrant this level of commitment.
Practical Guidelines. If you are choosing one of the exclusive options, you may still visit open houses on your own, but always state “Yes” to the question, “Do you have an agent?” and then show or give my card. As for private showings, these must be arranged through your contracted agent or there will be confusion as to who your agent is.
Termination: Should the agent not perform the services you expect, at any time you are entitled to terminate this agreement, but you must present in person a written notice to the team leader of the agent’s office with reasons for termination. If a retainer was paid, you may be eligible for a partial refund. A termination, however, will not release you from the terms of the agreement for any property you viewed while this agreement was in effect.
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