A Buyer's Agent is a real estate agent (Realtor) who represents the buyer of real property in a single-agent capacity. The Buyer's Agent specifically represents the Buyer's interests rather than acting as an intermediary (like a Transaction Broker). In Florida a Buyer’s Agent owes the following duties to the Buyer:
1. Dealing honestly and fairly;
5. Full disclosure;
6. Accounting for all funds;
7. Skill, care, and diligence in the transaction;
8. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; and
9. Disclosing all known facts that materially affect the value of residential real property and are not readily observable.
This differs from the role of a transaction broker in that a buyer agent specifically represents the interests of the buyer and must disclose all known facts regarding the transaction (Full disclosure). For instance, if a buyer agent has knowledge that the seller of a property would be willing to take $10K less than the buyer wants to offer, the buyer agent would have to disclose that information to the buyer. A transaction broker, on the other hand, could NOT disclose that information.
In order to create a buyer agency relationship between a Realtor and a Buyer it is necessary for both parties to sign an Exclusive Buyer Broker Agreement. The Buyer Broker Agreement is designed to protect both the Buyer and the Realtor outlining all terms of the agreement and brokerage relationship. The document has 14 sections, as follows:
1. Parties: Names the Buyer(s) and Broker(s) to the agreement.
2. Term: Assigns a specific term and expiration date to the agreement (90 days is common).
3. Property: Outlines the type and location of property Buyer wishes to acquire. This may be left wide open or narrowed down to specific areas and price ranges.
4. Broker’s Obligations: Specifically outlines the Buyer Agent’s responsibilities to the Buyer.
5. Buyer’s Obligations: Outlines the Buyer’s responsibilities, both to the transaction and to the Buyer Agent (Broker).
6. Retainer: Some agents charge a non-refundable deposit before entering into an agreement to work as a Buyer’s Agent. Because a Buyer Agent could spend months showing a client homes only to have them change their mind in the end, a retainer guarantees against a total loss by providing some compensation up front.
7. Compensation: This section spells out exactly how the Buyer Agent will be paid. In most real estate transactions the agent is paid by the seller of the property. However, if the compensation is listed as 3%, and a seller is only offering 2.5% in the MLS, the buyer will be required to pay the difference of .5% at closing.
8. Protection Period: Specifies a period of time after the Exclusive Buyer Broker Agreement ends that the Buyer Agent would be paid for a transaction on a property that they found for the Buyer. This protects the Realtor from unethical practices where a client would cancel an agreement, or let it expire, and then ask another Realtor to write an offer at a reduced commission.
9. Early Termination: Explains under what terms the agreement may be terminated.
10. Dispute Resolution: Explains that disputes will be mediated or submitted for arbitration.
11. Assignment; Persons Bound: Explains that Broker may assign the Agreement.
12. Brokerage Relationship: This is where the brokerage relationship is selected. We always use “single agent of buyer with consent to transition into a transaction broker.” This means we will represent the buyer as a single agent so long as any contracts written are for properties that are not listed with our brokerage. (more on that in an upcoming article)
13. Special Clauses: Any special terms agreed to by both Buyer and Broker.
14. Acknowledgement; Modifications: Sign, Date and you have hired yourself a Buyer Agent! If the name under “Real Estate Associate” is not Christine Bacon or Dan Bacon, there has been a mistake and you should contact us right away before signing.