What is a Buyer Agency Agreement, and Is It Required?
A buyer agency agreement outlines the formal relationship between a homebuyer and their real estate agent. But is it something you really need, and how does it impact your home search? With the recent National Association of Realtors (NAR) settlement, which took effect on August 17, the way real estate agent fees are communicated and negotiated has changed. Whether you’re searching for a condo in Chicago or a home in Miami, this Redfin article covers everything you need to know about buyer agency agreements and how these new rules might affect your experience.
What is a buyer agency agreement?
A buyer’s agency agreement, also known as a buyer’s representation agreement, is an agreement signed by a prospective buyer. It authorizes a licensed brokerage firm, and usually a specific real estate agent, to represent the buyer in buying a home. The specifics of these agreements vary, but they usually outline the agent’s role in assisting with the home search, negotiations, and closing process, and specify how the agent will be compensated if a purchase is made. While the terms can vary by market and brokerage, the agreement confirms the buyer’s commitment to work with that agent. The length and terms are usually negotiable, offering flexibility for both the buyer and the agent.
Redfin’s buyer agreements
Redfin’s approach to buyer agreements is designed to be flexible and straightforward. Before the first home tour, Redfin requires clients to sign a simple fee agreement, which can be done online with one click. This agreement doesn’t obligate the client to use Redfin—it merely outlines the fee Redfin would charge if they represent the buyer. We think consumers should have a chance to get to know their agent before being asked to sign a contract to work exclusively with them.
At Redfin, clients are only required to sign a formal buyer’s agency agreement when submitting an offer (unless required earlier by local law). If the offer isn’t accepted, there’s no obligation to continue working with Redfin, and clients can cancel the agreement at any time.
Buyer agency agreements at other brokerages
At other brokerages, buyer agency agreements may come with different terms and conditions. Some agreements could require you to pay an agent for their time and services, even if you decide not to purchase a home. This might include covering costs related to home tours, research, or administrative work. Additionally, many brokerages now ask for exclusive buyer agency agreements to tour, which bind you to work with that agent for a specific period, limiting your ability to switch agents or avoid fees if you don’t proceed with a purchase. Always review the agreement carefully to understand your obligations before signing.
Is a buyer agency agreement required?
The new industry-wide rules require a written agreement that explains the agent’s fees before touring. Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home.
Some agents at other brokerages require buyers to sign a full buyer agency agreement before touring, obligating them to work exclusively with that agent for a set period of time. Redfin does not.
What happens if you don’t sign a buyer agency agreement?
While you can work with an agent without signing a formal contract, doing so can lead to complications. For example, without an agreement, there may be misunderstandings about the agent’s obligations, and the agent may not prioritize you over clients who have signed agreements. Additionally, without a formal agreement, you won’t have clear terms regarding commission or the agent’s duties, which could lead to issues later in the process.
Buyer agency agreement FAQs
1. Is Redfin requiring a buyer agency agreement to tour?
No. The new rules require Redfin to get your agreement on our fee before we tour a home with you. We show the fee on Redfin.com when scheduling a home tour. You can sign the fee agreement with one click. Unlike the forms used by other brokers, this agreement doesn’t obligate you to use Redfin; it exists only to set the maximum amount Redfin can charge to be your buyer’s agent.
2. Can I work with more than one real estate agent at a time?
It depends on the type of buyer agency agreement you sign. If you sign an exclusive right-to-represent agreement, you’re committing to working with just one agent. However, if you have a non-exclusive or open agreement, you can work with multiple agents and only pay the one who helps you purchase a home.
3. What happens if I find a property on my own?
It depends on the terms of your agency agreement. If you find a property on your own, you should still inform your agent, especially if you’re under an exclusive agreement. In some cases, your agent may still be entitled to the commission even if you found the home without their assistance. This is why it’s important to clarify how the agent will be compensated before signing the agreement.
4. What should I do if I’m unhappy with my agent after signing an agreement?
If you’re unhappy with your agent, many agreements will have a clause allowing you to terminate the contract under certain conditions. It’s important to review the termination terms before signing to ensure you can exit the agreement without penalties if the agent’s services are unsatisfactory. At Redfin, you can sign our agreement and cancel it later, by emailing your agent that you wish to cancel.
5. Do I have to pay the agent if the deal falls through?
In many cases, the buyer does not owe the agent any commission if the deal falls through, provided you haven’t breached any terms of the agreement. However, it’s essential to review your contract for any specific clauses that might address this scenario.
6. Can I switch agents if I’m under contract with one?
You can switch agents, but only if your agreement allows it or if you’re able to terminate the current agreement. Switching agents while still under contract with one may lead to legal or financial issues, so it’s important to understand the termination and exclusivity clauses in your agreement.
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