real estate laws

What Is a Buyers Agency Agreement?

By Tracey Farmer 22 September, 2023 2 mins read

A buyer agency agreement is an important document that outlines the relationship between a home buyer and a real estate professional. The terms of this contract can vary by state, so it's important to understand them before signing.

Exclusive Buyer Agency Agreement

An exclusive buyer agreement stipulates that the client can only work with one broker or agent for a set period of time. This agreement can be renewed by neither party and lasts for several months to one year.

This arrangement is for serious buyers, who may not be ready to purchase a house immediately. This arrangement ensures the buyer doesn't have to work alongside another broker or agent during the term, and allows the agent earn a commission without worrying about losing the client.

Agent fees are paid to retain the client's services. Compensation for expenses and time spent with buyers during the contract period is also included. The fee is generally 5-6% of home's price. It can vary depending on market conditions.

Non-Exclusive Buy Agent Agreement

A non-exclusive buyer agency agreement is another common type of contract that outlines the broker/agent's duties and obligations to the buyer, as well as the buyer's responsibilities and the commission to be paid. This form of contract is sometimes confusing for the buyer since it removes their responsibility to pay a commission if the broker/agent is compensated by the seller.

Buyers who are unhappy with their agent or broker and wish to change agents or brokerages will need to read the termination rights section. This section will tell the buyer how they should end the contract, what they can expect in compensation, and how much notice they should give.

It's not always simple to terminate a buyer agency relationship. Most agreements will have a termination clause that sets out the grounds for cancellation, how to go about terminating the relationship, and any compensation that may be owed to the broker.

Buying Agency Agreement

A buying agency agreement allows a buyer to work with multiple agents while purchasing a house. This type of agreement is often a short-term and gives the buyer the opportunity to find an agent that they trust, like, and feel comfortable with. It gives the agent an opportunity to find a client who is interested in working with them long-term. It's a great way for buyers to protect themselves from agents trying to take their commission without helping to find a place.

FAQ

Is it better to buy or rent?

Renting is typically cheaper than buying your home. But, it's important to understand that you'll have to pay for additional expenses like utilities, repairs, and maintenance. Buying a home has its advantages too. For instance, you will have more control over your living situation.

How much will my home cost?

This can vary greatly depending on many factors like the condition of your house and how long it's been on the market. Zillow.com says that the average selling cost for a US house is $203,000 This

What is a Reverse Mortgage?

Reverse mortgages are a way to borrow funds from your home, without having any equity. You can draw money from your home equity, while you live in the property. There are two types: conventional and government-insured (FHA). With a conventional reverse mortgage, you must repay the amount borrowed plus an origination fee. FHA insurance covers your repayments.

Is it possible to get a second mortgage?

However, it is advisable to seek professional advice before deciding whether to get one. A second mortgage is often used to consolidate existing loans or to finance home improvement projects.

How long does it take to get a mortgage approved?

It all depends on your credit score, income level, and type of loan. It typically takes 30 days for a mortgage to be approved.

Statistics

The FHA sets its desirable debt-to-income ratio at 43%. (fortunebuilders.com)
10 years ago, homeownership was nearly 70%. (fortunebuilders.com)
When it came to buying a home in 2015, experts predicted that mortgage rates would surpass five percent, yet interest rates remained below four percent. (fortunebuilders.com)
Private mortgage insurance may be required for conventional loans when the borrower puts less than 20% down.4 FHA loans are mortgage loans issued by private lenders and backed by the federal government. (investopedia.com)
Some experts hypothesize that rates will hit five percent by the second half of 2018, but there has been no official confirmation one way or the other. (fortunebuilders.com)