Have a look at any contract you’ve signed…phone, internet, gas, etc. If you read the clauses, you’ll discover that most of the time the contract protects the company more than it protects the consumer. Most contracts are extremely long and you likely won’t be able to get an explanation or clarification from a company sales rep. You may have limited choices on the duration of the contract and if you decide that you want out, it’s likely going to cost you. Frankly, it’s no wonder there are a lot of people who are apprehensive when it comes to The Buyer Representation Contract with Realtors. This is, after all, a house/condo not a cell phone! The thing you might not know is that a Buyer Representation Agreement actually protects consumers.
Generally, a Buyer Representation Agreement outlines the parties in the working relationship and the expectations from both parties. In this case, what is to be expected of us, as Realtors and what is to be expected of you as the Buyers. Buyer Representation Agreements document the type of property the buyer(s) is looking for and puts everything on the table so there are no misconceptions or misunderstandings. It also give house hunters the freedom to choose the duration of the contract - how long you want to work with a certain Realtor for.
How is this good for you?
Simple…you’re protected in several ways. It starts with the fact that you’re entering into this contract with the Brokerage (Office), not the specific Realtor. This means that if there are serious problems with your Realtor, the owners of the Brokerage are responsible and accountable. The contract also outlines several possible scenarios that Buyers might encounter while working with a Realtor (working with other Buyers, Multiple Representation, Customer Service with Sellers, etc) and how it affects the working relationship. It requires your Realtor to explain the different types of representation to you, giving you the necessary knowledge and understanding of what to expect during the process. MOST IMPORTANTLY, however, a signed contract with a Brokerage means that any information you share with your Realtor is kept 100% confidential.
What about the commission clause?
There are a few clauses on the contract that protect your Realtor and the Brokerage. This is one of them. If you think about it, no one wants to work for free. A Realtor is no exception, but until you actually buy a house, that is essentially what a Realtor is doing. That’s why this clause is on the contract. By asking you…the person who has been benefiting from our efforts…to provide that compensation IF we are unable to get it through the seller. This clause protects our compensation for all the work we’ve been putting into finding you a property.
There‘s still going to be protection for you because this clause should be discussed up front. You’re not going to be blind sided with a bill for a Realtor's commission. You should be informed asap if this is a possibility, giving you the freedom to consider your options before you even walk in the door of a house.
If you’re not happy, get out!
Even though you have a contract with a Brokerage for a certain period of time, you can dissolve the contract if you’re not happy with your Realtor. Canceling a Buyer’s Agreement is not going to cost you (unless you agreed to something different when you signed it). Tell your Realtor why you’re not satisfied, and then request a “Cancellation of Buyer Representation Agreement”. The Cancellation Agreement is signed by all parties then you’re free to pursue other Realtors and other properties.