Buyer Agency Agreements: What are They and How They Can Benefit You As Buyer

BUYER AGENCY AGREEMENTS:

WHAT THEY ARE AND HOW THEY CAN BENEFIT YOU AS A BUYER

Today’s real estate climate is reminiscent of the Wild West –offer-slinging, fast-moving, threats of the unknown lurking beyond every blind turn in this

uncharted territory. Buyers always, and today especially, need a pro in their corner, delivering cover fire, watching their back and lightening the load–leading the way on an otherwise unknown path. Enter, the single agent and a buyer agency agreement.

Much like a listing agreement for a home seller seeking agent representation, a Buyer Agency agreement is essentially an employment contract between a home buyer and a real estate agent. The agreement outlines the duties of both parties in a cooperative partnership ending, ideally, in the purchase of a home. While standard buyer agency agreements can be cancelled in writing if either party neglects their duties, the idea is to create a mutual understanding and a working relationship that will serve both parties equally.

A true buyer agency agreement should establish, as one of its primary functions, a fiduciary “single agent” relationship between the agent/brokerage and the buyer, meaning that the agent and his or her brokerage are agreeing to represent the buyers’ interest above all others in the transaction, including their own. The agent is also committing to diligent efforts, communications, and other performance-based activities as a part of a standard buyer agency agreement. The buyer in this scenario is essentially agreeing to use the named agent and brokerage–so long as they perform their duties at the level and extent prescribed and should the buyer indeed find and purchase a home within the given timeframe–to represent them in said purchase. There may or may not be an advance retainer (usually applied toward any commissions eventually earned) as a hedge against upfront time, effort and/or expense outlay on the part of the agent, and there will typically be a fee due upon performance that will usually be offset (and perhaps paid in full) by any cooperating commissions offered by the seller’s brokerage.

What’s the benefit?

For the agent, the primary benefit lies in knowing that their buying clients (or “principals”) are as committed to the partnership as they are–knowing that the time spent researching, studying, chasing down leads and even knocking on doors, if needed, to procure potential properties for their buyer, is time well-invested and that they will, when that perfect property is located and secured for their principal, be fairly compensated for their efforts.

For the buyer, the benefit is in knowing that you have a wellqualified, committed professional under contract and representing your interests alone. Much different from the default and majority “transactional” agents who abound today, a buyer’s agent is not trying to sell you a certain house because it’s the one you called about or perhaps because it’s their listing, they are trying to find the perfect home for you, period. On the market, off the market, private sellers, unlisted builder homes, their listing, someone else’s listing, something not listed at all–they are interested only in the best fit for you, wherever and under whatever circumstances it may be found. A buyer’s agent, as a fiduciary single agent, owes you advice, guidance, loyalty, and full confidentiality–all important benefits when merging onto today’s fast-moving and everchanging real estate freeway - and none of which can be provided by a transactional agent, which is the default relationship agents assume in both Florida and Alabama.

Bottom line, if you expect high-level representation and your agent has not mentioned a “buyer agency agreement,” or your option to be represented as a “single agent,” you may want to ask that question sooner rather than later. Many brokerages do not train their agents for and/ or do not allow buyer agency agreements with Single Agent representation. As such, and because both Florida and Alabama take the presumptive default role of transaction agent, the only agent-buyer relationship that should be assumed without an explicit conversation and/ or a document to outline it is a transactional one.

Always read your documents. Agency laws, options and disclosure requirements are different for every state. The “standards” discussed here relate to commonly used state forms in our region (Florida & Alabama Gulf Coast) that may or may not be used by all brokerages. Know the questions to ask. Know the service to expect. Know the experts to trust. Expect better.

Holly Lovett

licensed broker – FL & AL Broker/Owner Better Homes and Gardens Real Estate Main Street Properties A full-service brokerage serving the Gulf Coast since 2011. Find your favorite agent at mainstreetproperty.com