In reality, formal contracts are commonplace in the real estate industry. In the same way that listing agents sign formal agreements with sellers, buying agents need to have formal agreements as well.
According to realtor.com, exclusive right-to-represent contracts are the most common contract between home buyers and brokers. This contract outlines the responsibilities of the broker and the buyer, including the following:
- the buyer may not retain more than one broker
- sets commission amount to be paid to the broker
- description of the type of home the buyer is seeking
- length of contract may span several months to a year
In Hiring Buyers’ Agents, Elizabeth Weintraub discusses several important aspects to signing an exclusive agreement with an agent. It’s important to remember that this agreement means that the agent is working exclusively for the buyer. The contract benefits both the buyer and agent, establishing the rights and responsibilities of both parties.
Tips for Finding a Buyer’s Agent
- Get referrals from family and friends. Ask them to refer agents that have done an exceptional job for them in the past. Then contact that agent and interview them to see if you get the same good feeling from the agent.
- If you are moving to a new area, and can’t use the referral system, utilize internet searches (run keyword searches like “downtown Charlotte’s buyer’s agent”) and browse sites where agents maintain national profiles such as realtor.com, and well as exclusive buyer brokerages that specialize solely in buyer representation.
- Open houses often give you the opportunity to meet an agent (although the agent hosting an open house may not be the listing agent).
Things Buyers Should Do Before Signing an Exclusive Agreement
- Meet with the agent in person.
- Conduct an interview to get to know his/her personality and knowledge of the area and market.
Typical Time Commitment
The term of a buyer’s broker agreement is negotiable. It is typical for agents to request a 3-6 month commitment.
What Should Be Included in the Contract?
- specific terms—price range, neighborhood
- guarantee—benefits both parties; agent and buyer both agree that if the business relationship is not working out, either party can be released from the agreement