Buyer's Agency
This page is to explain what a buyer's Agency Agreement means to you and why you should want one.
Why you want to have a Buyer's Agency Agreement.
A buyer's agency agreement puts in writing that your Realtor® is working for you and putting your interests before all customers and even their own interests. They are giving you a guarantee that they will do everything that is required by you to find you the home you want to buy. Plus, if you find that they are not putting your interests first, the agreement can be used to hold them accountable.
So, besides the legal implications how does this help you? There is one main driving factor in what a Realtor® does on a day to day basis. This is "Uncertainty". A Realtor® has no guarantees that they will receive another commission. There is no guarantee that anyone will actually buy real estate through them. This added to the fact that every day they spend money showing homes, prospecting, advertising and a variety of other expenses.
Realtors® are constantly making judgement calls as to whether one activity has more value than another. Since time is our most valuable asset, every activity must be seen as expense.
So, if a customer and a client both call to look at properties, the client will be given priority to the customer. Why? Because the Client has stated in writing that they are going to buy real estate through the agent. The Realtor knows that if his/her job is done correctly, and the appropriate home exists, then a commission will be earned. So their emphasis becomes providing great service instead of finding the next cheque.
Discount brokerages have created another reason to want a buyer's agent. Some discount packages cut the buyer's agent's commission to as low as 1$. If an agent shows you that home they will take a huge loss. So much so that they are better of having you use another agent or just not let you know that it exists. However, if you are a client your agent cannot avoid those listings with out breaking the duties that have been agreed to. As a Client your Realtor® must inform you of all appropriate properties. This is also why it is common to have a minimum commission stated in the agreement. Should there not be a minimum commission and only a statement of "as listed on MLS" you should make sure that your agent is not weeding out discount listings.
In essence, a Buyer's Agency Agreement allows your agent to concentrate on providing great service and not worrying that they are wasting time. There is no clause in the agreement that says that you have to buy Real Estate, only that if you do you will use a particular agent.
If you are worried about signing with an agent that you do not know well and do not want to be stuck if you do not like their style, ask to have a clause inserted that give you the ability to exit the agreement. Most agents will agree to this on the condition that they receive their commission if you purchase a property they showed you.
 In short, you remove some of the uncertainty from your Realtor's® life and they concentrate on providing the best service that they can.
What are you agreeing to in a Buyer's Agency Agreement?
In return for your Realtor's® services as your agent, you will be agreeing to the following when using the standard OREA Buyer's Agency Agreement form.
1. That you will use a particular broker as your agent to purchase real estate of a particular type and area.
2. You agree that your agent will be paid a set commission and that you will pay any difference between the commission offered by the vendor and the amount stated in the agreement. (i.e. if you agree to a minimum of 2.5% and the vendor is only offering 2% you would be responsible for 0.5% of the purchase price plus G.S.T.) The agent is obligated to inform you if the offered commission is lower than the minimum that you agreed to, as it might effect how much you are willing to offer for the property (part of Realtors® Duties).
3. That your agent has explained Agency and that you understand agency, including what happens under Dual Agency.
4. If you see any property that might interest you, you will inform your agent so that your agent can get the information you need on the property while protecting your information. This includes signs you drive by, for sale by owners, MLS.ca listings and even unlisted homes that you might like. You agent will then help you decide if the property is a good match or is even available.
5. You acknowledge that Realtors® are not trained to determine the physical condition of a property, and that you understand that understand that you have been advised to have the property inspected by a home inspector.
Generally speaking the agreement states that you and your agent will be working together to find you a property that you like and can afford and that your agent will be compensated for that work.
Most people that I have talked to about agency agreements have no problem with an agent getting paid. They just do not want to get stuck with the wrong agent. Remember, there is nothing that says that you cannot ask to have an exit clause added. The agent does not have to accept, but at least you will know up front what is likely to happen if you find out that you do not connect with your agent.
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