Signing a seller’s listing agreement is a standard practice between real estate professionals and home sellers. When potential buyers seek help from an agent to find and purchase a home, a buyer’s agency agreement is just as important. These agreements offer many benefits. Many states’ laws require them, which will be required nationwide beginning August 2024. Here’s what home buyers should know.
Transparency is critical
The main benefit of a buyer agency agreement is that it spells out the crucial details of the agent’s compensation, the contract’s other requirements, and both the agent’s and the buyer’s responsibilities. The agreement must:
- Clearly explain the amount or rate of compensation from any source to the MLS participating buyer’s agent for her services. This includes any retainer fees and whether they are the entire compensation to the agent or only part of the overall compensation. The agreement must state that compensation is not set by law and is always negotiable between the agent and the client. The compensation must be explained in clearly defined terms, not vague or open-ended.
- State that the agent cannot receive compensation from any source that exceeds the amount or rate described in the agreement.
- Set forth the terms of the agreement and what must occur for either the buyer or agent to terminate the contract.
- Clearly list responsibilities for both buyers and the agent. For the agent, this means putting the buyer’s interests first, disclosing any material fact about a property that could affect the buyer’s decision, protecting confidential information the buyer shares with the agent, and working diligently to help the buyer find properties fitting their stated desires. For the buyer, responsibilities include providing the agent with enough financial information to indicate whether the price of a home is acceptable and informing the agent about an available home the buyer has become aware of, or that has been offered to him for sale.
- The agreement should contain all legal and regulatory language, such as Equal Housing Opportunity stipulations. It should also explain how disputes will be negotiated and settled.
Both the buyers and the agent must sign the buyer agency agreement before touring a home, including virtual tours.
A nationwide legal requirement
Buyer agreements are already used in some states, but a recent settlement between the National Association of REALTORS® and plaintiffs in a lawsuit will make buyer agreements with the abovementioned provisions a requirement nationwide as of August 17, 2024.
Related – 7 Benefits of Working With a Real Estate Agent
