Buyer Agency Agreements Guide
Go Back To Previous PageA real estate buyer agency agreement is a contract between a prospective homebuyer and a real estate agent or broker that outlines the terms and conditions of their working relationship. This agreement formally establishes the agent’s role as the buyer’s representative in the home purchasing process. Before signing, this section will discuss everything you need about a buyer-broker agreement.
To begin with, it’s important to clarify that a buyer agency agreement and a buyer broker agreement are essentially the same thing. Whether you’re working with a real estate agent or an associate broker, the agreement you will sign will likely be called a buyer-broker agreement.
This contract creates an agency relationship between you, your buying agent, and their brokerage.
Buyer Broker Agreements Defined
A buyer-broker agreement is a formal contract between you and a real estate agency outlining the mutual commitments both parties have. Agents typically ask you to sign this agreement to save time on 
buyers who are not fully committed to the process. This lengthy process depends on the market and your specific needs. It’s important to remember that the terms of a buyer agency agreement are always negotiable. You can set boundaries to make your collaboration with your agent more efficient.
Contrary to popular belief, it’s a positive sign when a real estate agent asks you to sign a buyer-broker agreement. This indicates they are eager to work hard for you. They seek your commitment in return. In some larger brokerages, you may be asked to sign an agency agreement as soon as you enter the office, after which an agent will be assigned to assist you.
Buyer agency agreements are generally enforceable contracts. If you have concerns about this, you can consult an attorney in your area to discuss it.
Do you know if Signing a Buyer Agency Agreement is required?
A buyer agency agreement is not legally required to work with a real estate agent. However, many agents prefer this agreement to formalize the relationship and ensure mutual commitment. If your buyer’s agent asks you to sign an exclusive contract, you can explain that you do not wish to do so. Be prepared for the possibility that the agent may decide to stop working with you, as they may see this reluctance as a waste of their time.
Do not take this personally; they act in their interest to protect themselves. The buyer agency agreement guarantees that your agent will receive payment if they help you find a property.
As a buyer, you also benefit from having a buyer agency agreement. It prioritizes your needs and interests with your agent, who is motivated to find you a property to earn their commission. Additionally, having this agreement ensures that your agent exclusively represents you in the transaction, alleviating concerns about potential conflicts of interest.
Are Buyer Broker Agreements Enforceable?
Yes, buyer-broker agreements are enforceable because they are legally binding contracts once both parties sign. If the buyer breaches the terms of the agreement, the agent may have legal grounds to seek compensation or other remedies as specified in the contract.
Most terms of a buyer-broker agreement, such as duration and exclusivity, are negotiable. Buyers should carefully review and thoroughly understand the deal before signing. Buyer agency agreements also typically include termination clauses that outline the conditions under which either party can end the relationship. Reasons include mutual consent, breach of contract, or specific performance issues.
Yes, buyer-broker agreements are enforceable because they are legally binding contracts once both parties sign.
If the buyer breaches the terms of the agreement, the agent may have legal grounds to seek compensation or other remedies as specified in the contract.
Most terms of a buyer-broker agreement, such as duration and exclusivity, are negotiable. Buyers should carefully review and thoroughly understand the deal before signing. B
Can You Terminate a Buyer’s Broker Agreement?
A buyer-broker agreement is a contract that typically includes termination clauses allowing you to cancel the deal if needed. Most agents are also open to mutually canceling the contract if they feel they are not a good fit for you.
If you cancel your buyer agency agreement, the first step is to discuss your concerns with your agent. You can cancel the contract if you cannot reach an agreement or understanding.
If your agent refuses to let you out of the contract, carefully review the terms of the agreement to identify any loopholes that may allow you to cancel it without penalty. For instance, if the broker fails to fulfill their responsibilities, you may have the right to cancel the contract unilaterally.
You can also negotiate the cancellation with the brokerage or the managing or supervising broker if necessary. Most agents are generally willing to let you cancel the contract because they prefer to avoid receiving negative reviews.
However, remember that once the agent has found you a property, you cannot cancel the contract, as they have technically earned their commission at that stage.
Can You Terminate a Home Purchase Agreement?
When you enter into a home purchase agreement, also known as a contract for sale, you are typically required to make an earnest money deposit. This deposit is a good-faith gesture, demonstrating to the seller that you are serious about buying the home. However, if you cancel the agreement without a valid legal reason specified in the contract, you risk losing your earnest money deposit.
Generally, your buyer’s agent will ensure that your contract includes the appropriate contingency clauses to protect you if you need to withdraw from the deal. For instance, the contract usually contains a home inspection contingency, allowing the buyer to back out of the agreement if the inspection reveals unsatisfactory findings.
Should I Hire a Buyer’s Agent?
There is no reason buyers shouldn’t consider hiring a buyer’s agent to assist them with purchasing a home.
In most standard residential sales transactions, the seller is responsible for paying the commissions of both their listing agent and the buyer’s agent. Consequently, buyers can engage an agent to represent their interests without incurring fees. You will only owe them something if you find a suitable agent. And the seller won’t be required to pay any fees either.
Hiring a Buyer’s Agent Benefits
There are many reasons to hire a buyer’s agent, especially if you are a first-time homebuyer and unfamiliar with the process.
1. They Educate You and Answer Questions
Buyer’s agents are there to provide education. They know the right questions to ask before entering a sales contract and can answer all your questions about the transaction.
2. They are Constantly Working For You
Buyer’s agents are actively searching for property listings for you. They have access to more listings and showing appointments than you would find by searching online on your own. Furthermore, buyer’s agents leverage their extensive real estate network and have access to the multiple listing service (MLS).
3. They are Expert Negotiators
Buyer’s agents are professionals who negotiate on your behalf. Since this is their area of expertise, they excel at it. If the seller presents an unfair offer or any issues with the transaction, your agent can help you navigate these challenges.
Throughout the process, the buyer’s agent will ensure that all terms and conditions in the sales contract are structured in your best interest.
4. They Offer Support and Get You To The Closing Table
Ultimately, your buyer’s agent will support you throughout the transaction, helping you reach the closing table as quickly as possible.
If any tasks need to be completed before closing, your buyer’s agent will remember that they only get paid once you close the deal. So, it is in their best interest to assist you in finalizing the transaction.
Buyer Agency Agreements Bottom Line
A real estate buyer agency agreement is a formal contract that defines the relationship between a buyer and a real estate agent. I just wanted to let you know that signing this agreement is optional. However, doing so can offer advantages such as clear expectations and dedicated service from the agent.
Please review the agreement’s terms carefully and ensure you are comfortable with the conditions before signing. These are binding and enforceable. Buyers should not feel intimidated by signing a buyer-broker agreement, as these legally enforceable contracts protect both the buyer and the real estate agent.
Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.
