BUYER'S AGREEMENT
What is a buyer’s agreement and why do I have to sign one to see a home?
There’s a lot of chatter around the real estate industry and recent changes that have lead to buyers being required to sign a buyer’s agreement prior to a real estate agent showing them a property listed for sale. The most important thing for you to take away from this is that nothing has truly changed as far as the buyer and seller are concerned. What has changed is the requirement for transparent communication and the marketing rules around how agents are compensated.
So here’s the deal: buyer’s agents work for compensation. Realtors do not typically receive any compensation for finding & showing homes, negotiating contracts, going to inspections, writing offers, etc. In most cases, agents don’t earn their compensation until after a real estate contract successfully closes. Your agent will charge a fee for their expertise and services and the buyer’s agreement will explain what their fee is up front. By signing a buyer’s agreement, you are acknowledging their fee is and agreeing to them being fairly compensated for their efforts in helping you find and successfully purchasing a home. The agreement will also allow them to negotiate that this fee be paid for by the sellers on your behalf if you are not in a financial position to pay this fee. Due to new industry regulations, if an agent does not have their buyer’s agreement signed prior to showing homes, they cannot be compensated for their efforts at all which is why your agent will require it to be signed up front.
There was a common misconception prior to these recent changes that there was a pre-determined compensation amount for a Realtor to represent you in a home sale or purchase and that the compensation was always paid for by sellers. The reality is, every agent determines their fee and sellers have always had an option of whether or not they were willing to offer compensation to an agent/brokerage who brings them a qualified buyer to purchase their home. There was, is, and always will be a benefit to a seller offering compensation to a buyer’s agent/brokerage which I explain in more detail HERE, but at the end of the day a seller offering buyer’s agent/brokerage compensation is not required.
Prior to the changes, if a seller was willing to contribute towards the compensation of the buyer’s agent, their agent was able to market the amount they were offering on the MLS so buyers and their agents knew up front whether or not the fee would be covered. Seller paid compensation can no longer be marketed on the MLS. It’s very important to note that though compensation was previously marketed as offered by the seller, in competitive selling markets buyer’s could offer to cover that compensation in order for the seller to net more money. IT ALL COMES DOWN TO NET! At the end of the day, as I mentioned up above, nothing has truly changed because a seller’s goal is to sell their property and net the most amount of money from the sale.
There are many different terms within a contract that contribute towards the net to seller. This is the true value a buyer’s agent can provide you. Your agent should be able to educate you on ALL of the ways you can strengthen your offer to appeal the most to a seller while also educating you on what serves the best interest for your goals as a buyer. Your agent should be able to work with you and your lender to determine your goals and your financial opportunity and advise accordingly. Just as not every buyer is in the same position to qualify for different loan programs, not every buyer will be in the position to offer the same terms in a purchase contract. If you do not have the financial means to pay for your agent’s compensation, your agent will negotiate it as part of the contract with other appealing terms within your means. What is not in your control is if someone else is in the position to pay compensation or offer any other terms that are more appealing to the seller than yours. I encourage you to trust the process, trust the agent you feel is best fit to advocate for you, and trust that the home that is meant to be yours will be!
If you have any additional questions or would like more information about signing a buyer’s agreement with me, let's chat! Feel free to text or call me any time at 614.264.8412 or fill out the form below and I'll reach out to setup a time to chat and I can answer any questions you have.