If
you’ve reached the logical conclusion that an exclusive buyer
representation specialist would most effectively represent your
personal best interests it becomes important for you to understand
the different types of representation agreements available to you.
You have three options and, though each has its unique benefits,
the needs of each individual aren’t necessarily best suited
for every type of buyer representation agreement. The following
summarizes the various aspects of each. You should thoroughly review
the entire contract before making a final decision about which
is best for you and you should discuss it with your Buyer Representation
Specialist to assure you fully understand the various aspects.
Buyer Broker Agreement
Non-Exclusive/Not For Compensation
Purpose:
This representation agreement is very similar to the
process utilized by more traditional brokers, although it goes
further by clearly defining the broker’s duties and responsibilities.
Traditionally, broker’s responsibilities are just assumed
and assumptions are not always correct. This agreement establishes
in writing the terms of the relationship.
Term:
It continues for one year or unless cancelled by either
buyer or broker earlier.
Exclusivity:
This agreement is non-exclusive, meaning buyers
have no obligation to utilize the services of the broker with
whom they’ve contracted. Buyers may enter into such agreements
with more than one broker.
Cost:
There is no direct compensation provided for the
services of the buyer’s broker. Instead, the compensation
would typically be factored into the price of the property and
paid to the buyer’s broker out of proceeds paid to the seller.
Use:
This basic agreement is best utilized by buyers
with limited funds for down payment and closing costs. Compensation
for buyer’s broker’s services are provided out of
seller proceeds deposited into escrow by the buyer, most substantially
funding from the buyer’s mortgage loan.
Buyer Broker Agreement
Non-Exclusive Right to Represent
Purpose:
With this contract the buyer hires the broker and
agrees to compensation, provided that the broker fulfills all
terms and that the broker is the one to introduce the buyer to
the property being purchased. The broker’s responsibilities
are expanded.
Term:
It contains specific commencement and termination
dates.
Exclusivity:
This agreement is non-exclusive, meaning buyers
have no obligation to utilize the services of the broker with
whom they’ve contracted. Buyers may enter into such agreements
with more than one broker.
Cost:
The buyer pays for broker services by depositing
funds into escrow as part of the buyer’s closing costs.
If the broker receives compensation from any other source such
as the seller or the seller’s broker, the buyer is not
required to make any direct payment, even if the amount being
paid by the seller or seller’s broker is less than the
buyer agreed to. If compensation paid by the seller is greater
than the amount contracted by the buyer, the difference is credited
to the buyer, not to the broker.
Use:
This contract is best used by buyers who are considering
buying in different regions or buying different types of properties
requiring different brokers or different broker specializations.
Buyer Broker Agreement
Exclusive Right to Represent
Purpose:
With this contract the buyer hires the broker and
agrees to compensation, provided that the broker fulfills all terms
and that the broker is the one to locate the property being purchased.
The broker’s responsibilities are expanded.
Term:
It contains specific commencement and termination
dates.
Exclusivity:
This agreement is exclusive, meaning buyers have
made an obligation to compensate the broker with whom they’ve
contracted even if they learn of the availability of the property
being purchase from another source. Buyers should not enter into
such agreements with more than one broker as an obligation to
pay more than one broker could result.
Cost:
The buyer pays for broker services by depositing
funds into escrow as part of the buyer’s closing costs.
If the broker receives compensation from any other source such
as the seller or the seller’s broker, the buyer is not
required to make any direct payment, even if the amount being
paid by the seller or seller’s broker is less than the
buyer agreed to. If compensation paid by the seller is greater
than the amount contracted by the buyer, the difference is credited
to the buyer, not to the broker.
Use:
This contract is best used by buyers who are confident
in the abilities of the broker to represent them in the purchase
of the specific type and location of property they seek.
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