Buyer Representation Agreement - Protecting Consumers

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.

Sylvia Robbins is with CENTURY 21 Capital Realty Inc. in Ottawa, ON.

5 Comments

  1. Scott 01/25/2011 at 10:21 AM

    Every situation is different, and a buyers agreement works for some, and not in others. It is clearly an effort by agents to get half of a commission, and in some cases more. Be very careful what you sign.

    Remember that a buyers agent is another link in the communications chain. If you are looking for a property in a hot market, that extra link can cost you the deal. If you are out of town and don't have time to hit the streets, then the extra link is a strong one in your purchasing chain.

    Each situation is different, and the buyers should think carefully before signing. Remember you are hiring someone to work for you at a very significant price. Making the wrong hire can make your house hunting experience a night mare just as quickly as hiring the right person can make it a dream.

    1. Ask for references and understand these will all be positive.
    2. Ask the references questions relevant to your situation.
    3. Talk to several agents. There is a difference. Some know VA, some know short sales, some know REO sales better than others.
    4. Know what you are looking for. Limit your emotional responses by writing an outline of the house, neighborhoods and prices you are willing to pay. Help your new hire work for you if you are going to hire them.
    5. Remember, you are the boss, the agent is the contracted employee

    Most important Have Fun.

  2. Marketing Company 01/27/2011 at 2:28 AM

    Its good protecting your consumers by using these strategies. I was worried of getting being taken cost while breaking the agreement. Thanks for your useful information.

  3. Evan Hendry 03/31/2011 at 10:35 AM

    While it's true that signing a buyer representation agreement means you're hiring someone to work for you, there may, or more importantly, may NOT be a fee to the buyer for the services received. In many, if not most cases, the commission fee is paid entirely by the seller, not the buyer, regardless of whether or not a buyer representation agreement is in place.

    To refute what's been said before me, a buyer representation is not always an effort to gain a commission from the buyer. It does however permit the agent to act directly on behalf of the buyer.

    Making sure you understand what you're agreeing to is of course always strongly recommended.

  4. Tim 12/19/2011 at 1:55 PM

    It's good for both parties. I was told by an agent I met at Sundaybell that this agreement makes sure that the consumers are aware on how they are going to be taken care of. As a consumer, you will be able to monitor your service to make sure it is just as good as the agreement promises. If not, you can get out of the contract by asking the agent to break the agreement...or if they wont, their broker will if you can prove that your service wasn't to the standards of this agreement.

    Like other posts have stated, be careful what you sign! But if you find a really good agent, then there's nothing to worry about.

    tim

  5. zeebeesee 03/19/2012 at 1:45 PM

    To the extent that some (not all) agents do good work for a prospect, it's unfair for that prospect to take steps to cut the agent out of a commission. Few people will argue against that.

    I would note that in many cases, including some (not all) of the posts on here, the BRA is painted as purely in the interest of the buyer: extra personal service, agent's loyalty to the buyer etc.

    Seldom clearly mentioned is that the buyer is on the hook to guarantee that the agency that gets a BRA signed is guaranteed a commission regardless of (a) real effort and (b) results. If a buyer finds a 'for sale by owner' house, with zero input from a brokerage, this BRA aims to collect a fee. Not entirely honest and fair, IMO.

    So now we have a situation where the listing brokerage AND the selling brokerage are guaranteed a fee. Performance is NOT guaranteed. A cynical (realistic?) person might conclude that a lot of effort went into trying to kill sale-by-owner business. As long as a real estate fee is collected by SOMEONE, the industry is happy to divide the spoils. I can even understand this self serving approach, but it's hard not to gag when they says that "it's in the client's interest". Yuk.

    It’s all about making people believe that a purchase or sale can only happen when a brokerage is involved, and that’s just inaccurate.

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