Before entering into any contract, it’s important to fully understand the terms you’re agreeing to abide by. Let’s walk through some conditions you may encounter in a buyer agency agreement. This section of the buyer agency agreement outlines the expectations of your real estate agent. Their responsibilities might include locating potential properties and open houses, submitting and negotiating home offers and helping with paperwork when you close on a house. Your agent may also be able to assist you with the home loan process, from comparing mortgage lenders to understanding the types of mortgage options available to you.Agent Duties
You hired your agent to represent your best interests during the home buying process, so they can also serve as a support system as you search for your dream home.
Term Length
Your buyer agency agreement will state the duration of time that your working partnership with the real estate agent or broker is valid. The agreement can extend anywhere from a few months to upward of a year. But just like with any of the conditions of the buyer agency agreement, the term length is generally negotiable. So, be sure to talk with your agent about the time frame you’ll be requiring their expertise.
Dual Agency
Whether your real estate agent is working as a dual agent is a condition typically disclosed in a buyer agency agreement. Dual agency means the real estate agent represents both the home buyer and the seller in a real estate deal. There’s potential for dual agency to create a conflict of interest between a buyer and seller because the agent helps lead negotiations between the two parties and wants the best outcome on both sides.
How Does Dual Agency Work?
A dual agent also receives the full commission from a real estate transaction, as opposed to splitting the commission evenly between a buyer’s and seller’s agent (also called a listing agent). This can be a financial incentive for the agent to see the entire transaction to completion.
Proceed with caution if your contract includes a dual agency clause. If you’re looking for sole representation, you may be able to negotiate this section with your real estate agent to better suit your needs.
Exclusivity
As mentioned already, exclusivity is a key component of your buyer agency contract. If your contract is exclusive, you can only buy a house with the real estate agent or brokerage firm you hired and signed with.
If you signed a non-exclusive contract, make sure you understand the terms of your working relationship – including the extent to which you can work with other real estate professionals, what commission looks like and whether you can demand sole representation (or single agency, as opposed to dual agency) from an agent.
Commission
This section of the buyer agency contract defines how compensation is handled. During a real estate transaction, the buyer’s and seller’s agents are paid a commission based on the property’s sale price. The average total commission paid to the real estate professionals involved in the home sale is typically 5% – 6%, but it can vary with market conditions. The buyer, the seller or both parties will pay this commission percentage when you close on the house.
If only the buyer’s and seller’s agents are involved in the transaction, these two parties usually split the commission 50/50. Of course, if the buyer is also working with a brokerage firm (as outlined in your buyer agency agreement), they may also receive a portion of the commission.
Termination
If you or your real estate agent are dissatisfied with the partnership, most buyer agency agreements outline how to end the arrangement. You might have to meet certain conditions – like giving prior notice or writing a letter of termination – to break the agreement. Be sure to carefully review the termination clause in your contract in the event you want to end it and work with another real estate professional.
