You found the Realtor you want to work with, you have talked to a lender and you know what price you are comfortable at for the home you want buy as well as what type of loan and you have your wish list prepared! Your Realtor has set up a link into MLS for you and you are now ready to start looking at homes! But before you go out and look at homes, you will want to sign a Buyer Agency Agreement with your Realtor!
Why is it necessary to sign a Buyer Agency Agreement? The easy answer is that Virginia law requires that you have a Buyer Agency agreement signed between you and your Realtor at the first substantive conversation you have about homes! A Buyer Agency Agreement is not necessary for a Realtor to open the door, show you around the house and let you know about the house based on what is in MLS. But as soon as you start to ask questions, such as "What do you think of the price of the home?" or "Will this home qualify for my loan?" or any other questions that you can't find the answer to in what is public information (or on your MLS sheet, or brochure provided by the seller's agent), then you have crossed into that territory that it may be considered substantive conversation!
So what is the Buyer Agency Agreement and what does it cover? How long do you have to sign for and commit to a particular Realtor? What happens if you don't want to use that Realtor again (for example, they are just not doing what you think they should be doing to help you with your search)? There are lots of questions - hopefully, your Realtor will be able to answer those for you!
But below is a summary of just what is covered by the agreement!
Who Is The Agreement Between - And How Long Is It For?
A Buyer Agency Agreement can be for as little as one house, one day, one month, several months! All agreements should have a start and end date to them! It is between the brokerage that your Realtor works for (in my case, it would be Long & Foster Realtors) and yourself. If you are just starting to work with a particular Realtor and you are not comfortable yet with your Realtor, you can make it for just one day's showings, or even just one house. If you do that, however, at some point you will probably want to sign another agreement for a longer period of time so you are not constantly having to sign a new agreement each time you go out to look at houses
What Does Each Party Agree To Do?
In the Buyer Agency Agreement there are certain things that the broker (and Realtor) are required to do: represent the buyer and their interests, including keeping information confidential. The buyer also has certain things they agree to do, including working exclusively with the Realtor during the term of the agreement, comply with any reasonable requests made by the broker, agree to not work with other Realtors or sellers during the term of the agreement.
How Does The Buyer Agent Get Paid?
This section is where the Buyer Agent and buyer talk about how their agent will be compensated. Some agents will collect a certain fee for helping the buyer - the fee is negotiated between buyer and broker. For instance, if the broker says that they will get paid 3 apples for helping the buyer and the listing agent has that a buyer will get paid only 2 1/2 apples at closing, then the agent may expect the buyer to make up the difference of 1/2 apple! OR the agent may agree to take whatever compensation is listed in MLS - so if a listing agent puts a property into MLS and says that they are only paying the buyer's broker 2 1/2 apples, then the buyer's broker only will get 2 1/2 apples and the buyer is not liable for anything else! AND/OR a buyer broker may say that they will expect the buyer to pay a fee of some sort - it may be called a transaction fee, it may be called an administrative fee!
What Are Dual & Designated Agents?
In Virginia, if a buyer is interested in properties that are listed by the same brokerage that your Buyer Agent works for, this may be considered a Dual Agency relationship. The brokerage in this case is representing both the buyer and seller. However, if an agent has a house listed for sale and a buyer, who does not have an agent representing them, decides to make an offer on the house, then this agent is now a dual agent and all parties to the contract need to sign that they are fine with this type of agency relationship (dual agency). But, many times, a buyer agent may work for a company like Long & Foster Realtors, which is one of the largest in the Richmond area. It is possible that a Long & Foster agent working with a buyer as their Buyer Agent may show them a house that is listed by another Long & Foster agent. This would become a Designated Agency relationship. Again, all parties need to sign that each party knows which agent is representing who in the transaction.
How About Recordings in the Property?
This paragraph puts the buyer on notice that if they plan to do any sort of photographing, videoing, etc of the property, they should speak to an attorney. Why? There are state and federal laws regarding this. In addition, it is possible that sellers may have some sort of security systems or nannie cams in the house that they may be able to listen to conversations in the house. This paragraph puts buyers on notice that they should be very careful about what they discuss in the house, including any negotiating strategies, and releases the broker from any liability that may arise from any recordings in the property.
The buyer agency agreement lets buyers know that Realtors are nothing but Realtors! We are not inspectors, lenders, attorneys, engineers or anything other than Realtors, and if buyers want to know anything about these other areas, they should consult appropriate professionals! In addition, there is something in the agreement that lets buyers know that there is potentially a lot of scams going on and not to wire any funds to someone without first verifying that the wiring instructions are correct!
This will summarize the Buyer Agency Agreement! However, when you are sitting with your Buyer Agency and discussing everything, make sure that your Realtor goes over the entire agreement with you and you are able to discuss any concerns you may have about this.
Feel free to contact me at 804-869-1191 or email me at BReagan2@gmail.com if you have any questions or I can help with anything!