The “Residential Buyer/Tenant Representation Agreement”
Every buyer of real estate is asking “What is an Agency Agreement”, and why do I have to sign anything?” . Sellers are asking the question too, but for some reason, they seem to know more about this side of the equation, having already bought a property, therefore going through the home selling-buying process at least once.
The Buyer Representation Agreement establishes a business relationship between you and your broker through your agent. Everyone knows an agreement is a document where 2 parties are coming together and commonly agree on something. In this case, we agree to “Representation”.
When you sign the representation agreement with us, you become the Client, Independent Realty will become your Broker and me, your Agent.
At this point YOU start having more RIGHTS than otherwise would not, and WE start having more OBLIGATIONS to you. Yes, you read that correctly, you have more RIGHTS and we have more OBLIGATIONS. Not only you get to be Represented, in a real estate transaction, you have now the Right to be Advised by your Broker and Agent, YOUR interests protected and promoted by them, something they cannot do if there is no Representation Agreement. You see, they will be honest with you yet they cannot “Represent” you.
Also, besides the moral obligations we already had towards you before we entered in this business relationship, we now also have a FIDUCIARY duty to you. Yes, that is “money trust” not “money issues”.
Consider this too: by not signing a Representation Agreement, the buyer is “playing Poker” with his cards in the open. The Agent the buyer is working with does not have the obligation to keep secret on buyers “cards”, like how high is the buyer willing to go with his offers, what other factors are influencing the buying decision, etc.
When and Agreement of Representation is signed, any confidential information you provide is now protected. Your “Poker cards” are now hidden.
Maybe you didn’t know, but the Agent and Broker you are “working” with and visit “see the places you consider buying” are “de-facto” working for the seller and will be their advisor in that transaction if there is no representation Agreement between you and “your Agent”.
I hear you: if the Representation Agreement is “So Good” for the Buyer, why are Agents insisting on entering the relationship? In the overwhelming majority of the situations, they GET PAID regardless if there is a Representation Agreement with the buyer or not.
There are two important things to consider when it comes to how your Broker and your Agent are paid. First: The Representation Agreement establishes the rate at which the “buyer’s agent” is paid. Second: in the majority of situations, the buyer’s Broker/Agent gets paid by the Seller’s Broker. ONLY when the seller through his/her Broker did not reserved enough through the MLS listing to satisfy the Buyer’s Agent required rate, the Buyer accepts the obligation to make up for the difference. Or, when there is no “MLS listing”. Yes, for example, you can choose a FSBO, and that’s when the charge goes to you. Everyone wants to save money and no one wants to work for free. Look at the upside: You get professional representation and advice while the owner takes the huge risk by accepting to sell on it’s own. It’s like going into a car race, one car is driven by a professional driver and the other it’s not. Which one would you rather put your money on?
One more thing. You see, there is a code of ethics that the REALTORS® are following, and among of the higher standards they adhere to is the pledge NOT to interfere in the relationship of another agent with a client (art. 16-9, 2020 Code of Ethics and Standard Practices). That’s why one of the first questions an agent will ask is: “Are you already working with an agent?”. You always have a choice of representation and that fact it’s stated in the IABS document – short for Information About Brokerage Services, document which you should receive every time when you are having a significant conversation with a new real estate agent. If you are looking to talk business with an agent, make sure you receive the IABS document. That is a safe way to verify that you are actually speaking with a real Real Estate Agent.
While this is how I explain anyone the advantages and disadvantages of signing a Buyer Representation Agreement when working with the Real Estate Agent and Brokerage of their choice, I am not an attorney and I recommend to always seek an attorney’s interpretation before signing any legally binding document.
Are you already working with an Agent? If not, I would love to be your Agent and help you find your new home. I am a very well trained professional and work very hard so you don’t have to.
Call or text me any time: 214-836-0752. I’d love to answer any questions you may have.
Luminita Cordes, MBA | REALTOR®
INDEPENDENT Realty