Tuesday, March 01, 2005

Buyer Broker Agreement - The Informed Buyer

There is a contract that I feel is very important to both the buyer and the broker (including the agent) when representing the buyer. It is one that I know should be used more often. This contract is called the Buyer Broker Agreement - Right to Represent. I like to think if it as the equivalent to an Exclusive Residential Listing Agreement, when a broker represents the seller in the sale of their home. The Buyer Broker Agreement is for the buyer what the Residential Listing Agreement is for the Seller.

When a seller signs an exclusive listing agreement for a broker to sell their home, the seller has decided to list their home exclusively with a broker and give that broker compensation for the sale of their home. In return for the compensation, the broker then has a fiduciary duty to represent the seller, this can include, advertising, open houses, phone calls, arrange showing, and handling of necessary paperwork and many other tasks to make a smooth transaction for the seller.

The buyer broker agreement is the contract that lays out the brokers’ duties, obligation, and agency relationship to the client, the buyer. It puts forth how the buyers’ broker receives compensation. In most cases, the seller pays the compensation of the buyers broker in the form of a percentage of the sale price after the escrow closes, for representing that. This compensation to the buyers broker can also be in the form of a flat fee or hourly rate.

The agreement also goes over what the broker is allowed to do for the buyer and what they are not allowed to do. More specifically, it mentions that real estate agents are not lawyers, home inspectors, lenders, accountants, or city employees. This further advises the buyer that by signing the buyer broker agreement they agree to seek assistance from the appropriate professionals. Moreover, the buyer broker agreement explains to the buyer what the broker does in return for an exclusive relationship and compensation. This includes the authorization to represent the buyer, locate and select properties for the buyer, assist the buyer with the financing process including obtaining loan prequalification through a lender, assist the buyer in negotiating offers, order reports, schedule meetings with professionals chosen by the buyer, provide guidance to help the buyer with the acquisition of a property, and much more.

For all the services that we, as agents, do for our buyers, there is an agreement between the buyer and their broker that details that relationship. That agreement is the Buyer Broker Agreement - Right to Represent. Your agent/broker should inform you of it, including the scope of the buyer/broker relationship and the broker obligations.

Ryan Kerzner
REALTOR ®
http://www.realtorryan.net/
California Oaks Real Estate

2 Comments:

At 3/01/2005 9:30 PM, Blogger Hope Goss, Realtor said...

This is such an under-used agreement in our present market. The entire process and all responsibilities are outlined in detail when a homeowner lists their home with a real estate agent. However, most of the time, buyers and their agents have never discussed what the buyer is expecting their agent to do for them, let alone, who will pay the agent for their services. This agreement lays everything on the table so that buyer and agent are on the same page. I look forward to this agreement being used more regularly.

www.HopeGoss.com

 
At 3/02/2005 8:13 AM, Blogger RealtorRyan said...

I personally will be introducing every buyer to the buyer broker agreement and the "Disclosure Regarding Real Estate Agency Relationships" agreement. The latter will help introduce to the buyer what relationship means. It also gets the client familiar with signing the many contracts that follow. I will be posting a blog later about the "Disclosure Regarding Real Estate Agency Relationships" as well.

 

Post a Comment

<< Home