2019 is the time to buy a house

Why A Buyer Representation Contract Is Good For You!

Why is a Buyer Representation Agreement is good for you? Well it is for so many reasons. Have a look at any contract you’ve signed…phone, internet, gas, etc. If you read the clauses, you’ll discover that most of the time the contract protects the company more than it protects the consumer. Most contracts are extremely long, you likely won’t be able to get a clause explanation or clarification from any company sales rep, you have limited choices on the duration of the contract and if you decide that you want out, it’s likely going to cost you. Frankly, it’s no wonder there are a lot of people who are apprehensive when it comes to The Buyer Representation Contract with Realtors. This is, after all, a house/condo not a cell phone! Relax. OREA’s Buyer Representation Contract nothing like that. Of all the contracts we face in our lives, OREA’s Buyer Representation contract (which you are asked to sign when hiring a Realtor) is clear, concise and protects consumers.

Generally, it outlines what is to be expected of us, as Realtors, what is to be expected of the Buyers and outlines the parties in the working relationship. It gives house hunters the freedom to choose the duration of the contract, documents the type of property that the buyers are looking for and puts everything on the table so there are no misconceptions or misunderstandings.

How is this good for me?

Simple…you’re protected on so many levels. It starts with the fact that you’re entering into this contract with the Brokerage (Office), not the specific Realtor. This means that if there are serious problems with your Realtor, the owners of the Brokerage are responsible and accountable. The contract also outlines several possible scenarios that Buyers might encounter while working with a Realtor (working with other Buyers, Multiple Representation, Customer Service with Sellers, etc) and how it affects the working relationship. It requires your Realtor to explain the different types of representation to you, giving you the necessary knowledge and understanding of what to expect during the process. MOST IMPORTANTLY, however, a signed contract with a Brokerage means that any information you share with your Realtor is kept 100% confidential.

What about the commission clause?

There are few clauses on the contract that protect your Realtor and the Brokerage. This is one of them. Think logically. Would you work for free? Not likely. We don’t either. Until you buy a house, however, we essentially do work for free. That’s why this clause is on the contract. By asking you…the person who has been benefiting from our efforts…to provide that compensation IF we are unable to get it through the seller, this clause protects our compensation for all the work we’ve been putting into finding you a property. There‘s still going to be protection for you though. You’re not going to be blind sided with a bill for our commission. You’ll be informed asap if this is a possibility, giving you the freedom to consider your options before you even walk in the door of a house.

The Buyer Representation Agreement:

An exclusive buyer representation agreement gives the brokerage the sole right to locate real property that meets a specific buyer’s requirements. Most importantly, the form details a general description of the property desired and geographic location, as well as setting out commission arrangements for locating such property.

As with the seller representation agreement (listing contract), the buyer representation agreement sets out the legal relationship, obligations of the parties and time limits concerning such authority. Unlike the seller agreement, the buyer representation form is an authority both for the purchase of property and the leasing of property.

The authority is granted in the brokerage’s name, never the salesperson’s. While the buyer’s authority can be verbal, the Code of Ethics requires that the authority be put in writing and signed by the brokerage or its representative prior to any offer being made.

Exclusive written representation agreements require that an express, signed authority be given. This express authority delegated by the principal clearly sets forth in exact, plain, direct and well-defined limits those acts and duties that the agent is empowered to perform on behalf of the principal. If there is a definite understanding between the principal and agent, then the relationship has been established by express agreement.

So what does this get you?

  • Assisting the buyer in setting out property preferences.
  • Developing a property profile for guidance.
  • Seeking out property in a timely manner that meet the buyer’s criteria, without regard for commission or other remuneration to which the brokerage may be entitled. 
  • Preparing a comparative market analysis (CMA) or analyzing a seller-provided CMA or other documentation (i.e., Seller Property Information Statement) to assist the buyer in making an informed decision and taking appropriate action.
  • Accurately and professionally preparing and conveying offers, counteroffers and other written documentation. 
  • Taking reasonable steps to determine and disclose to the Buyer material facts relating to the acquisition of a specific property.
  • Assisting with buyer negotiations with strategies/options to advance the client’s interests.
  • Negotiating for the client to obtain the lowest price and best possible terms.
  • Assisting the buyer with mortgage lenders, home inspectors and other professionals as required.
  • Reviewing or otherwise assisting the client, as appropriate, with reports received and other documentation arising from the property buying process.
  • Informing the client of all significant steps taken in the course of  representing that client.

In summary, a buying or selling contact is a good thing that can protect you and help look out for your main interests. Buying or selling a property! If you would like to know more, don’t hesitate to reach out!

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