When you are planning to buy a house, there are different methods you can use. You can directly connect with a house owner and negotiate with them. You may also search property websites or ask for recommendations from friends. You may also choose to go through an agent. It is an easier way where you give an agent your property specifications and they do the harder part of searching for your dream home. The agent will likely present you with a real estate buyers agreement to sign. It is nothing out of the ordinary but a common procedure when buying property through agents.
Table of Contents
- 1 Buyer Agency Agreements
- 2 What is a buyer’s agency agreement?
- 3 Buyer Agency Contracts
- 4 Is a buyer agency agreement required?
- 5 How to choose a property agent?
- 6 Buyer Representation Agreements
- 7 Types of real estate buyers agreement
- 8 Buyer Broker Agreements
- 9 How do I get out of a buyers agency agreement?
Buyer Agency Agreements
What is a buyer’s agency agreement?
An agent goes between the buyer and property seller or their agent. They can directly be working for a specific real estate broker or several. If they are in contact with several listing agents, they search for properties and set appointments. They may also work with mortgage experts and help buyers with the due diligence processes.
These are lengthy processes that consume time and money. The agent may go through all the processes of finding your dream property only to realize you used another agent and went ahead to buy.
To protect their interests, they request you to sign a buyer agency contract before they commit themselves to find property for you. It is an agreement between the buyer and the property agent. It details what you have agreed and how you have agreed to work together.
The buyer agency contract sets expectations between you and the agent and protects both of you. Before you sign the agreement, you should ensure you understand its contents and what you agree to.
Buyer Agency Contracts
Is a buyer agency agreement required?
Buying a home is the dream of many people, but most of them make serious mistakes when the time to buy comes. They rush into the process without considering the problems they might experience during the process or after.
It is in your best interest if you are certain about the person you are dealing with. Other business fields ask for years of experience before they hire someone. It should work the same way in the real estate field when you want to buy property. You require a buyer representation agreement due to its various benefits.
You will get a professional agent
Professional agents are experienced brokers in the real estate field. They have been offering property agent services for many years. They understand the field better than anyone else. If you look into other professional fields, you will always be at peace when you engage a professional.
For example, you seek health services from a professional doctor or accounting services from an accountant. Once you get to their office, you will no doubt that they will do a perfect job. In the same way, a professional property agent will do perfect work.
They request you to sign the buyer representation agreement to protect their interests. After signing the document, they will represent your interests and guide you through the process to ensure it is easier for you.
You will be certain to get your ideal home
Many times, it is not easy to get the exact descriptions of your ideal home. Most people get something close to their descriptions. This mostly happens when they do the home search themselves and avoid professional agents.
You will get better advantages when you sign a buyer representation agreement with a property agent. They understand the property types in your preferred neighborhoods. They may also know which properties are on sale, foreclosure, or under construction.
Once you give them your specifications, they will know exactly where to check or the real estate company to deal with.
It will not cost you money
When you sign a buyer broker agreement, it is like you are hiring an agent to work for you for a specified time. You only need to keep in constant communication with them until the time when you get all the ownership documents. When they get a good property, they will alert you for viewing.
Once you choose your dream property, they will help you through the processes. They will connect you with the seller or their agent. Sometimes they may advise you on the best mortgage company to use. Your biggest advantage is that you will get all these services absolutely free.
How to choose a property agent?
Just as it is a challenge to choose your dream home, it is also challenging to choose a property agent. You may not know if an agent is genuine by meeting them online, on the phone, or face to face the first time. You must do some investigations.
There are a lot of property agents out there. Just like you would search for several properties before you buy, search for different agents before you choose one. Different websites list property agents near you. You may also check real estate websites for some clues.
Choose an agent from within your neighborhood
There will be a difference between when you choose an agent from another state or city and when you choose an agent from your neighborhood. The local agent understands well the city and its neighborhoods. It is easier for them to understand where to get your dream property. It will be easier for them to compare other similar properties and get you the best.
Getting referrals is another easier way to get a good property agent. Your family members or friends might have bought property recently. It will be unlikely that they didn’t deal with an agent. What you want is an agent who understands how to deal with clients. Ask your family members, relatives, or friends for recommendations.
Some of the agents have taken extra training to help them offer the best services to property buyers. An example is a Certified Residential Specialist, Accredited Buyers Representative, and Seniors Real Estate Specialist. All these are agents who have taken extra training at a different level for better services.
Interact with agents during house inspections
If you have time to visit house inspections, use the chance and visit a few homes. Visit any type of home inspection, even if it is not your dream home. During the tour, you will interact with different agents in action.
Interact with them and decide if they are your best fit. Some of the qualities you will be observing are how they interact with clients, their style of communication, behavior, etc.
Test the agent’s market knowledge
A professional and experienced agent will have all the information you need readily with them. If you mention a certain area, they will give several options in that area in an instant. They may even suggest to you other options in another neighboring area.
They know the processes of property buying inside out. They will tell you the best schools in that area, transport solutions, shopping areas, security, and other services. They can describe to you the sorts of buyers looking for properties in those areas.
Listen to your inner feelings
After searching for several agents, what remains is to choose the best. You want someone who will be honest with you throughout the process. You want someone who will continually communicate and be sincere. If you are still not sure which agent to choose, listen to your heart. If you feel more comfortable with a certain agent, choose them and move on to the next process.
Buyer Representation Agreements
Types of real estate buyers agreement
The most important thing in a home buying process is to know you are dealing with the right agent. The real estate buyers agreement sets in place the right expectations between a buyer and an agent. There are different types of buyer broker agreements you will come across, but the most common types are three.
Exclusive right to represent buyer broker agreement
This is the commonest type of agreement used by most agents. This type of agreement details the responsibilities of the agent and buyer. The agreement usually details the commission the agent will get after the deal goes through.
You should note that the agent’s commission can either be paid by the buyer or the seller. Mostly, it is the seller who pays the commission, but sometimes a seller may decline to pay. In this case, the buyer should be ready to pay the agent’s commission.
Most of the time, the agent includes the commission in the total cost of buying the house. When signing this type of buyer broker agreement, you must be certain you are comfortable with the agent. Once you sign it, you agree not to work with any other agent until the contract expires.
Non-exclusive not for compensation buyer broker agreement
This type of agreement does not include compensation. It is not bound by time and lasts until the buyer gets the property they want or until they cancel the agreement. The buyer can cancel the agreement any time they want.
If the agent feels they are not comfortable with the buyer, they can also cancel the agreement at any time. This type of agreement also allows the buyer to work with multiple agents. Whoever gets the property first closes the deal with the buyer.
Non-exclusive right to represent buyer broker agreement
This type of agreement binds the buyer to pay a commission to the agent if they buy a property presented to them by the agent. If the seller or real estate company agrees to pay the agent, the buyer is relieved from paying the commission. The buyer is also allowed to deal with another agent and buy as long as it is not a property that the agent had proposed to them.
Buyer Broker Agreements
How do I get out of a buyers agency agreement?
Some states require property buyers to have a signed buyer agency contract in any real estate transaction. Other states do not put it as a requirement. Whether it is a requirement in your state or not, it is always necessary to have a signed buyer agency contract with you when searching for a property to buy.
Even after signing a buyer agency contract, things might not go as expected. At some point, you may feel you are no longer comfortable with your agent and desire to cancel the agreement.
Wait until 90 days are over
Legally, every buyer agency contract is supposed to have an expiry date. The generally accepted term is 90 days. The easiest way is to hold the agreement with you until the 90 days are over. After that period, you will be free from the agreement.
There are other situations where you might have signed a buyer representation agreement that has no expiry. That means you are bound by the agreement until the day you will buy a property. If you don’t desire to work anymore with the agent or you cannot wait until 90 days are over, there are several ways to get out of the agreement.
Follow the termination procedures
Read the termination clause to see the procedures for contract termination. Write a formal letter to the agent informing them of your intention to cancel the agreement. There could be a clause that will require you to compensate the agent if you terminate the contract prematurely.
In other cases, you may not be required to write to the agent. You may be required to sign with the agent a buyer contract termination form. In this case, you need to visit the agent and explain to them your decision. They will give you the termination form to sign, and your agreement between you and them will end at that point. This approach will also attract a contract termination fee.
Seek help from the board or attorney
Another situation may arise where the agent refuses to terminate the contract. In this case, point out to the agent the areas they are failing and why you cannot continue working with them. If you had obtained the agent through a real estate company, talk to them and request them to assign you another agent.
If this approach fails to work, file a formal complaint with the local real estate board or commission. You may also consult a real estate lawyer for help. If the agent realizes you are serious about canceling the contract, they will agree before the law catches up with them.