What is the reasoning behind the buyer’s agency agreements?

When a buyer has been working with an agent for a period of time, short term or long term, the agent will typically assist the buyer with the following:

• Email listings that concur with the buyer’s list of requirements
• Phone the selling agents of properties that peak the buyer’s interest
• Advise the buyer about lenders and help in collecting preapproval loan letters
• Make appointments with the sellers to show homes
• Taxi the buyers around viewing homes, sometimes this accounts for many miles

The agent would understandably be upset if the buyer announced that they had signed a contract with another agent on a home after walking by it one day, not to mention the buyer’s agent would receive no compensation for all the effort they put in.

A buyer’s broker agreement is usually signed before the buyer writes a purchase agreement. A buyer broker agreement is an often overlooked aspect to home buying. These agreements detail specifically who will represent the buyer and the rights and duties of both parties. Although these agreements may differ in many ways, they are all designed to protect the buyer as well as the agent.

A seller and a seller’s agent have a legal listing contract. The buyer agents expect to have formal agreements as well. Buyer’s agents are entitled to payment for their work just as seller’s agents are.

The Exclusive Right to Represent is the most commonly used form in California according to Elizabeth Weintraub in her Buyer’s Broker Agreements and Buyer’s Broker Contracts article in About.com. In the U.S., many different types of agreements are used.

The Exclusive Right to Represent buyer broker agreement says the buyer has the right to demand single agency. The buyer will agree to only work with one broker or agent. In this agreement, the buyer is not responsible for the commission if another party pays it, and the commission is negotiable. If the buyer is informed, the broker or agent has the right to receive a bigger commission from the seller if the seller chooses to pay more.

Exclusive buyer representation means the buyer has hired the broker or agent and they will vigorously in the name of the buyer. Only through exclusive buyer representation can the broker or agent negotiate with unrepresented sellers, like FSBO (for sale by owner), for the buyer. If the buyer obtains an extremely low price due to the negotiation skills of the buyer’s agent, then the buyer’s agent has earned their commission.

There are a few things buyers should specifically look for in an agreement. A right to terminate on both sides is one for instance. Sometimes 2 parties just have a hard time coming together. Meeting with an agent for a trial period may determine if it will be a good working relationship. Detailed duties and responsibilities are a good item to have in the contract. This agreement should be a bilateral contract in the protection of the buyer and the buyer’s agent.

Finding a buyer’s agent to work with is an important and crucial detail to home buying.