What to know about Buyer Broker Agreements

So you decided it’s time to buy a new home! You spent years saving up for a down payment. You binge watched every house hunting and renovation show on TV and streaming. Now is the time to take the leap.

Up until August 17th, 2024, buyers in that situation would normally just go around to different open houses speaking with the listing agents there, or speak with other real estate agents in town to find one they want to work with. Nothing needing to be signed usually cementing the agency between the agent and buyer until they find the house they want to write an offer on.

BUT OH, HOW THINGS HAVE CHANGED

Due to the lawsuit brought against the National Association of REALTORS and other real estate groups, buyers are now required by law to sign a BUYER BROKER AGREEMENT with an agent prior to them showing you ANY properties.

While the buyer agreements do benefit you as a consumer, clearly and transparently outlining the services the agent will provide and how they will be compensated… some of the text on the document may be confusing. So let’s break it down in simple terms.

KEY POINTS ON THE BUYER BROKER AGREEMENT

Before you sign a buyer broker agreement, you should have at least a basic understanding of what the contract means for you and how the terms could have an effect on the purchase of your new home. In the end, you should be comfortable with ALL of the terms BEFORE committing to working with a particular real estate agent.

Here are the key points to consider:

• Exclusivity – Check if the agreement is:
  • Exclusive, meaning you can only work with this agent to find a home during the contract period.
  • Non-Exclusive, allowing you to work with other agents during the contract period as well as this agent.
• Term Length – Understand how long the agreement will last. They can range from a few weeks to several months.
• Services Included – Review what specific services the agent will provide. These can include:
  • Property Searches
  • Showing Properties
  • Negotiating Offers
  • Handling Paperwork
  • Assisting with Inspections & Appraisers
  • Recommending Contractors & Others
• Termination Clause – Read carefully about the conditions under which you can terminate the agreement early. Their may be potential penalties if you break the contract prematurely.
• Geographic Area – Verify that the agent has experience in the specific geographic area (City, County, Neighborhood, Subdivision) you are looking at, and that the area is listed on the document. It is not recommended to leave it broad to include the entire state.
• Communication Expectations – Discuss how often you expect to be updated on property listings and potential issues that may arise during the search process. Tell your agent if you prefer calls, texts, emails, or any combination of those.
• Buyer Agency Fees – Understand how the agent will be compensated, whether through commission from the seller or directly from you as a buyer. Even though the commission rules have changed and agents are no longer guaranteed a commission paid from the seller if the property is listed in the Multiple Listing Service (MLS), many sellers are still offering to cover all or partial commissions to the buyers agent. You still need to discuss this and put in writing the agreed fee that will be paid to your agent.

IMPORTANT QUESTIONS TO ASK THE AGENT

It is highly recommended that you interview at least 3 real estate agents prior to selecting one to represent you in a purchase. This can be done by walking or calling into local real estate offices, calling agents who send you mailers, or getting recommendations from friends and family. Which every way you use to find agents, here are some questions to ask them during the interview to really see if they will be a good fit for you.

• What is your experience in the local market?
• How many properties do you typically show clients during their search?
• What is your strategy for negotiating offers?
• What is included in your services?
• Are their any additional fees associated with your services beyond the commission?
• Can I provide feedback on properties I view without affecting our agreement?
• Can you provide references or client testimonials?
• What is your current number of clients?
• Do you work with a team or are you independent?

BENEFIT OF SIGNING A BUYER BROKER AGREEMENT

Don’t let the buyer broker agreement scare you. It actually has some major benefits. It protects YOUR interests!

Once your agent signs a buyer’s broker agreement, the agent has a legal obligation to prioritize YOUR interests, not the seller’s. This gives you peace of mind knowing they are only looking out for what’s best for you. You also get to know up front the level of commitment your agent is willing to make to you.

Hopefully this information helps you along the path to finding a good agent to assist you in purchasing a new home. Our Team would love to assist you in any purchase or sale within the Tahoe and Carson Valley areas. Just shoot us a text/call at 530-541-2465 or email amanda@paradise-realestate.com and one of our experienced team members will respond.