As a potential home buyer begins to explore the home buying process the vast majority eventually end up sitting down with a licensed real estate agent either to find out what their next steps should be, or because they are ready to start making offers.
What a buyer should be presented with during this first meeting with an agent is a chance to review, and if appropriate, sign a “Buyer Agency Agreement”. The official name of this agreement varies from state to state, but all of them essentially accomplish the same thing.
What Is A Buyer Agency Agreement?
The Buyer Agency Agreement, in most iterations, exists to create an exclusive relationship between a real estate agent and that particular buyer, and it is a two way street. The agreement places the agent in the role of fiduciary for that buyer, and it also commits the buyer to working with that particular agent only. The default relationship, outside of such an agreement, between a buyer and an agent varies from state to state. In some states, such as Virginia, the default position, if there is not an agreement in place, is that the agent represents the seller’s interests. In other states, such as Maryland, there is a form of “presumed” agency, where the agent does not represent the buyer per se’ but the the agent is responsible for the confidentiality of the buyers interests, however the agent is not able to write an offer on behalf of that buyer.
A buyer agency agreement unlocks the full access to an agent’s services and experience, and also makes the agent responsible for guiding a buyer through a successful transaction.
NOTE: The agent must disclose his or her relationship to you before showing you any homes.
Do I Want A Buyer Agency Agreement?
In the vast majority of cases the answer to this question is, yes. With a buyer agency agreement you are committing to that agent, but they are committing to you as well, so you are putting an experienced representative in your corner who not only understands the market, but they understand your needs and interests (because you have divulged this to them). Combining the two they can then work to make your home buying experience far more efficient, and you always have someone to turn to when you have questions. Not only this, but in most instances the agent that you choose, at your sole discretion, will be paid by the seller of the home you select and not by you. Many firms have a processing fee, and perhaps some other fees, but with very few exceptions the agents commission is not your concern. This is why you may often hear that a buyer’s agent is “free” to the buyer.
What Should I Look For?
You do not want a buyer agency agreement with just anyone, and it is a myth (to some degree) that you should only sign one with someone you like. This sounds nice, and can be ALSO true, but in my opinion your priority should be to hire someone you trust. Someone that you trust knows what they are doing, who is going to represent your interests well, and will negotiate well on your behalf. The reality is, you may not inherently “like” that person. Now if you can’t respect them or their methods, that is another story.
Closing: It’s More Complicated
Understanding “agency relationships” and how to select an agent is far more complicated than this, but hopefully this overview will give you some direction. If you have specific questions please ask them below, or feel free to reach out directly.