What is a Buyer Broker Agreement and Why Do I Have to Sign One?

Q: My agent wants me to sign something called a buyer broker agreement. What is this and why should I sign one?

A: The buyer broker agreement is a contract that clearly outlines both the buyer’s and the agent’s expectations and helps to ensure that each party does what they say they will do. It is now required for your agent to receive a commission when they help you buy a house.

Because of a recent law-suit settlement, the landscape of real estate has changed in ways that will affect buyers and sellers. Although the buyer broker agreement is not new, it has not been widely used until now. If you want your agent to receive a commission for helping you buy a house, you will be required to sign a buyer brokerage agreement before you ever look at a house.

The buyer broker agreement  is a contract between the buyer and their agent stating that 1) the agent will represent the best interests of the buyer and will be compensated for their work. 2) The buyer will commit to working with that agent only and will work to accomplish the objectives of the agreement. Without a signed agreement, you are saying you’re not loyal to your agent, and they, in turn, don’t have to be loyal to you. Are you willing to take that risk with such an important purchase?

Additionally, agents will not be able to receive a commission unless they have a signed buyer broker agreement showing that they represent you. Buyers who refuse to sign the agreement may have a hard time getting any reputable agent to work with them.

A word of caution; the buyer broker agreement should not be taken lightly. Make sure you understand the terms of the agreement and that you’re serious about purchasing real estate before you sign one. This is not for tire-kickers or looky-loos. Monetary penalties can apply if either party breaks the contract. Also, shop around before signing with an agent, just like you would shop for a lawyer or an accountant. It’s important to find someone you like and trust. You know the one! Call me today for a no-obligation buyer consultation!