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Buying a home isn't as simple as shopping for anything else; you'll be required to sign several agreements even to begin the process, such as the buyer broker agreement.
Whether you're a home buyer looking for a broker's help or a broker simply interested in knowing more about the agreement, this legal document is one of the essential steps of real estate.
It's worth noting for a buyer that a broker will ask you to sign several disclosures and contracts while you work with them. That's why it's important to know what you're getting into before signing away!
If you're curious about the importance and contents of a buyer broker agreement, keep reading.
Here is a complete guide to buyer broker agreements.
A buyer broker agreement is a contract that legalizes the relationship between a buyer and a broker. Furthermore, it is a legally binding contract that outlines the rights and responsibilities of both parties. This contract essentially details that the buyer is utilizing the help of a broker to search for and buy a home.
When a buyer signs the real estate contract, they legally agree not to work with any other broker to help them buy a home. The terminologies used in a buyer broker agreement differ from state to state, but they all require the same responsibilities.
In a buyer broker agreement, there are specific duties a broker must fulfill and certain duties for the buyer too. A refusal to fulfill these responsibilities will result in a contract breach and legal trouble.
Here are the duties of a broker in a buyer broker agreement.
Here are the duties of a real estate broker in a buyer broker agreement.
Buyer broker agreements sometimes go by other names even though they may mean different things, including:
Here is an article about buyer broker agreements.
Meet some lawyers on our platformMost buyer broker agreements include the following information at a minimum:
The real estate broker will detail their responsibilities in this agreement section while helping homebuyers. First, a realtor must find properties that the buyer can consider and disclose the necessary material facts.
They must also help buyers review paperwork and prepare purchase offers. Realtors are also responsible for conducting visual inspections as required.
One of the essential details in a buyer broker agreement is the term length. This will determine the time frame to honor the agreement and its terms. This section of the contract is typically negotiable by both parties.
So, if you have concerns about the length of your term, you may discuss it with the other party and come to a mutual agreement.
If either party feels that the agreement isn't working out, they can terminate the contract. In this section of the agreement, you must detail a few elements, including:
It's also worth noting that buyer broker agreements are typically between homebuyers and real estate brokerages, not specific brokers. This means the brokerage may try to help your case by offering you a different agent to work with. You'll directly communicate with an independent broker if you work with an independent broker.
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In this section of the agreement, you must detail the buyer's kind of representation. For example, a homebuyer can choose two types of representations: designated representation and dual representation.
Designated representation allows the broker to present properties other agents from their real estate agency have listed. In this case, the broker will only be representing you.
On the other hand, dual representation allows the broker to present properties that they have listed with sellers. In this case, the broker will be representing both you and the seller. However, dual representation is illegal in some states since there's a high potential for conflict of interest. The biggest conflict is the price. The selling agent is supposed to get the highest price for the seller, and the buyer’s agent is supposed to get the lowest price for the buyer. A dual agent cannot remain neutral in this situation.
This section of the agreement is essential to detail the two types of compensation:
In this section of the agreement, the buyer may detail the property requirements they're looking for. Here are some of the elements they can include:
There are two types of buyer broker agreements for exclusivity; exclusive agreements and non-exclusive agreements.
Some contracts require additional clauses and information. You can customize a buyer broker agreement to meet the specific requirements of each party.
Here is an article about the components of a buyer broker agreement.
There are two types of buyer broker agreements that can be differentiated by exclusivity.
An exclusive buyer broker agreement details that the buyer may only work with the broker during the term length.
A non-exclusive buyer broker agreement allows the buyer to work with other brokers to help them purchase a home.
Here is an article about the different types of buyer broker agreements.
The length of a buyer broker agreement depends on both parties' requirements and can be negotiated if necessary. Typically, a buyer broker agreement lasts six months. However, buyers may even find brokers willing to work with them for a year or just a month.
Here is an article about the term length of a buyer broker agreement.
The main reason to sign a buyer broker agreement is to protect the buyer and the broker if their working relationship goes sour. In addition, this exclusive agreement ensures that your client is working with you and only you as a broker.
As long as the correct terms and conditions are outlined, a buyer broker agreement is only in the best interest.
Brokerages write buyer broker agreements, but the buyer may provide their input for terms and conditions they want to negotiate. Typically, a brokerage would hire a real estate lawyer to write their terms and conditions to offer to clients.
In real estate, buyer broker agreements guarantee the protection of both the broker and the buyer in case of legal trouble. This document ensures that both parties fulfill their responsibilities and follow the terms and conditions accordingly.
The agreement is in favor of both parties. That's because it details the expertise offered by the real estate agency while reassuring the buyer that their best interests are the end goal.
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
www.linkedin/in/michaelbmiller I am an experienced contracts professional having practiced nearly 3 decades in the areas of corporate, mergers and acquisitions, technology, start-up, intellectual property, real estate, employment law as well as informal dispute resolution. I enjoy providing a cost effective, high quality, timely solution with patience and empathy regarding client needs. I graduated from NYU Law School and attended Rutgers College and the London School of Economics as an undergraduate. I have worked at top Wall Street firms, top regional firms and have long term experience in my own practice. I would welcome the opportunity to be of service to you as a trusted fiduciary. In 2022 and 2023, I was the top ranked attorney on the Contract Counsel site based upon number of clients, quality of work and number of 5 Star reviews.
My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, Tax, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the 2024 Super Lawyers Southwest Rising Stars list. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.
