What is a Buyer's Agency Agreement?

Great question! Thanks for asking!

To get this out of the way, I am not a lawyer. I’m a real estate agent. While I use these contracts and am well versed in them, you should check with your local state laws. The United States is a Republic of States. If you haven’t noticed recently, not all states are the same. This goes for real estate as well. I want you to be the most prepared you can be when going through this process. Knowledge is power.

Let’s begin.

What is a Buyer’s Agency Agreement?

At the beginning of the home buying process, as of August 2024, all buyers who use agents are required to sign the buyer’s agency agreement. A buyer’s agency agreement is a contract that states that the buyer and agent are agreeing to exclusive representation. What does this mean?

The agent is required to work in the buyer’s best interest.
The buyer is required to use the agent when purchasing a home.

Here is a simple example to explain what I mean:

You are out and about looking at homes. You find one that matches exactly with what you have been looking for. As a result, you swing by an open house to check it out. You like the selling agent who just so happens to be me! You want to make an offer on the house. On the other hand, you have been working with a buyer’s agent for months. You also have a signed buyer’s agency agreement. In this example, you must use the agent you are in a contractual agreement with. Further, you should.

Why?

The agent you are already working with is contractually obligated to work in your best interest. I am not. I am under contract with the sellers to operate in their best interest. Said another way:

My job is to extract as much money out of you as humanly possible–they are contractually obligated to get you the best deal!

Consequently, let’s look at some other aspects of the contract.

Why is the Agreement Important?

Exclusive Representation: We already covered this. However, if you want more information, you can look into a fiduciary relationship. This gets created upon signing.
Expert Advice: Real estate agents bring valuable market insights and advice, helping you make informed decisions. They can identify potential issues with a property that you might overlook. Always use a buyer’s agent in my opinion. If nothing else, we’re insured.
Time and Effort: Searching for a home can be overwhelming. An agent handles the legwork, from finding listings to scheduling viewings, saving you time and stress. Furthermore, they are responsible for handling all contracts. Finally, we only get paid after closing (in most cases).
Negotiation Skills: Your agent should be a skilled negotiator. They can help you get the best deal possible. Typically these are things like a lower price or additional perks like repairs and closing costs.

How Does it Work?

When you sign a Buyer’s Agency Agreement, you agree to work with a specific agent for a set period. This agreement typically includes:

Duration: The length of time the agreement is valid.
Compensation: How the agent will be paid. A percentage or dollar amount. In general, a commission from the seller.
Duties: The specific services the agent will provide. For example finding properties, arranging viewings, and negotiating offers.

Can I Break the Contract?

You bet!

Let’s say you end up not liking the real estate broker you signed a buyer’s agency agreement with. All you need to do to break the contract is to inform them that you are no longer going to be using their services. I recommend emailing them and asking to be released from the contract. I would CC their brokerage email to ensure that management sees this. It’s not to get them in trouble, it’s to save your butt. They will probably ask why and I would be honest with them. I’ve had people say, “I want to use my friend.” It’s annoying but whatever, it’s part of the job.

In Conclusion

Just fill out the contract.

It is in everyone’s best interest and you can get out of it if need be.

I know many of us find contracts and “the government telling me what to do!” annoying. I get it. However, it’s there for a reason and in the end, it’ll make your life easier especially if things go sideways.

If you want to talk more about this, please reach out. I can get back to you within twelve hours depending on what time of day you reach out.