When it comes to purchasing real estate, many buyers turn to a buyer’s broker to help them find their dream home. But, before beginning the search, it’s important to sign a buyers brokers agreement.
A buyers broker agreement is a legal contract between the buyer and the broker that outlines the terms of their working relationship. Here are some key things to know about this agreement:
1. Types of buyer broker agreements
There are three types of buyer broker agreements: exclusive right to represent, exclusive agency, and open agreement. The exclusive right to represent agreement is the most common, giving the broker exclusive rights to represent the buyer and earn a commission on the sale. The exclusive agency agreement gives the broker the right to represent the buyer, but allows the buyer to find and purchase a property on their own without paying a commission. The open agreement allows the buyer to work with multiple brokers and only pay a commission to the broker who helps them find and purchase a property.
2. Length of agreement
The length of the agreement is negotiable, but typically lasts for three to six months. If the buyer finds a property and purchases it after the agreement has expired but during the time they were working with the broker, the broker is still entitled to a commission.
3. Commission
The commission amount is also negotiable, but is usually around 2-3% of the purchase price. The commission is paid by the seller, but is split between the listing agent and the buyer’s broker.
4. Responsibilities of the buyer’s broker
The buyer’s broker has a fiduciary duty to act in the best interest of their client. This includes finding properties that meet the buyer’s criteria, providing market analysis and pricing advice, negotiating the purchase contract, and guiding the buyer through the closing process. The broker must also disclose any conflicts of interest, such as if they represent both the buyer and the seller.
In summary, signing a buyers brokers agreement is an important step in the home buying process. It establishes the terms of the relationship between the buyer and the broker, and ensures that both parties understand their responsibilities. Working with a buyer’s broker can help make the home buying process smoother and more efficient.