There is a lot that goes into buying a home. You have to sort through listings, arrange for private viewings, compare your options, negotiate, and then work from contract to closing. All of this takes time and requires specialized skills if you want to get the best deal possible. That’s why hiring an Exclusive Buyer Agent is so important. They can speed up the whole process, give you straight answers and help iron out any roadblocks. If you want the best service possible then you should consider hiring an Exclusive Buyer’s Agent. This is an agent that works exclusively with buyers. They know the whole buying process back to front and owe their loyalty entirely to you.
One of the first things you’ll be asked to do when meeting a buyer’s agent is to sign an exclusive agreement. Paperwork and contracts are highly important in the real estate world, so you’ll want to know what exactly this agreement is.
What is an Exclusive Buyer-Broker Agreement?
Anyone who hires a real estate agent will have to sign a contract. For sellers, it’s a listing agreement, for buyers its buyer’s agency agreement. For agents, this is an important contract as it ensures they’ll be paid for their services. Real estate agents work on a commission basis and only make a commission when they help buy/sell a property. The exclusive agency agreement holds the buyer to the agent, meaning that they can’t just drop the agent and avoid paying the commission. Exclusive buyer-broker agreements aren’t the only contracts that agents deal in, but it is the most common one.
Like a lot of real estate lingo, this contract goes by a lot of names. Buyer’s agency agreement, buyer-broker agreement, exclusive buyer agency agreement, etc. Whatever they call it they all break down into a few key elements. These will outline the duties of the agent, the rights of the buyer, how the commission will be handled, and how your relationship with the agent will work.
What Goes into an Exclusive Buyer-Broker Agreement?
Every agency will have its own contract with some including extra clauses and others less. The majority though will include the following elements at a minimum. Make sure to read it carefully and ask questions if there’s anything you’re not sure about.
Under this clause, you agree to work only with the buyer and agency that you chose. This means you can’t turn around and ask another agent to show you a property or write a purchase offer for you. The contract will have a time limit (usually a few months) by which you are bound to your agent. If you purchase a home within that timeframe you are obligated to pay the agent a commission rate that was agreed to previously. However, if you clash with your agent you are within your rights to request a different one from the agency. The agreement is with the broker agency, not the individual agent.
Terms of the Buyer-Broker Contract
On the first page of the contract, in the first paragraph, you will see the length of time, or term, by which you are bound to the contract. This can be weeks, months or even years. As with a lot of things in the real estate world, this time frame is negotiable.
Listed here will be the amount of compensation your agent will earn if any sale takes place. This is usually 5-6% of the sale price and it negotiable like most things. The wording of the document should also clarify that if the seller pays the compensation out of the proceeds of the sale then you are not obligated to pay anything extra. It’s highly unusual for a buyer to be asked to pay the commission out of their own pocket.
Property Description in the Buyer-Broker Contract
The final paragraph will describe what sort of property the buyer is looking for and what the price range is. Technically speaking, you are only bound to the contract if the property you buy matches the property description. For instance, if the property description is a single-family home then you are free to purchase a condo with a different broker. If the property description limits the parameters to a certain county and you decide to by in an adjacent one, then you are not bound by the terms of the contract. If you already have a property that you’re under contract for then you can have the agreement changed to apply only to this property.
Should you Sign?
Before you sign, make sure to read everything carefully and ask any questions you might have. Think also about how serious you are about buying a home. If you don’t sign, then the agent isn’t likely to give you their full effort. Who can blame them? Without this contract, they have no guarantee of being paid for their hard work and time. If you really want the very best in service, then you should probably consider signing it. Just be sure to ask and do the following before you sign:
- Inquire about a shorter-term – If the contract feels a bit too long then don’t be shy about asking for a reduced term.
- Ask for a trial run – When you hire an agent, you’ll be working very closely with them for some time. It’s important that they are not only qualified and experienced but are also someone you can get along with. Ask about a trial run for a day or just an afternoon. Do they seem competent? Do they listen to you? Do their temperament and attitude match yours? You’ll feel much more comfortable signing if you know you can get along with them.
- Read the fine print – Every exclusive agreement will be a little different, so you’ll want to read the fine print. Are there any extra provisions that raise a few eyebrows? Do you have a way out of the contract if you’re not happy with their services? Know what the agreement says before signing.