What is a buyer agreement?
The buyer agreement is a legal document that establishes cooperation between the buyer and a chosen real estate agent.
Both parties commit to working together to find the buyer’s first (or next) property.
What is the role of a buyer agreement?
When you are thinking about buying real estate and are dreaming of your first coffee in your new home, remember the importance of the agreement with your real estate agent.
A buyer’s agreement between you and your buyer’s agent clearly outlines the terms of collaboration and that agent’s duties.
By signing this agreement, you and your real estate agent assume mutual obligations.
If any misrepresentation or disputes arise during the search and eventual purchase of your new home, the buyer’s agreement will be there to help resolve the issues, making sure you can enjoy the comfort and prestige of being a new home buyer.
Depending on the state you reside in, you might hear the term “buyer representation agreement” or “buyer-broker agreement.”
Essentially, both terms refer to the same concept: the contract you sign with your chosen buyer’s agent.
What are the types of buyer agreements?
You may be pursuing a beach house for leisurely summer days or an urban loft right in the city’s heartbeat — the type of property and dollar amount of the real estate transaction will dictate the agent’s commission and your obligations.
Depending on the nature and scope of the transaction, you will choose a particular type of buyer agreement.
Here are the most common:
Exclusive buyer agency agreement
This is the most common type of buyer agreement, often used to close a sale as swiftly as possible.
It is a contract between you and your buyer’s agent or brokerage in which you give that agent an exclusive right to represent you, and you commit to purchasing a new home exclusively through them via their real estate agency.
You can have no cooperation with competitor listing agents or agency relationships for the entire term length of the agreement. It sounds like you’re in an “exclusive relationship” because it’s exactly that — no seeing other (real estate) people allowed!
Non-exclusive agreement
If your agreement is non-exclusive, this means you can work with other real estate agents. It’s important to review the fine print regarding collaborations with other realtors, commission structures, etc.
For example, non-exclusive contracts can be “right-to-represent” (meaning you’ll pay an agent a commission if they recommend the property you end up purchasing), or “not-for-compensation” (no commission for the agent).
Understandably, most realtors and brokerages would prefer working under an exclusive agreement, which is why it’s the most common.
Dual agency in real estate
In this scenario, a buyer agency agreement allows a brokerage to function as both the buyer’s and the seller’s dual agent for the same property transaction.
Most real estate transactions involve different realtors representing the buyer and the seller to avoid conflicts of interest.
With the dual agency scenario, there may be a struggle to advocate fully for either party, since the commission will not be split in the traditional way (a buyer’s agent and a listing agent).
If you’re a first-time buyer, make sure you give informed consent before entering into a dual agency agreement.
What are the most common terms of a buyer agency agreement?
Most buyer agreements include the terms you’ll read below.
Duties and responsibilities
You entrust the real estate agent with certain tasks for landing your ideal property.
Your agent is now responsible for spotting potential homes, arranging open house tours, easing the offer negotiations, and handling the paperwork — from the opening offer and until the sale closes.
Contract length
This is the time frame under which you’ll have an active contract with your buyer’s agent — the amount of time they have to set up a successful sale that gets you the keys to your new home.
For example, if you have a four-month buyer’s agreement, your chosen real estate agent has 120 days to help you complete the home buying process.
While you can negotiate to extend this date, unforeseen life events might lead to changes — and if it’s not working out (they haven’t found that dream pad you’re searching for), you won’t want to renew.
Compensation
In this part of a buyer agency contract, you’ll define the earnings your agent will receive, typically garnered through a commission upon the property’s sale.
This amount is generally halved between the seller’s agent and your realtor. Typically, it’s the property seller who covers this commission; however, always check the fine print to be sure.
Property description
The agent will document the specifics of the home you’re considering: desired price, neighborhoods, the size and type of a house, and so forth.
So, if you’re hunting for a two-bedroom house in the quiet suburbs, with a budget cap of $500,000, all these details should be included in the agreement.
Termination
The buyer’s agency agreement can be terminated if one or both parties find the cooperation flawed.
This part of the contract explains the conditions under which you can end the agreement, the required amount of notice, and any financial commitments you might have if you decide to withdraw.
Create a solid basis for a secure property deal
For both first-time homebuyers and experienced property owners, a buyer agency agreement should guarantee a smooth real estate transaction.
Alongside signing with a buyer’s agent, consider using free purchase and sale agreement templates that you can adjust to your needs.
PandaDoc is here to help. Once you have an agreement ready, use e-signatures to quickly validate the document.
You can then share it with relevant parties or store it securely. Remember to seek advice from a legal professional to make sure your agreement covers all aspects of the property transaction.
To make sure your real estate documents are clear and valid, start your trial to check out all of PandaDoc’s features and templates!