What is a Buyer’s Representation Agreement Anyway?

What is a Buyer’s Representation Agreement Anyway?

  You are in the market for a house. You find a Realtor. They are a family friend, or a referral from a friend, or you found them on the internet. You meet with them and they ask you to sign a contract to represent you. Wait, you haven’t even found a house. What is a Buyer’s Representation Agreement anyway? What does it mean, and should you sign it? First let’s look at the different types of Buyer representation agreements. (Disclaimer: This is for the State of Tennessee. You will want to check with your state to find out what types they use.) There are two main types with two sub-types. There are Exclusive and Non-Exclusive as well as Buyer Agency and Designated Agency. Exclusive Buyer’s Representation Agreement: This is an agreement that says the agent or company is the only agent or company that has the right to represent the buyer in a residential real estate transaction. Non-exclusive Buyer’s Representation Agreement: This agreement allows a Buyer to hire more than one agent or company to represent them in a residential real estate transaction. Buyer Agency: Under this type of Buyer’s Representation Agreement, the entire real estate company technically represent the Buyer. Designated Agency: This type of Buyer’s Representation Agreement will designate one agent in a company to represent the Buyer. Why would you sign them? Exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: A Buyer has one agent or one company working for them. Some buyers may think they will get more results if they hire more than one agent. In my experience, agents/companies tend to work harder for the buyers that are working with them exclusively. This type of agreement obligates both parties to each other which typically forms a loyalty from day one and will cause an agent/company to put every effort into finding the perfect property for the buyer, knowing that if/when they do, they will get paid. Non-exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: Some investors decide that this is the best agreement to sign because agents/companies may have access to different off-market properties. This may be true for some, however, my opinion is that a buyer will typically get the best service if the agent/company knows they have their client’s loyalty. Should you sign it? In the state of Tennessee, in order for an agent/company to work for you, there must be a written agreement, so, yes, you should sign it. However, the fact that you sign it, doesn’t mean you are stuck if the agent/company does not perform their duties. Either party may terminate the agreement. If you don’t feel you are receiving the best service, speak to the agent/company. If...

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