As we come into the spring real estate market, I have been talking to a number of people who are currently renting who are now thinking that it may be the right time to go ahead and look for their first home. And, if you have been reading through my weekly blog posts, and watching my weekly videos, you will find that I am trying each week to give a new helpful tip to first time homebuyers here in Richmond, Virginia!
So today's tip has to do with the Buyer Agency Agreement. I have read a lot of information on the internet and on various websites in which buyers are being told not to sign a buyer agency agreement. However, if you are buying a home, you will ultimately need to sign a Buyer Agency Agreement - in July 2012 the law changed and all licensees (or Realtors) are required to have a signed Buyer Agency Agreement with their buyer clients!
But is it really a bad idea to sign a Buyer Agency Agreement? I don't think so!
So what exactly is a Buyer Agency Agreement? In a nutshell, it is an agreement between you (the Buyer) and your Buyer Agent that ensures the Realtor is looking out for YOUR interests! So this can't really be a bad idea, can it?
The Buyer Agency Agreement spells out the duties that your Realtor will be required to perform for you ---
* They will have to negotiate the terms of the purchase agreement!
* They have to maintain the confidentiality of your personal & financial information!
* They have to account for any monies they receive from you!
In return, you are asked to remain loyal to your Buyer Agent!
What happens if there is a problem between you and your Realtor? As a Buyer Agent, I would ask that you come to myself or my broker and discuss the problem so that a possible solution can be worked out! If it can't be, I don't know a lot of Realtors who would want to keep you tied to an agreement if you were unhappy with their service! If this happens to me and we cannot work out a solution to the problem, then I am happy to release my buyer from the agreement!
So, as I said before, in Virginia, you will need to sign a Buyer Agency Agreement with your Realtor. The law says that this agency disclosure must be in writing prior to any substantial discussions about a specific property!
So what is included in the Buyer Agency Agreement?
The Term: there must be a start and end date. I have had Buyer Agency Agreements between my buyers and myself for as little as one day, or even for the properties we were looking at that day!
The Compensation: it needs to discuss how the Realtor will be paid - will they get paid whatever is being offered in the Multiple Listing Service, will their brokerage be charging the buyer an administrative fee, how will the Realtor get paid if you buy a For Sale By Owner. These things definitely need to be discussed when discussing the Buyer Agency Agreement.
Disclosure on Dual & Designated Agency: Dual agency is when the same agent represents both the seller AND buyer on the same transaction (example: I have a house listed for sale, you visit my open house and decide to write an offer, but have no agent representing you - this could potentially be a dual agency situation). Designated agency occurs when the brokerage represents both the seller and buyer on the same transaction but buyer and seller each have a different agent representing them!
So, as a first time homebuyer, you may not feel comfortable committing yourself to a 3 month or 6 month Buyer Agency Agreement right off the bat! That is not a problem - talk to your Realtor and agree to sign a 1 day agreement or a 1 week agreement or an agreement that covers just the properties you are looking at that day! In the end, most Buyer Agents I know want to work with buyers who feel comfortable with the process and the Buyer Agency Agreement.
Thinking of buying your first home? Have questions? Feel free to contact me! I would be happy to help! And feel free to listen to my short video and hit the subscribe button to be notified of a new video each week!