Why Should Buyers Sign a Buyer’s Representation Agreement?
A buyer’s representation agreement is simply a contract signed between a potential home buyer and a real estate brokerage for the right to represent them in a real estate transaction.
It will lay out the agreement, like the time frame and services that the brokerage commits to provide the client which can last from three months to a year.
Before viewing homes, some realtors will ask for a buyer’s representation agreement, while others prefer to wait until a customer is ready to make an offer.
Why Sign a Buyer’s Representative Agreement?
Many buyers are hesitant to sign a contract because they are concerned about being tied to a specific brokerage or agent. While it may appear frightening, the buyer’s representation agreement does not obligate you to buy and offers you a number of advantages as a client. Let’s go through a few of these advantages.
- Instead of being a customer, you will become a client.
Clients and customers are distinguished by a single distinction: a contractual connection. When you sign a buyer’s representation agreement with your realtor, you become their client, and they are bound by contract to operate in your best interests.
Your Realtor’s legal obligation would be to the seller if that document was not in place. Realtors have a stronger ethical commitment to their clients, just as the Minnesota Association of Realtors says, to “defend and promote their interests.”
Real estate transactions are governed by a slew of regulations, and no matter how eager a realtor is to assist you, there is some information they can’t legally tell you unless you’re a client.
In addition, your realtor will be able to provide you with services that are not legally available to customers, such as a Comparative Market Analysis (CMA) and the ability to bargain on your behalf during the purchase process.
The distinction between “client” and “customer” may appear minor to those outside the real estate industry,, but it can have a significant impact on your real estate transaction and your confidence in the ultimate conclusion.
- All expectations will be stated clearly.
The home-buying process can be stressful. A buyer’s representation agreement can help you relax by establishing all of your expectation to your realtor throughout the transaction. On the other hand, your realtor can do the same.
Your chosen realtor will go over the contract and all of the services they will provide as your purchasing agent. This easy step will eliminate any potential misconceptions and allow you to move forward with confidence.
- You’ll only be working with and getting to know one person.
It might be difficult to compare homes posted by different brokerages if you are unfamiliar with real estate terminology. Talking to five different people about five different homes can be bewildering. With a buyer’s representation agreement, you just have to deal with one individual for all of your questions.
Your real estate agent’s rapport with you will put you at ease, and they will be able to guide you based on their years of expertise. Before you sign any contract with your realtor, make sure you meet with them. Realtors, too, will want to make sure the buyer and seller are a good match before moving forward.
Your home search will be substantially less stressful if you have one individual to help you through the process who is just looking out for your best interests.
- It safeguards your client rights.
Realtors are governed by a code of ethics that holds them to the highest ethical standards throughout the real estate transaction. “When representing a buyer, seller, landlord, renter, or another client as an agent, realtors promise themselves to defend and promote the interests of their client,” states Article 1 of the Code of Ethics.
If you believe you were not adequately represented during the transaction, your standing as a client gives you access to resources that customers do not have. While such instances are uncommon, knowing that you are protected by these guidelines will provide you with peace of mind.
- It ensures that the selling broker will compensate your agent.
Realtors operate only on commission and are compensated by the seller when a home is sold. If you’ve been dealing with an agent and are happy with his or her hard work, make sure you sign a buyer’s representation agreement so that the selling broker pays them.
After all of their efforts, if the realtor does not have a signed buyer’s representation agreement, the corporation that owns the property may refuse to pay the realtor.
While it may not affect your bottom line, a buyer’s agent will spend hours helping you and will feel much more comfortable doing so if there is an agreement in place so that they may be compensated for their efforts.
Is it necessary for me to sign a representative agreement?
While there are numerous advantages to signing a buyer’s representation agreement, many brokerages, on the other hand, demand its agents to obtain a written agreement before submitting an offer on their behalf.
By clearly detailing services and expectations, this protects both the client and the brokerage. “For the protection of all parties, ensure that all agreements connected to real estate transactions are in writing wherever possible,” according to the Code of Ethics & Standards of Practice.