A buyer’s agency agreement is used for establishing a contractual relationship between a prospective home buyer and their agent. The form provides security to the agent in that they’re assured a commission if the buyer purchases a property, and provides security to the buyer in that their agent is obligated to put their best interests first. The average term of the agreement is between six (6) and twelve (12) months, although any timeframe can be negotiated.
A buyer’s agent agreement is a legal form used in real estate to outline how an agent and their client will go about the home-buying process. It identifies what needs to occur in order for the agent to receive their commission, whether they are the buyer’s only agent (if an “exclusive” agreement), and if dual-agency is permitted, among other important clauses. The agreement is especially important for agents, as it protects against their client from signing a contract with another agent “on a whim”, resulting in months of hard work going uncompensated.
A buyer’s agent assists their clients with every step in the home-buying process, which includes providing the following services:
- Learning about their client’s interests and preferences
- Researching potential properties & scheduling showings
- Educating their clients on the home buying process
- Walking their clients through properties
- Presenting offers and negotiating on behalf of their clients
- Preparing documents and handling the closing process
The form contains twenty (20) clauses, which identify the parties and their duties to one another. The most essential clauses include:
This clause is found in almost all real estate contracts. It serves the purpose of identifying the date the document was written as well as the names and addresses of the buyer and the agency.
Arguably one of the most important sections in the agreement, the “exclusivity” clause determines whether the buyer is limited to working with one (1) agent, or if they can enter into contracts with other agencies as well.
Establishes when the contract will officially begin and end. Also contains an area for inputting the “listing period extension”, which is a period of time (such as 30 days) after the end of the listing period in which the agent may be owed a commission if the buyer purchases a property. The agent is only guaranteed a commission during the extension period if they spoke to, or received information from the seller of the property that the buyer purchased.
Covers how much the agent is paid should they find their client a property that they end up purchasing. The section contains four (4) subsections, which go over 1) the amount the agent would be paid if the property is listed (has a seller’s agent), 2) the amount they’d receive if the property is unlisted, 3) if the agent will require a retainer (and if so, the amount of the retainer), and 4) the commission the agent would receive if they find the buyer a property that they end up renting.
A simple clause that lets the buyer choose whether or not they want their agent to keep their identity secret when presenting offers on properties.
This clause allows the buyer to either allow or restrict their agent from acting as a dual agent. “Dual agency” refers to the buyer’s agent representing both the seller and the buyer in a transaction, and is considered “risky” due to the potential for a conflict of interest. This can occur when the seller does not have their own agent due to selling the property on their own (FSBO).