If you've started looking for a home and a real estate professional to assist you, you may be asked to sign a Buyer Representation Agreement. A Buyer Representation Agreement is a legal document that formalizes your working relationship with a particular buyer's representative, detailing what services you are entitled to and what your buyer's rep expects from you in return.
- Receive a higher level of service. If you've formalized a relationship with a buyer's rep, you can expect to be treated like a client instead of a customer. What's the difference? Clients are entitled to superior services, relative to customers. You can generally assume that being a client means you have formed a fiduciary or agency relationship with your buyer's rep.
- Get more without paying more. In almost every case, home sellers have already agreed to pay a buyer's agent's commission. If they haven't, you can ask your buyer's rep to avoid showing you any such homes. Or you can still view the home, knowing that you'll need to factor your agent's commission into any offer you may write. While buyers rarely pay real estate commissions, this is an important detail you'll want to discuss with your buyer's rep and clarify in the representation agreement.
- Avoid misunderstandings. A Buyer's Representation Agreement is an important and helpful tool that clarifies expectations, helping you understand what you should & should not expect from your buyer's rep & what they expect from you, which usually centers on loyalty.
- A relationship based on mutual consent. While most agreements specify a time period, they can be terminated early if both parties consent. Most buyers' reps are willing to end an agreement early if the working relationship is not going well. Some even offer a brief trial period to explore working together.
- Strength as a team. When you and your buyer's rep work together within a formalized agency relationship, you've created a team dedicated to helping you achieve the best possible home-buying experience.
Customer or Client? What's the Difference?
In real estate transactions, clients are entitled to a higher level of service than customers. Becoming a client typically involves signing a Buyer Representative Agreement with a buyer's representative, who then owes you fiduciary duties. This means that your buyer's rep is expected to exercise discretion when acting on your behalf and adhere to very specific responsibilities, obligations, and high standards of good faith and loyalty. For example, if you're a client, a buyer's rep will seek to negotiate the most favorable transaction terms for you and will not disclose any material facts about your situation that could hurt your negotiating position. If, however, you are only a customer, a buyer's rep may not be in a position to answer even basic questions, such as "Why are they selling?" or "Is this home priced competitively?" This is because they are acting as a sub-agent for the seller. Your service will vary, depending on your status.
If You Are a Customer (No Fiduciary Relationship), and the Agent Will:
- Maintain loyalty to the seller's needs
- Tell the seller all that they know about you
- Keep important information about the seller confidential
- Focus on the seller-client's property
- Provide just the material facts
- Only provide price information that supports the seller's listing price
- Protect the seller
- Negotiate on behalf of the seller
- Attempt to solve problems to the seller's advantage
If You Are a Client (Fiduciary Relationship), Your Agent Will:
- Pay full attention to your needs
- Tell you all that they know about the seller
- Keep information about you confidential
- Focus on choices that satisfy your needs
- Provide material facts and professional advice
- Provide price counseling based on comparable properties and their professional insights
- Protect and guide you
- Negotiate on your behalf
- Attempt to solve problems to your advantage