Many real estate brokers ask home buyers they work with to sign a Buyer Representative Agreement. It’s a standard form and commonly used, but is it required?
Not all brokers require their clients to sign a Buyer Representative Agreement and there is no government requirement that buyers sign one. Sometimes the brokerage (real estate company) may not require the Agreement, but an individual agent may refuse to serve a client without one. Since agents are usually independent contractors, they have the right to require an Agreement. If the buyer does not want to sign an Agreement, they have the right to work with another agent.
The Agreement guarantees compensation to the broker when a real estate purchase is completed, which is redundant with the broker compensation section in most standard purchase agreement (offer) forms. The Buyer Representative Agreement goes a step further to document potentially unique features of the broker/buyer relationship. Some of these features could include:
- Guaranteeing a commission to your broker if they show you a home, even if you later submit an offer to purchase the property through another agent within a specified period of time.
- Providing the broker with a commission amount or form of payment that might be different from the commission offered by the seller’s broker.
- Confirming, if applicable, the existence and terms of any Buyer Representative Agreement you may have entered into with another broker.*
- Identifying the specific type of property, features or price range being sought (e.g. home, land, commercial).
Most buyers should have no problem signing a Buyer Representative Agreement. Like all real estate agreements, they should read the document carefully and consult with an attorney if they have concerns.
*Regarding Agreements with other brokers – the Buyer Representative Agreement may be Exclusive or Non-Exclusive. Buyers are free to work with as many brokers as they like on a non-exclusive basis. However, some brokers (my opinion is most) will not offer their services under a Non-Exclusive agreement or work with buyers who disclose they are simultaneously working with other brokers. Brokers concerned with the potential for buyers being obligated to other brokers often require a signed Buyer Representative Agreement to protect their compensation in the event of conflict. Buyers who have entered into previous agreements with other brokers may want to consult with an attorney to confirm they no longer have obligations under those agreements.
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