Congratulations! You have found the perfect Buyer Agent to assist you with your home buying journey! But now they are asking you to sign a Buyer Agency Agreement and you aren’t sure if you should be doing this or not! Why is it necessary to sign a Buyer Agency Agreement?
The easy answer to that question is that Virginia law requires that you have a Buyer Agency agreement signed between you and your Realtor at the first substantive conversation you have about homes! If you are like most buyers, when you visit a home, you are going to ask a lot of questions about the home and the area, and many of the answers to those questions may mean that you and the Realtor are now having a substantive conversation about a house! You may ask questions such as “What do you think of the price of the house?” or “Will this home qualify for my loan type?” or any other questions that you can’t find the answer to in what is public information (on your MLS sheet, in Zillow or on the brochure the listing agent has in the house). This may mean you have now crossed into the territory of “substantive conversation”.
So what is the Buyer Agency Agreement and what does it cover? How long do you have to sign for and commit to a particular Realtor? What happens if you don’t want to use that Realtor again (for example, they are just not doing what you think they should be doing to help you with your search)? There are lots of questions – hopefully, your Realtor will explain the agreement to you and answer those questions!
Here is a summary of just what is covered by the agreement!
Who Is The Agreement Between – And How Long Is It For?
A Buyer Agency Agreement can be for as short a period of time as one house, one day, one month, several months! All agreements have a start and end date to them! It is between the brokerage that your Realtor works for (in my case, it would be Long & Foster Realtors) and yourself! If you are just starting work with a particular Realtor and you are not yet comfortable with that Realtor, you can make it for just one day’s showings, or even just for one house! If you do that, however, at some point you will probably want to sign another agreement for a longer period of time so you are not constantly having to sign a new agreement each time you go out to look at houses!
What Does Each Party Agree To Do?
In the Buyer Agency Agreement there are certain things that the broker (and Realtor) are required to do: represent the buyer and their interests, including keeping information confidential. The buyer also has certain things they agree to do, including working exclusively with the Realtor during the term of the agreement, comply with any reasonable requests made by the broker, agree to not work with other Realtors or sellers during the term of the agreement.
How Does The Buyer Agent Get Paid?
This section is where the Buyer Agent and buyer talk about how their agent will be compensated. Some agents will collect a fee for helping the buyer – the fee is negotiated between buyer and broker. For instance, if the broker says they will get paid 3 apples for helping the buyer and the listing agent is only offering the buyer agent compensation of 2 apples, then the agent may expect the buyer to make up that difference of 1 apple at closing! OR the agent may agree to take whatever compensation is listed in MLS – so if a listing agent puts a property in MLS and states that they will only pay the buyer’s broker 2 1/2 apples, then the buyer is not liable for any additional compensation! AND/OR a buyer broker may say that they will expect the buyer to pay an additional fee at closing – it may be an Admin Fee or a Transaction Fee! But the Buyer Agency Agreement will detail the exact compensation and who pays the Buyer Agent’s compensation!
What Are Dual and Designated Agents?
In Virginia, if a buyer is interested in properties that are listed by the same brokerage that your Buyer Agent works for, this may be considered a Dual Agency situation or even a Designated Agency situation. The brokerage may be representing both the buyer and seller – but the brokerage will have “designated” the Buyer Agent to represent the buyer and the listing agent is “designated” to represent the seller, making this a Designated Agency relationship! However, if a Realtor lists a house for sale, and a buyer, who does not have a Buyer Agent representing them and decides to write a contract, then if the listing agent now writes up an offer for the buyer, this becomes a Dual Agency relationship! This is something that should be discussed when you are signing the Buyer Agency Agreement!
How About Recordings in the Property?
This paragraph puts the buyer on notice that if they plan to do any sort of photographing, videoing, etc. of the property they should speak to an attorney. Why? There are state and federal laws regarding this. In addition, it is possible that sellers may have some sort of security systems or nanny cams in the house that they may be able to listen to conversations in the house. This paragraph puts buyers on notice that they should be very careful about what they discuss in the house, including any negotiating strategies, and releases the broker from any liability that may arise from any recordings in the property.
The Buyer Agency Agreement lets buyers know that Realtors are nothing but Realtors! We are not inspectors, lenders, attorneys, engineers, or anything other than Realtors, and if buyers want to know anything about these other areas, they should consult appropriate professionals! In addition, there is something in the agreement that lets buyers know that there is potentially a lot of scams going on and not to wire any funds to someone without first verifying that the wiring instructions are correct!
This will summarize the Buyer Agency Agreement! However, when you are sitting with your Buyer Agent and discussing everything, make sure that your Realtor goes over the entire agreement with you and you are able to discuss any concerns you may have about it!
If you are thinking of buying your first home and want to talk to a Realtor who specializes in helping first time homebuyers in the Richmond area, feel free to contact me! No pressure, no obligation!