Posted by Renee Porsia under For Buyers, For Realty Professionals, General Information, RE/MAX, selling, buying, Renee Porsia, NAR
Today I wanted to talk about what a Buyer Broker Agreement is, why it is used, why a buyer should sign one and what happens when a buyer refuses to sign one.
A Buyer Broker Agreement is a legal document that establishes the relationship between a buyer and a Realtor. It lays out how long the buyer agent will work for the buyer "client" (more on client vs. consumer later) and what the buyer agent will do for the buyer "client" and how the buyer agent will be paid.
Why is a Buyer Broker Agreement used? A Buyer Broker Agreement is used when a buyer wants to work with a Realtor. It's really no different than signing a listing agreement when a seller wants to sell their home and they hire a Realtor. A seller hires a Realtor to represent them in the transaction and to protect their best interests and now a buyer has that same option.
Why a buyer should sign a Buyer Broker Agreement is simple. Does the buyer want to be a "client" or a "customer?" If a buyer refuses to sign a Buyer Broker Agreement then that buyer is NOT a "client" of that Realtor but instead is just a "customer." :
Are you a buyer-customer or a buyer-client? Services will vary, depending on your agency status* (if you do not sign a Buyer Broker Agreement)
If you are a CUSTOMER (no agency relationship),an agent will:
Maintain loyalty to the seller's need
Tell the seller all that they know about you
Keep information about the seller confidential
Focus on the seller-client's property
Provide just the material facts
Only provide price information that supports the seller's listing price
Protect the seller
Negotiate on behalf of the seller
Attempt to solve problems to the seller's advantage and satisfaction
If you are a CLIENT (agency relationship), your agent will:
Pay full attention to your needs
Tell you all that they know about the seller
Keep information about you confidential,
Focus on choices that satisfy your needs
Provide material facts as well as professional advice
Provide price counseling based on comparable properties and their professional insights,
Protect and guide you
Negotiate on your behalf
Attempt to solve problems to your advantage and satisfaction
So, you can clearly see the difference between being a "client" buyer or a "customer" buyer.
* This chart is for general illustration purposes only. Agency laws vary by state; and specific terms of individual agency contracts will vary from one agent to another.
You may not know if you're a customer or a client.
Depending on the laws in your state, you may find yourself working with someone who is actually negotiating for the seller, not you the buyer. The best way to be certain your interests are being considered and protected is to sign a buyer agency agreement with a trained buyer's rep, which clearly establishes client-level services and spells out what services you can depend upon.
Some questions you should ask your Buyer Agent:
Do you represent buyers, sellers or both?
What services are provided to (or excluded from) me, based on my status as a buyer-customer or buyer-client?
When does representation begin? When does it conclude?
If I'm not ready to commit to your normal term, can you offer me a one-day buyer agency agreement or a 24-hour opt-out clause?
How is dual agency addressed in your firm?
You can now clearly see the benefits to working with your very own Buyer Agent. Why wouldn't any buyer want to be a "client" rather than a "customer?"
Finally, the way the buyer agent gets paid will also be determined by the buyer and buyer's agent and will be specified in the Buyer Broker Agreement. Normally, the buyer agent is paid at settlement and comes out of the fee for service or commission paid by the seller. The buyer could also pay his/her buyer agent a flat fee or by the hour. Make sure to discuss your buyer agent's fee and then put it into the Buyer Broker Agreement.
You may still have questions about Buyer Agency and that is to be expected. There are many Realtors who do not know the difference between a "client" or a "customer." I would be happy to answer any other questions you may have. Feel free to e-mail me or call me.
I hope you find my blog on Buyer Agency educational.
My thanks to REBAC.net for providing information to my blog.
;)
;)
