If you are looking to buy a home, chances are your agent will ask you to consider signing a Buyers Representation Agreement. I once had a teacher that described the arrangements between buyer and agent in terms of spousal status.
No contract meant that you were dating eachother. While the rapport was building, both parties were free to see other people. Signing a Buyers Representation Agreement was more like a marriage- whereas both parties are firmly committed to eachother.
Now, dont get me wrong, this analogy got old fairly quickly in the classroom setting, but it definitely stuck with me and gave me a long lasting impression of the benefits to this particular contract. So, in no uncertain terms, I have set out to explain what this contract means to you, the consumer.
There are some key reasons why you should consider signing this:
- Two words: Full disclosure. All sorts of secret tidbits of information known about a property must be disclosed once you make thing official with your agent.
- As your agent, giving you full disclosure about a house ensures you receive expert, professional advice from me. Happy wife, Happy life.
- Now that we are married, I can tell everyone! I can tell everyone your "Must Haves" , that is. I can register your demands so that Selling Realtors can let me know about "Exclusive Listings" that might work for you. (Exclusive listings mean they cannot be seen on the MLS)
- With our union comes your peace of mind that I will always look out for your best interests. (Even if it doesn't align with the seller) If we were just "dating", I would have to treat you the same as the seller, because Niether of you are married to me.
- When you sign those documents, It tells your REALTOR that you like them. Everyone wants to be liked. It makes them feel nice. When people feel nice, they want to thank you by making YOU feel nice. That will usually result in your wallet feeling nice, too.
What is a Buyer Representation Agreement?
It's a contract between a real estate brokerage and a buyer. The brokerage vows to take care of you and your interests in finding a property. In return, you aren't going to cheat on the brokerage with any other brokerages.
It also serves as a type of prenuptial agreement. In this document it says that I (as a realtor) will receive a commission for finding you a home. This commission is usually 2.5%. Most often this is paid buy the listing agent, but on occasion (*cough* Private Sales *cough*) the person selling the home is not willing to pay an agent for helping to sell the house OR they are not willing to pay more than 1.7% (yes, I have heard that before). Should this be the case, this contract says that YOU will cover that cost or top up the commission to equal 2.5%. A lot of agents don't bother being topped up 0.5%, but you should be aware that it is in their legal capacity to do so.
The prenup also says that whoever shows you a house gets the commission. This prevents you from waiting until the contract expires to go privately cut a no commissioned deal. No way, buddy. As a REALTOR, I will take you to family court for custody of that commission cheque.
There was nothing at all in our wedding vow contract that says you have to.... Ahem... Consummate the marriage. If you don't find a home, or something changes, or you win the lottery and decide you will be better suited to a villa in the Cayman Islands, NO PROBLEM! Though I am not adverse to flying to tropics with you as a real estate advisor, there is nothing that holds you financially accountable for NOT buying.
When should the Buyer Representation Agreement be signed?
Look. Before we do something crazy like buy a house we will have to sign a Buyers Rep anyways- That's just the way it is. But why should we have to have a quickie Vegas wedding to seal the deal. You would be best suited, (& more informed) if we date for one or two showings (After all, this is a two way street and Im not out to trap anyone in a loveless marriage). Then, If we are soul mates, let's just jump the broom, and make sure you are being taken care of to the full extent of a REALTOR's capabilities.
If you have any questions about a Buyers Representation Agreement, give me a shout! I suppose now that you are informed there is only one thing left to do:
*Gets down on one knee*
Will you marry me?