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Should I Sign a Buyer Rep Agreement

Main considerations are highlighted whether should sign a buyer agency agreement

Should I Sign a Buyer Rep Agreement?

The first question to address this issue is whether it is a legal obligation to sign. Definitely not, per RECO (Real Estate Council of Ontario),  it is required for the agents to bring and present the written Buyer Representation Agreement to the clients, however, the clients are not obliged to sign this contract.

What is a buyer representation agreement?

It is the contract, between the clients and the brokerage, to document the relationship between the buyer and the agent. More specifically, the agreement requires you to keep staying with the same agent during the contract period and has the holdover clause to secure the agent’s commission after the contract expiration, if you make a switch to a new brokerage or buy the home by yourself, but that property was shown with the previous agent.

How long does a buyer representation agreement last

It varies depending on the situation and it could be longer or shorter. A 3 month to 6-month term is usually seen and is more applicable to a normal market.

What are the main terms of a buyer rep agreement?

Commission

Though the commission is usually out of the seller's pocket, however, in some cases the seller doesn’t pay commission or the commission paid does not match the commission signed in the buyer representation agreement. The buyer has to make up for the deficiency.  

The holdover period, as mentioned above, protects the agent numeration in certain instances.

Multiple representation

When the brokerage has 2 clients in the same deal/property, the agent is limited to perform certain functions such as not releasing the pricing information, the client's sensitive information, etc. If the situation happens, it is your call whether you want to keep being represented. The factor you may want to consider is whether your interest can be well covered if the agent also represents the seller. Do those limited services serve your demands well? One more thing, don’t forget that you are dealing with a human being, not a law paper. 

Indemnification

The agent is relieved from any claims on the issues relating to home conditions or improvements. It is a fair clause since the agent is not a trained professional in those fields and their duty is to assist you to identify the home-related issues and remind you to get a professional hired.

If you do need to read the whole terms, please look through the comprehensive explanation on the buyer agency contract.


How to get out of a buyer representation agreement?

Of course, you can terminate the agreement. But it is a legally binding contract, you will have the legal obligation to fulfill the duties stipulated in clauses, you would get a mutual release for safety. Since it is the contract between you and the brokerage, the salesperson you are dealing with is the party to sign the agreement on behalf of the brokerage, most likely the brokerage will assign a different salesperson to you. If you still pursue the termination, things might be going uneasy. If you do have solid evidence and proof, you can seek to resort to RECO, or to the court.

Pros of singing a buyer representation agreement

Once into the agreement, you are represented by the agent. Per RECO regulation, the agent needs to follow the regulations and rules, code of ethics, provide fiduciary loyalty to you, and protect your best interest.

If there are negotiations favorable to you such as the commission rebate, you might want it documented as proof.

Cons of signing a buyer representation agreement

You are locked by the contract period of time plus the holdover period, which is commission-related. You need to fulfill the duties on the contract.

The dilemma of signing a buyer representation agreement

You may face continuous pushes from the salesperson to sign this agreement impliedly, friendly, straightforwardly, or manipulatively. Please be understanding the importance of this document to the salesperson, it is a talisman to safeguard the salesperson’s work and efforts, and it is also required by the brokerage as evidence. But once you sign off, you are locked with this brokerage.

An alternative solution

  1. To be familiar with the terms and clauses. 
  2. To specify the property and shorten the validity of time
  3. To judge the situations for your own interest and factor in the agent consideration. Anyway, a win-win is the best prevailing practice.

The possible ultimate solution

Buying a home is perhaps the largest investment for an average family, it is worthwhile to do homework. With the knowledge built up, you are better positioned to pick up the appropriate service and realtor. You may want to consider a transparent and less worried option at realsav.com. Those commission rebate packages and terms are designed on the basis of effectiveness and transparency, which may relieve you from unnecessary anxieties.

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