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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.
Tim advises small businesses, entrepreneurs, and start-ups on a wide range of legal matters. He has experience with company formation and restructuring, capital and equity planning, tax planning and tax controversy, contract drafting, and employment law issues. His clients range from side gig sole proprietors to companies recognized by Inc. magazine.
Charlton Messer helps businesses and their owners with general counsel and contract drafting services. He has helped over 500 businesses with their legal needs across a variety of industries in nearly a decade of practice.
Ms. Ayub is an attorney licensed to practice in Texas. Before moving to the US, she has a number of years of experience in contract review, analysis and drafting. Ms. Ayub is available to help you with your legal problems, as well as filling LLC and other business entity formation documents. To know more about her practice, please visit https://ayublawfirmpllc.com/.
With 20 years of transactional law experience, I have represented corporate giants like AT&T and T-Mobile, as well as mid-size and small businesses across a wide spectrum of legal needs, including business purchase agreements, entity formation, employment matters, commercial and residential real estate transactions, partnership agreements, online business terms and policy drafting, and business and corporate compliance. Recognizing the complexities of the legal landscape, I am dedicated to providing accessible and transparent legal services by offering a flat fee structure, making high-quality legal representation available to all. My extensive knowledge and commitment to client success establishes me as a trusted advisor for businesses of all sizes.
Business-minded, analytical and detail-oriented attorney with broad experience in real estate and corporate law, with an emphasis on retail leasing, sales and acquisitions and real estate finance. Extensive experience in drafting complex commercial contracts, including purchase and sale contracts for businesses in a wide variety of industries. Also experienced in corporate formation and governance, mergers and acquisitions, employment and franchise law. Admitted to practice in Colorado since 2001, Bar No. 33427.
Attorney Garrett Mayleben's practice is focused on representing small businesses and the working people that make them profitable. He represents companies in structuring and negotiating merger, acquisition, and real estate transactions; guides emerging companies through the startup phase; and consults with business owners on corporate governance matters. Garrett also practices in employment law, copyright and trademark law, and civil litigation. Though industry agnostic, Garrett has particular experience representing medical, dental, veterinary, and chiropractic practices in various business transactions, transitions, and the structuring of related management service organizations (MSOs).
I was born in Charlotte, NC and primarily raised in Dalton, GA. I graduated from Dalton High School in 1981 where I was in the band and the French club. I also participated in Junior Achievement and was a member of Tri-Hi-Y. New York granted my first license as an attorney in 1990. I then worked as a partner in the firm of Broda and Burnett for almost 10 years and as a solo practitioner for about 2 years. I worked as a general practitioner (primarily doing divorces, child abuse cases, custody matters and other family law matters, bankruptcy, real estate closings, contracts, taxes, etc.) and as a Law Guardian (attorney who represents children). I obtained my license in Tennessee in December 2002 and began working as an associate at Blackburn & McCune from February of 2003 until May of 2005. At Blackburn & McCune I provided telephone legal counsel to Prepaid Legal Services (now known as Legal Shield) members, wrote letters for members, reviewed contracts, attended hearings on traffic ticket matters and represented members with regard to IRS matters. In May of 2005, I went to work for North American Satellite Corporation where I served as Corporate Counsel. I handled a number of taxation issues, reviewed and wrote contracts, counseled the CEO and Board of Directors on avoiding legal problems and resolving disputes, and represented employees on a variety of matters, and also assisted the company for a period of time as its Director of Accounting. In 2010, I volunteered as a law clerk for Judge Robert Adams in Dalton, Georgia until I obtained my license to practice law in Georgia in November, 2010. In Georgia, I have handled a variety of family law matters, drafted wills, advanced health care directives, power of attorney documents, reviewed and drafted contracts, and conducted real estate closings. Currently, I accept cases in the areas of adoption, child support, custody, divorce, legitimation and other family law matters. In addition, I handle name change petitions and draft wills.
