What is a Buyer’s Representation Agreement – And Why Do You Need One?
When working with a buyer’s agent, the topic of an Exclusive Representation Agreement will usually come up. Why would you sign one? What are you committing to?
Generally speaking, in most transactions, a buyer’s agent is compensated through the seller’s sales proceeds, and the buyer of the home is not directly paying for the buyer’s agent’s services. The National Association of Realtors has some very useful guidance on this topic:
A buyer’s agreement formalizes the agency relationship between the homebuyer and their agent. Without a formal agreement, the buyer is a customer, but not necessarily a client. The agreement ensures all parties in the transaction know, and are clear that the buyer’s agent has a fiduciary duty to their buyer client, but has no such duty to the seller. This relationship delivers a superior level of service, establishes clear rules for confidentiality, removes any ambiguity, and gives you as a client absolute confidence that your buyer’s agent is laser-focused on your best interests and protecting you during the transaction.
A Buyer’s agreement clarifies expectations, helping you understand what you should and shouldn’t expect from your buyer’s rep, and what they will expect from you, which usually centers on loyalty.
While most representation agreements specify a time period, they can be terminated early if both parties consent. Most buyer’s agents are willing to end the agreement early if the working relationship isn’t going well. Some buyer’s agents also offer representation agreements for as little as one day, for the purpose of giving both parties a brief trial period to explore working together.
When you and your buyer’s rep work together within a formalized agency relationship, you have created a team dedicated to helping you achieve the best possible home-buying experience.
When the time is right, we will want to discuss an agreement with you, and while we hope the points above help clarify the purpose of the agreement and why it’s important, don’t hesitate to ask any additional questions or bring up any concerns about this process – remember, formalizing an agency relationship is designed to help and protect you and ensure clarity around who is representing who in the transaction.