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Buying a home isn't as simple as shopping for anything else; you'll be required to sign several agreements even to begin the process, such as the buyer broker agreement.
Whether you're a home buyer looking for a broker's help or a broker simply interested in knowing more about the agreement, this legal document is one of the essential steps of real estate.
It's worth noting for a buyer that a broker will ask you to sign several disclosures and contracts while you work with them. That's why it's important to know what you're getting into before signing away!
If you're curious about the importance and contents of a buyer broker agreement, keep reading.
Here is a complete guide to buyer broker agreements.
A buyer broker agreement is a contract that legalizes the relationship between a buyer and a broker. Furthermore, it is a legally binding contract that outlines the rights and responsibilities of both parties. This contract essentially details that the buyer is utilizing the help of a broker to search for and buy a home.
When a buyer signs the real estate contract, they legally agree not to work with any other broker to help them buy a home. The terminologies used in a buyer broker agreement differ from state to state, but they all require the same responsibilities.
In a buyer broker agreement, there are specific duties a broker must fulfill and certain duties for the buyer too. A refusal to fulfill these responsibilities will result in a contract breach and legal trouble.
Here are the duties of a broker in a buyer broker agreement.
Here are the duties of a real estate broker in a buyer broker agreement.
Buyer broker agreements sometimes go by other names even though they may mean different things, including:
Here is an article about buyer broker agreements.
Meet some lawyers on our platformMost buyer broker agreements include the following information at a minimum:
The real estate broker will detail their responsibilities in this agreement section while helping homebuyers. First, a realtor must find properties that the buyer can consider and disclose the necessary material facts.
They must also help buyers review paperwork and prepare purchase offers. Realtors are also responsible for conducting visual inspections as required.
One of the essential details in a buyer broker agreement is the term length. This will determine the time frame to honor the agreement and its terms. This section of the contract is typically negotiable by both parties.
So, if you have concerns about the length of your term, you may discuss it with the other party and come to a mutual agreement.
If either party feels that the agreement isn't working out, they can terminate the contract. In this section of the agreement, you must detail a few elements, including:
It's also worth noting that buyer broker agreements are typically between homebuyers and real estate brokerages, not specific brokers. This means the brokerage may try to help your case by offering you a different agent to work with. You'll directly communicate with an independent broker if you work with an independent broker.
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In this section of the agreement, you must detail the buyer's kind of representation. For example, a homebuyer can choose two types of representations: designated representation and dual representation.
Designated representation allows the broker to present properties other agents from their real estate agency have listed. In this case, the broker will only be representing you.
On the other hand, dual representation allows the broker to present properties that they have listed with sellers. In this case, the broker will be representing both you and the seller. However, dual representation is illegal in some states since there's a high potential for conflict of interest. The biggest conflict is the price. The selling agent is supposed to get the highest price for the seller, and the buyer’s agent is supposed to get the lowest price for the buyer. A dual agent cannot remain neutral in this situation.
This section of the agreement is essential to detail the two types of compensation:
In this section of the agreement, the buyer may detail the property requirements they're looking for. Here are some of the elements they can include:
There are two types of buyer broker agreements for exclusivity; exclusive agreements and non-exclusive agreements.
Some contracts require additional clauses and information. You can customize a buyer broker agreement to meet the specific requirements of each party.
Here is an article about the components of a buyer broker agreement.
There are two types of buyer broker agreements that can be differentiated by exclusivity.
An exclusive buyer broker agreement details that the buyer may only work with the broker during the term length.
A non-exclusive buyer broker agreement allows the buyer to work with other brokers to help them purchase a home.
Here is an article about the different types of buyer broker agreements.
The length of a buyer broker agreement depends on both parties' requirements and can be negotiated if necessary. Typically, a buyer broker agreement lasts six months. However, buyers may even find brokers willing to work with them for a year or just a month.
Here is an article about the term length of a buyer broker agreement.
The main reason to sign a buyer broker agreement is to protect the buyer and the broker if their working relationship goes sour. In addition, this exclusive agreement ensures that your client is working with you and only you as a broker.
As long as the correct terms and conditions are outlined, a buyer broker agreement is only in the best interest.
Brokerages write buyer broker agreements, but the buyer may provide their input for terms and conditions they want to negotiate. Typically, a brokerage would hire a real estate lawyer to write their terms and conditions to offer to clients.
In real estate, buyer broker agreements guarantee the protection of both the broker and the buyer in case of legal trouble. This document ensures that both parties fulfill their responsibilities and follow the terms and conditions accordingly.
The agreement is in favor of both parties. That's because it details the expertise offered by the real estate agency while reassuring the buyer that their best interests are the end goal.
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Advised startups and established corporations on a wide range of commercial and corporate matters, including VC funding, technology law, and M&A. Commercial and Corporate Matters • Advised companies on commercial and corporate matters and drafted corporate documents and commercial agreements—including but not limited to —Convertible Note, SAFE, Promissory Note, Terms and Conditions, SaaS Agreement, Employment Agreement, Contractor Agreement, Joint Venture Agreement, Stock Purchase Agreement, Asset Purchase Agreement, Shareholders Agreement, Partnership Agreement, Franchise Agreement, License Agreement, and Financing Agreement. • Drafted and revised internal regulations of joint venture companies (board of directors, employment, office organization, discretional duty, internal control, accounting, fund management, etc.) • Advised JVs on corporate structuring and other legal matters • Advised startups on VC funding Employment Matters • Drafted a wide range of employment agreements, including dental associate agreements, physician employment agreements, startup employment agreements, and executive employment agreements. • Advised clients on complex employment law matters and drafted employment agreements, dispute settlement agreements, and severance agreements. General Counsel • As outside general counsel, I advised startups on ICOs, securities law, business licenses, regulatory compliance, and other commercial and corporate matters. • Drafted or analyzed coin or token sale agreements for global ICOs. • Assisted clients with corporate formations, including filing incorporation documents and foreign corporation registrations, drafting operating and partnership agreements, and creating articles of incorporation and bylaws. Dispute Resolution • Conducted legal research, and document review, and drafted pleadings, motions, and other trial documents. • Advised the client on strategic approaches to discovery proceedings and settlement negotiation. • Advised clients on employment dispute settlements.
Ms. Ayub is an attorney licensed to practice in Texas. Before moving to the US, she has a number of years of experience in contract review, analysis and drafting. Ms. Ayub is available to help you with your legal problems, as well as filling LLC and other business entity formation documents. To know more about her practice, please visit https://ayublawfirmpllc.com/.
Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.
Jason is a self-starting, go-getting lawyer who takes a pragmatic approach to helping his clients. He co-founded Fortify Law because he was not satisfied with the traditional approach to providing legal services. He firmly believes that legal costs should be predictable, transparent and value-driven. Jason’s entrepreneurial mindset enables him to better understand his clients’ needs. His first taste of entrepreneurship came from an early age when he helped manage his family’s small free range cattle farm. Every morning, before school, he would deliver hay to a herd of 50 hungry cows. In addition, he was responsible for sweeping "the shop" at his parent's 40-employee HVAC business. Before becoming a lawyer, he clerked at the Lewis & Clark Small Business Legal Clinic where he handled a diverse range of legal issues including establishing new businesses, registering trademarks, and drafting contracts. He also spent time working with the in-house team at adidas® where, among other things, he reviewed and negotiated complex agreements and created training materials for employees. He also previously worked with Meriwether Group, a Portland-based business consulting firm focused on accelerating the growth of disruptive consumer brands and facilitating founder exits. These experiences have enabled Jason to not only understand the unique legal hurdles that can threaten a business, but also help position them for growth. Jason's practice focuses on Business and Intellectual Property Law, including: -Reviewing and negotiating contracts -Resolving internal corporate disputes -Creating employment and HR policies -Registering and protecting intellectual property -Forming new businesses and subsidiaries -Facilitating Business mergers, acquisitions, and exit strategies -Conducting international business transactions In his free time, Jason is an adventure junkie and gear-head. He especially enjoys backpacking, kayaking, and snowboarding. He is also a technology enthusiast, craft beer connoisseur, and avid soccer player.
