Buyer Representation Agreements: What You Need to Know
When you’ve found a real estate agent to guide you through the home buying process in San Jose, they may ask you to sign a buyer representation agreement. But what is this agreement and what does it entail? Should you sign one?
A buyer representation agreement, sometimes called a buyer-broker agreement, is a legally binding agreement or contract between you and your real estate agent.This agreement legally defines what you as a buyer and they as the agent are going to do to work together to your common goal to find a property. It asks you to have an exclusive relationship with the agent.
You can think of a buyer representation agreement as a choice to be in partnership with your agent. This has benefits for both parties. It protects you as a buyer, giving you reassurance that your real estate agent is doing all of their duties and keeping your best interests in mind. The buyer representation agreement has perks for the agent as well– they’re assured that all the hard work they do for you pays off.
The most seamless real estate transactions come when the real estate agent and buyer are in a closer partnership. A buyer representation agreement confirms and solidifies the relationship.
Why sign a buyer’s representation agreement??
Although it may be tempting to shop around for real estate agents throughout the buying process, you’re much better off developing a relationship with one trusted agent who understands your home buying goals.
Signing a buyer representation agreement gives you a dedicated agent who is invested in your journey. This agent will continue to educate you and work alongside you in the process. They are much more likely to connect you with off-market listings, guide you through the offer process, and ultimately get you into a home in San Jose.
If you’re serious about buying a home, it’s best to have a committed agent on your side. From an agent’s perspective, they give much more effort if they know you’re working with them because they know they’ll get paid by the seller when you close.
What’s in the standard California buyer’s representation agreement?
The standard California buyer’s representation agreement defines what a buyer’s agent does and how they’ll represent you. Here are some of the most important sections included:
This section shares the names of you and the buyer’s agent, the date signed, and how long the agreement is in affect. We typically set 180 days or 6 months in our buyer’s representation agreements.
Property to be acquired
This agreement is for a specific real estate goal, so we usually say it’s for “any property in Santa Clara County.” Sometimes, we define it more specifically. If you buy a home outside of Santa Clara County, the contract does not apply.
Expectations for buyer’s agent
This section defines that the buyer’s agent has a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealing with the buyer. It shares that they have a duty to be honest and act in fair dealing and good faith, and that they will disclose all facts known that would affect the value or desirability of a property. This means they’ll be your extra sleuth to discover all they can.
This section shares that the buyer will work exclusively with the agent for a specific amount of time and will act in good faith. As the buyer, your responsibility is to consider all homes presented, to act in good faith, get qualified for a loan, cooperate with a broker, and work with your agent as a team.
Disclosure about fair housing
This disclosure shares that there is no discrimination allowed when buying or selling properties in California. This is discrimination based on race, age, sexual orientation, immigration status, disability, or a number of other factors. This includes best practices for how to make sure there is no discrimination. For example, buyers used to be able to submit a letter about their family with their offer, providing details so the seller could make sure they liked the family moving in. This is no longer allowed, as there is a risk for discriminatory decision-making.
Representation of more than one buyer or seller
Your real estate agent has relationships with more than one buyer or seller. Even so, your real estate agent will have your best interests in mind. They may represent a seller who may have a good property for you.
Wire fraud advisory
We will advise you through the process, but this section basically says to call and verify for any wiring information so that you can verify anything you’ve received in a secure email to make sure you’re sending funds to the right place.
Buyer agrees to pay the broker
This is a little daunting for some clients. In 99% of cases, someone else is paying the buyer’s broker on your behalf– usually the seller when the transaction closes. How do you know how much the buyer’s broker will be compensated? When you visit a property on Redfin, you can see what the buyer’s commission will be– 2.5% is standard. The broker takes their cut and then pays the real estate agent.
Thinking about signing a buyer representation agreement? We’re ready to walk you through any questions you have. Set up a buyer consultation so we can talk through where a buyer presentation agreement fits in when buying a house in San Jose.