This is exciting! You're thinking of buying a new property and, of course, you are planning to find an agent to guide you through this complex purchase process. According recent research, about 88% of home buyers use an agent to help them find a home, write a purchase offer, negotiate the price and terms, and to guide them through the closing process until the property officially changes hands.
Buyer’s agents provide expert guidance and advocacy through one of the most important financial transactions you’ll ever make. As a home buyer, you will benefit from having an experienced professional represent your interests exclusively — not the seller's — in the search and transaction. Most sellers, in turn, work with a listing agent to represent their side of the deal.
There are now new standards required for how agents interact with consumers, including a requirement for buyers to sign an agreement with their buyer’s agent that lays out the terms of the relationship — broadly called a buyer’s agreement. There are different forms of these agreements that you may sign throughout your home-shopping journey. Here's what to know right now, with the understanding the the paperwork may have different names and will clarity terms as these forms are currently under review and will be changing.
What is a touring agreement?
Let’s say you’re early in your home-shopping journey. A touring agreement or limited services agreement may be used to specify that you and the agent will work together for a very specific purpose and brief period of time — during the home tour. This gives you the important opportunity to get to know an agent before you commit to an ongoing and exclusing buyer’s agreement.
A Touring or Limited Showing Agreement, may expire one day or one week after signing, this is negotiable. The agreement may not require a fee, and may not bind you to work with this agent in the purchase of a home in general. However, if the showing agent shows you a home you want to purchase, the expectation is that you will work with that agent as your Buyer's Agent. Therefore, you may want to schedule a Buyer's Consulation prior to looking at homes to purchase, to be sure you like the agent and feel comfortable working with them. Once you choose an agent to work with, you are required to sign a buyer’s agreement specifying the terms and compensation.
Are buyer’s agreements exclusive?
Buyer agreements typically establish an “agency” relationship between you and your agent — meaning, the agent is bound to advise and advocate on your behalf during the duration of your agreement. This means the buyer’s agent represents solely you — not the seller — in the transaction.
These agreements are exclusive, which means that you will not hire another agent to represent you while you shop for a home.
Non-exclusive buyer’s agreement may be appropriate from time to time and will not lock you into a long-term commitment with an agent, or will allows you to work with more than one agent. You might decide to work with two or more agents if you’re searching for homes on two different islands. In this case, you and your agents would sign non-exclusive agreements, unless otherwise required in your state. This arrangement should be with the knowledge of all involved.
What to understand before you sign an exclusive buyer agreement
You should not agree to an exclusive agreement until you are comfortable that the agent is the right fit. Your agent will be your partner and advisor for one of the most important purchases of your life, so it’s well worth the effort of talking to several to find the agent that is the best for you.
Buyer agreements should spell out:
Duration of the agreement: Specifies the time frame the contract covers, providing both parties with a clear understanding of the length of their commitment. Generally includes a termination clause that gives both you and your agent the ability to walk away from the agreement under specified conditions, or the agreement terminates automatically at the end of a specified period.
Agent responsibilities: Lays out the duties of the real estate agent, such as searching for properties that fit the buyer’s criteria, arranging showings, and assisting with the negotiation process.
Compensation: Clearly lays out the amount of compensation and how the agent will be paid. It’s important to understand that this is negotiable, and not set by law. Common arrangements could involve the agent receiving a percentage of the purchase price, or a flat fee agreed upon by all parties. In some limited buyer agreements — such as a Touring Agreement — it specifically notes there is no compensation for the touring services provided.
Buyer commitments: Spells out what is expected from the buyer, such as working exclusively with the agent and providing prompt feedback/responses on property listings, visits and purchasing paperwork.
What are the advantages of signing a buyer’s agreement?
It protects your interests. Once your agent signs a buyer’s agency agreement, the agent has a legal obligation to prioritize your interests, not the seller's, giving you peace of mind and guiding you through what can be a stressful and complex process.
It provides for personalized service. Under the terms of your agreement, you’ll receive personalized service tailored to your specific real estate needs. Your agent will spend time understanding your requirements and preferences to find your ideal home. They'll also handle the legwork, from scouting listings to coordinating showings, reducing the stress and your time/effort associated with the home buying process.
It sets clear expectations. Buyer agreements clarify the responsibilities and expectations of both the agent and the buyer, minimizing misunderstandings and helping you feel more confident in your eventual success.
A buyer agreement is much more than just a formality; it’s a foundation for a successful working relationship between you and your real estate agent. If you’re preparing to venture into the real estate market, consider the buyer agreement as a powerful tool in your toolkit to help you get the best outcome: a new home you love.