Best Time to Sell?
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5 Reasons to Sign a Buyer Representation Agreement
1. RECEIVE A HIGHER LEVEL OF SERVICE.
If you're formalized an agency relationship with a buyer's rep, you can expect to be treated like a client instead of a customer. What’s the difference? Clients are entitled to superior services, relative to customers. While the details vary from state to state, and from one buyer’s agent to another, you can generally assume that being a client means that you’ve formed a fiduciary, or agency, relationship with your buyer’s rep.
2. GET MORE WITHOUT PAYING MORE.
In almost every case, home sellers have already agreed to pay a buyer’s agent’s commission. If they haven’t, you can ask your buyer’s rep to avoid showing you any such homes. Or you can still view the home, knowing that you’ll need to factor your agent’s commission into any offer you may write. While buyers rarely pay real estate commissions, this is an important detail you’ll want to discuss with your buyer’s rep and clarify in their representation agreement.
3. AVOID MISUNDERSTANDING.
A Buyer’s Representation Agreement clarifies expectations, helping you understand what you should and shouldn’t expect from your buyer’s rep, and what they will expect from you, which usually centers on loyalty.
4. AGENCY RELATIONSHIPS ARE BASED ON MUTUAL CONSENT.
While most representation agreements specify a time period, they can be terminated early if both parties consent. Most buyer’s reps are willing to end the agreement early if the working relationship isn’t going well. Some buyer’s reps also offer representation agreements for as little as one day, for the purpose of giving both parties a brief trial period to explore working together.
5. STRENGTH AS A TEAM.
When you and your buyer’s rep work together within a formalized agency relationship, you have created a team dedicated to helping you achieve the best possible home-buying experience.
Customer or Client?
What’s the difference?
In real estate transactions, buyer-clients are entitled to a higher level of service than buyer-customers. Becoming a client typically involves signing a Buyer Representation Agreement with a buyer’s representative, who then owes you fiduciary duties. This means that your buyer’s rep is expected to exercise discretion when acting on your behalf, including adhering to very specific responsibilities, obligations, and high standards of good faith and loyalty.
For example, if you’re a client, a buyer’s agent will seek to negotiate the most favorable transaction terms for you – and will not disclose any material facts about your situation that could hurt your negotiating position. If, however, you are only a customer, a buyer’s rep may not be in a position to answer even basic questions, such as “Why are they selling?” or “Is this home priced competitively?” This is because they are acting instead as a sub-agent for the seller.
If you are a CUSTOMER (no fiduciary relationship), an agent will:
1. Maintain loyalty to the seller’s needs.
2. Tell the seller all that they know about you.
3. Keep information about the seller confidential.
4. Focus on the seller-client’s property.
5. Provide just the material facts.
6. Only provide price information that supports the seller’s listing price.
7. Protect the seller.
8. Negotiate on behalf of the seller.
9. Attempt to solve problems to the seller’s advantage and satisfaction.
If you are a CLIENT (fiduciary relationship), your agent will:
1. Pay full attention to your needs.
2. Tell you all that they know about the seller.
3. Keep information about you confidential.
4. Focus on choices that satisfy your needs.
5. Provide material facts as well as professional advice.
6. Provide price counseling based on comparable properties and their professional insights.
7. Protect and guide you.
8. Negotiate on your behalf.
9. Attempt to solve problems to your advantage and satisfaction.
*Note that every state requires a signed Buyer’s Representation Agreement to create an agency relationship. In some cases, an agency relationship can be formed if both parties simply behave as if one exists.