Buyer Agent Agreement

Why is the buyer agency agreement now required?

This is the effort for more transparency in the real estate transaction. The sellers can no longer advertise commission and incentives which could sway some real estate agents to steer clients to communities and homes which pay higher commission. So, in order for real estate agent to get paid they need to have an agreement with the buyer, just like the listing agent has an agreement with the seller and address commission upfront.

The buyer agency agreement used to be optional

The buyer agency agreement is not new however only few companies required buyers to sign one before touring homes. The agreement spells out agents duties and different representation levels. Some even used a non-representation agency agreement to avoid any liability.

My agreements have always given buyers an easy way yout without any penalties. Even then some buyers still resisted to sign one and it made an uncomfortable conversation when someone is just getting to know you. Imagine asking your date on the first meeting if they would marry you? I don’t think that would go over well. So, I was not using those agreements but now I would be required to use one.

New rules take effect August 6th, 2024

If you want to tour a home with a real estate agent (Realtor®), starting August 6th, 2024 you will be required to have a buyer agency agreement. The following is a copy of the stipulations needed for the agreement.

Who pays commission?

We are used to having seller pay commission for the buyers and listing agent for the sale of the property. In reality, the buyer is the one who brings enough money in the form of the purchase price to pay the commission. With this new change the buyers agents commission will now show up on the buyer’s side of the closing statement.

Does that mean buyers will need to save up more money for down payment and extra closing costs?

Not necessarily. The sellers are still able to offer closing cost concessions to the buyer to help offset these costs. It may actually help the buyer with their closing costs. For example, if you have an agreement with your buyers agent to represent you for 3% and seller is offering 4% towards buyers closing costs the buyer would get the 4% for their costs. If that 4% was commission instead, the buyers agent would typically keep the whole 4% and any bonuses offered by the seller.

Hope this was helpful and feel free to contact me with any questions you may have.