More than ever, real estate brokers are encouraging the use of buyer agency agreements. an agreement stating that the broker will represent the buyer as his agent, that the broker’s job is to find property suitable for the buyer.
As these contracts are legally binding and give the broker special powers, buyers must fully understand their rights and responsibilities before signing the clause.
These agreements are promoted as a stronger level of buyer representation due to the trust relationship they have established. After signing the agreement, the broker must protect the buyer’s interest at every step.
There are three types of buyer agency contracts used by realtors today.
1. Exclusive Buyer Agency Contract (or Exclusive Representation Right)
Under this completely exclusive agency contract, the buyer is legally obliged to compensate the agent when the buyer buys the same type of property as described in the contract. Regardless of whether he finds the property, the broker is entitled to payment. Even if the buyer finds that the property is independent, the agent is still obliged to pay.
2. Exclusive agency buyer agency contract
Like a sole proprietorship agency contract, this exclusive contract operates on a “buyer” basis. But this type of contract restricts the broker’s right to pay. The broker is only entitled to pay if he actually finds the property purchased by the buyer. Consequently, the buyer is free to find the relevant property without having to pay the agent.
3. Open Buyer Agency Contract
This is a non-exclusive agency contract between the buyer և broker և, which allows the buyer to enter into similar contracts with an unlimited number of other brokers. Only the broker who actually finds the property that the buyer eventually buys is entitled to compensation.
Before concluding a buyer’s agency contract, there are some potential considerations that the broker-buyer should consider. First of all, the broker must make the same disclosures to the buyer that he will make to the seller under the listing agreement. The buyer must have a clear understanding of the three types of agency available և the rights and responsibilities of the parties under each of them. This means that the broker must clearly explain the specific services provided to the client-client of each type of agreement.
In addition, the issue of compensation must be discussed in detail. For example, buyer’s agents may be charged a fixed fee for services, an hourly rate, or a percentage of the final purchase price. In some cases, the agent may charge a maintenance fee when signing the contract to cover pre-listing and advertising costs. This maintenance fee can be used as a credit to all payments made at the time of closing. The buyer’s agent can also be reimbursed by sharing the commission paid by the seller.
Buyer agency contracts provide agents with a comforting level of confidence that their efforts will not go unnoticed, prompting them to work harder for the buyer. Of course, for buyers, they have to provide financial guarantees to agents against the risk of limited or poor performance.