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Buyer Agent FAQs
Will I be required to sign a written contract?
Exclusive Buyer's Agents generally believe in working
for buyers with a written buyer agency agreement. They do so, because it
makes sense to put all agreements into written form and it is more
professional to have a written agreement that spells out both parties
responsibilities and other terms and conditions of the understanding
between the buyer and the EBA. By putting this agreement in writing, the
risk and chance of a misunderstanding in the future is greatly
diminished.
What are some of the terms of a buyer agency agreement?
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Exclusive Right To Represent: Generally these
agreements give the agent the "exclusive right to represent" the
buyer. Meaning that no matter how you buy a home, or through whom
you buy, or even if you buy directly from a "for sale by owner", you
will owe the real estate company their fee if you purchase a home
during the time the agreement is in effect. Real estate agents are
generally paid on a contingency basis, or in other words when a
closing takes place. If a buyer goes around the agent and deals
directly with a seller or uses another agent to buy a home, the
original agent is cut out of the deal and compensation.
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Kick-out Clause: Generally the agreement also
is applicable for any property, the buyer enters into a contract for
within a certain time period following the termination of the
agreement, which the buyer found out about during the original term
of the agreement. This is known as the kick-out clause and the time
period ranges from 60 days to 90 days or longer.
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Duration of the agreement: This is the
initial time period for which the agreement runs. It will vary
greatly depending on the needs of the buyer. It may be for a period
of a week for a relocating buyer who has very little time in which
to find and close on a home. Or it may be as long as 4 to 6 months
for a buyer who can take their time finding the right home.
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Compensation of the agent: How the
compensation is to be determined and how it is to be paid should
clearly be set out in the agreement.
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Conflicts: Any conflicts that the agent might
encounter should be clearly spelled out in the agreement as well as
how those conflicts will be handled.
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Other Terms: Description of the target
property; Agent's representations and services; Agent's agreement to
keep your information confidential; and typical contract language
pertaining to Nondiscrimination, Attorney's fees, Modification of
the agreement, Entire agreement, etc.
Things To Watch Out For:
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Long duration for the agreement. No more than 30 to
60 days, if there isn't a way for you to terminate without penalty.
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Long kick-out time periods. 90 days should be the
maximum. Some agreements call for the cancellation of this provision
if the buyer enters into another buyer agency agreement with another
agent.
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Consenting to dual agency or designated agency in
advance when you sign the agreement. As discussed elsewhere, you
should not consider buying a home through a dual or designated
agent. Most traditional real estate companies include a clause that
automatically switches the agent from a buyer's agent to a dual or
designated agent for in-house listings.
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