Your plan to buy a home or invest in real estate is superb. Yes, it would help if you had an agency to help you navigate the process. Starting with the buyers’ agency agreement and the various agreement types we have, you are in good hands. You will also learn the contents of a typical buyer’s agency agreement, the contents, and how to get out of one. Let us consider some of the essential things you should expect from this article without much ado.
What is a Buyer’s Agency Agreement?
Firstly, another name for the buyers agencies agreement is the buyers’ broker agreement or a buyers’ representation agreement. The buyer’s agency agreement is a legal contract in real estate that is drawn between a buyer’s agent and a potential home buyer. When the two parties come together to sign an agreement, it becomes a protective document to ensure safety in the occurrence of any breach of terms and conditions.
As a result of the document, the prospective home buyer is confident that the agent has his best interest at heart. They want to be sure that the agent is committed to them and can be held responsible if things don’t work out as expected. On the other hand, the agent also expects the potential home buyer to cooperate with them and keep the necessary values and expectations. The agent also wants to ensure they are not wasting their time and effort.
If there is the slightest chance that the potential home buyer may leave this agency and work with another agency, then it is strongly advised to sign a buyer’s agency agreement. The buyer’s agency agreement is the document that provides the required legal backing that provides compensation to the other party who may feel cheated. It compensates for the time, effort, and expenses they may incur in a failed deal if the buyer ends up with another agency.
Types of Buyers Agency Agreements
There are multiple types of buyer agency agreements for different kinds of expectations the two parties hold. However, some aspects of the agreement are sure to be present if it is valid and fulfills its purpose. For instance, the buyers’ agency agreement must contain all the terms and conditions of the deal, the duration, the expiration date, and a fair housing statement. Others include a blockbusting statement and signature lines for both parties.
Let us carefully consider some of the different types of buyers agency agreement that is available out there;
- An Exclusive Right to Sell
The first buyer agency agreement we will consider is the exclusive right-to-sell agreement or the lease listing agreement. This is the most typical type of agency agreement that grants the buyer’s agent an exclusive right to represent the seller at all times.
By implication, the buyer cannot go on to hire another agent while they are under contract with this agent or agency with whom they sign this agreement. In addition, the exclusive right to sell also ensures that the broker gets compensation on deal completion. It may also occur on the expiration of the duration of the agreement.
- Exclusive Agency Agreement
Let us now look at the second buyers’ agency agreement: the exclusive agency agreement, which is similar to the first one above. However, the difference between the two types of contracts is how they compensate the broker at the deal ends. The genuine estate broker has to produce a tenant or buyer in this exclusive agency agreement. Otherwise, if the seller finds another way to sell the property on his own, the broker forfeits his compensation.
- Exclusive Buyers Agency Agreement
Another type of buyer agency agreement is the exclusive buyers’ agency agreement. In this type of agreement, the broker gets the exclusive right to represent the buyer at all times. When the property sells, the broker receives compensation. Otherwise, the property ends up as an exemption. In this agreement, both parties must agree on who gets what at the end of a deal. At other times, the broker may obtain a payment that differs from the broker’s representation of the buyer.
What are the elements of a buyers Agency Agreement?
As we saw up there, the buyers’ agency agreement can vary from one type to another. But it must clearly state the expectations and needs of both parties, the buyers’ agent and the buyer. The agreement is usually very flexible too, and the parties can adjust them to suit the specific needs on the ground. Despite this tailored suitability and flexibility, some basic information and terms must be present within the agreement.
- Term length
The term length is the duration of the agreement or contract, which most buyers agencies set at 90 days. It may often be less; other times, it may be more. But if both parties agree to a certain period, they can freely set the term length to that. The term length is the part of the buyer agency agreement that states in specific terms when the contract begins when it ends, and what happens when it ends.
- Termination rights
It is also essential to state how to stop the contract before it reaches its term length in a buyer’s agency agreement. There must be grounds for contract termination if anything goes wrong during implementation. This termination clause must show how the broker gets the compensation when the buyer terminates the contract. It should also include the time that will serve as notice before the termination occurs.
Another vital part of a buyer’s agency agreement is the responsibility of the selling party. There must be a straightforward way for the seller to get the payment and the buyer’s agent also gets his commission. Otherwise, the contract will not be complete. However, the compensation part requires carefulness, understanding, and clarity. In some cases, after the contract ends, the seller may refuse to pay, or it is the buyer that breaches the contract. This agreement should take care of all these things.
- Buyer Exclusivity and representation
This part of the buyer’s agency agreement is a clause that commits the buyer to work with the broker and him alone. This obligation takes effect from when both parties sign the contract to finalizing and closing the deal.
- Agent Duties
What is a buyer’s agency agreement without stating the agent’s duties? So, it is crucial to clarify the responsibilities of the buyers’ agent, including finding and showing potential homes and writing and negotiating offers.
- Property Description
The last important part of a buyer’s agency agreement is the property description, a section that states the type of property the buyer wants. Other vital information in this section includes the neighborhood, price range, property type, and size.
Finally, the buyers’ agency agreement allows flexibility and negotiation terms to which both parties can agree if they are comfortable. The buyer may at any time choose to waive some of the broker’s duties or add some expectations to the agreement. For example, the buyer may decide to waive the broker’s flat fee listing or limited service agreement from the agreement. In such cases, the buyer must complete the waiver of obligations specified within the broker’s duties being waived.