Let’s Talk Buyer Representation Agreements

Buyer Representation Agreements….what’s new?

We, as Realtors, are in a new day. The National Association of Realtors has passed what is the new way of doing business. Today, every Realtor has to have a signed agreement with their buyers before showing any property for sale.

The seller has hired their agent because of the integrity and protections offered them by having representation.  Equally so, this is something that a buyer invests in as we see the topic of how buyers agents get paid disclosed before the first property is shown.

Buyer Representation Agreements are not new. They have been around for years.  This agreement saw Realtors request commitment for the time they invest in return for the buyer clients’ fidelity to transact with them once they find the right property.

REALTORS® are members of NAR, the National Association of REALTORS®

What’s changed as of August 17, 2024 is that the Buyer Representation Agreement is now a requirement between Realtor and Buyer. This is no longer optional if you are to retain a Realtor.

A Realtor is the integral partner for the buyer to aid in smart choices. Your Realtor will navigate legalities and nuances of the process involved in buying real estate. That’s why it is important to interview your agent before signing a Buyer’s Representation Agreement. After all, it is a legally binding contract. The discussion about our fees is now made upfront. Previously this acquisition fee was a line item incorporated into the market price of residential property. No longer is this the case.

A contract for each party

The seller has hired their Realtor because of the integrity and protections offered them. By having this representation, the seller commits to a Listing Agreement with his or her agent and here outlines the sales fee to their Realtor.

We traditionally worked with a binding contract with sellers only. However, Realtors are now required to also contract with the buyer. This Buyers Representation Agreement actually spells out the negotiated compensation to be paid by the buyer. It may be that the fee is offered in full or in part by the seller who recognizes that market price has been established incorporating the fees to be paid. In some instances, it may not be included in the market price and further negotiations are then necessary to ensure commissions are paid.

Buying real estate is a BIG DEAL

When you begin your search for property with your Realtor you will review and address the terms of the Buyers Representation Agreement together. This contract must be signed before your agent shows you any property, and that includes FaceTime tours.

“If we’re growing, we’re always going to be out of our comfort zone.” – John Maxwell

So please bear with us as an industry as we go through these new policies and procedures which are across the board as far as being a national requirement for members of the National Association of Realtors. Rest assured we practice real estate adhering to our Code of Ethics, established in 1908, to ensure best business practices. Transparency is the intention as we all wade through some muddy waters to bring clarity and understanding to this new process, a requirement that is industry-wide.

Moving with the changes

There are undoubtedly many questions and if you’d like to discuss the changes, please call me. The key here is to remember at the end of the day….with some nuances, this is business as usual! The buyer has always been the only party bringing money to the table. The commission has been part of the price of real estate to ensure the Realtors are paid. It is however a new era in real estate. Clarity at the outset about how commissions are to be paid are upfront discussions. All the more important is the value of an agent’s representation which is negotiated through commissions.