Buyer Agency Agreement

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Updated January 07, 2022

A buyer agency agreement is between a real estate broker (seller’s agent) that agrees to represent a buyer in a real estate transaction. The seller’s agent and the buyer will enter into the agreement either on an exclusive or non-exclusive basis before any properties are shown to the buyer.

Selling Agent vs Listing Agent

  • Selling Agent – Between a buyer that hires an agent to buy a property that meets their criteria. Also known as a “buyer’s agent.”
  • Listing Agent – Between a seller that hires an agent to sell their property.

If a seller’s agent shows a property is listed with a different agent, both agents will agree to share the commission that is stated in the listing agreement (between the seller and listing agent).

By State

Table of Contents

What is a Buyer’s Agent?

A buyer’s agent is hired by a prospective buyer to show them properties that are listed for sale and to help in the negotiation if an offer is made. Depending on the State, the buyer’s agent may have a fiduciary duty to represent the buyer’s best interests when negotiating with the seller or seller’s broker. This means that if the buyer reveals their “price range”, the buyer’s agent is not allowed to disclose this to the other party.

(Video) What is a Buyer Agency Agreement?

How Does a Buyer’s Agent get Paid?

In most cases, the buyer’s agent will be paid at the closing as a percentage (%) of the purchase price. If there is a listing agent, this makes it easier as the parties will commonly “split” the commission between the seller and their agent.

If there is not a listing agent then the seller has the option to refuse payment to the buyer’s agent and the buyer may have to pay the agent out-of-pocket.

Exclusive vs Non-Exclusive

  • Exclusive Agreement – Offers protection to the agent that, no matter what property the buyer purchases during the listing period, the agent will receive a commission.
  • Non-Exclusive Agreement – The agent will only be paid a commission if they show the buyer a property that the buyer ends up purchasing. In a non-exclusive agreement, the buyer has more protections that if the agent does not do their job then they do not get paid.

How to Terminate a Buyer’s Agreement

If a buyer has determined they would like to terminate their agreement, they will have to read and find any termination clauses or options to revoke the agreement. In most buyers’ agreements, there is no language that allows the buyer to opt out of the contract. Furthermore, agents are discouraged from terminating the agreement due to fear of missing out on a commission that may be owed if the buyer purchases a property that was shown to them.

Sample – Buyer Agency Agreement

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How to Write

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I. The Parties

(1) Buyer Agency Agreement Date. The agreement being developed should be easy to identify in one’s files. A valuable reference tool will be its formal date of effect. Furnish a record of this date to complete the first statement.

(2) Buyer Identity And Mailing Address. Identify the Party or Business Entity of this agreement by documenting the Real Estate or Property Buyer’s full name and legal mailing address. This is the Party that shall pay the Broker and Agency participating in this agreement in exchange for finding and closing a purchase of the real property desired by the Buyer.

(3) Agency Name And Mailing Address. This agreement’s introduction will also require a record of the Broker’s name, the name of the Agency he or she represents, and the business mailing address needed to reach him. It is important that the appropriate Broker or Sales Person is listed here since this will be the Party expected to sign the completed agreement on the Agency’s behalf.

II. Services Provided

(4) Exclusive Basis. If the Buyer grants the Agency exclusive rights to purchase property on his or her behalf then select the “Exclusive Basis” definition. This will mean that the Agency will be entitled to its payment even if a property is purchased by the Buyer outside of the Agency’s involvement or knowledge.

(5) Non-Exclusive Basis. If the Agency will not be entitled to any payment should the Buyer purchase real estate that fits the same needs stated in this agreement (even if through another Agency’s listing or efforts) then select the “Non-Exclusive Basis” checkbox to classify this agreement correctly.

III. Period Of Agreement

(6) Agreement Start. This contract will need a definitive lifespan assigned to it. Use the first area provided in Article III to establish the first calendar date when its effect will be felt.

(7) Agreement Termination. Document the final active date of this agreement to the next area presented in Article III. This agreement will not have an effect after the date recorded here.

(8) Listing Period Extension. A Buyer may attempt to purchase a property that was introduced by the Agency once this agreement terminates. To aid in preventing such a maneuver, this contract will require that the Agency’s agreed-upon fee is paid should such a sale occur within a certain number of days of this agreement’s termination. Produce the number of days that define this period in Item A.

IV. Compensation

(9) Listed Property Commission Payment. It is time to define the fee the Buyer must pay the Agency should a property be purchased under this agreement. Article IV will seek to define the payment according to whether the property has been listed or not. If so, then produce the percentage of the purchase price the Agency will expect as payment. Additionally, an alternate flat fee payment should be documented. This will prevent the Agency from suffering because of a property that sells for a lower value. Item A in this article will thus require that the Agency’s fee for a listed property be the greater value of either the percentage of the purchase price or the listed flat fee.

(10) Commission Payment For Unlisted Property. If the property is not listed then a different commission can be documented as payment. Record the percentage of the total sale that will be used to calculate the Agency’s payment and the flat fee that is expected as a minimum payment should the commission percentage be too low. Once the sale is complete, the greater of these values will be used as payment for the Agency.

(11) Retainer Fee Status. A retainer fee will show a certain amount of faith in the agreement being developed but is not always required by the participating Parties. If no retainer fee will be needed to enter this agreement then select the first statement in Item C. Otherwise, if the Agency expects the Buyer to submit a retainer fee, select the second statement, then supply its content with the fee amount. Notice, that at the time of a successful closing the retainer fee listed will be deducted from the payment the Agency will expect from the Buyer. Only one of these statements can be selected.

(12) Leasing. In some cases, the Agency may find a property that the Buyer may rent while waiting to purchase the desired real estate. If this occurs, the Agency should be paid a certain percentage of the rent amount that will be owed for the leasing period. Determine then report the percentage of total rent that the Agency will expect for its efforts in finding a property to lease to the Buyer.

V. Buyer’s Identity

(13) Disclose Buyer’s Identity. Select the first checkbox in Article V if Agency will be required to “Disclose the Buyer’s Identity” during its efforts to find and close on a real estate purchase for the Buyer.

(14) Exclusive Basis. If the Buyer wishes to remain anonymous during the listing period, then place a mark in the second checkbox.

VII. Disclosed Dual Agency

(15) Allow Disclosed Dual Agency. It will be up to the Buyer to consent or refuse to allow the Agency to act as a Disclosed Dual Agency. If the Buyer will allow the Agency to broker this deal on both the Buyer and the Seller’s side as well as collect compensation from the Real Estate Seller then select the “Allow” box. Keep in mind that some states will not allow an Agency to act as a Dual Agency during a property sale therefore, make sure your choice is compliant with the state law where this agreement is effective.

(16) Not Allow Disclosed Dual Agency. The Buyer has the right to insist that the Agency only broker the deal as his or her Agent. This will mean the Agency cannot represent the Seller during a real estate purchase the Buyer is participating in. To prevent the Agency from acting as a Disclosed Dual Agency, select the “Do Not Allow” checkbox.

XVIII. Additional Terms And Conditions

(17) Include Additional Provisions. Only the obligations physically listed in this agreement can be placed upon the Buyer and Agency involved in it. If there are any other conditions, requirements, or payments left unmentioned that should be considered mandatory (and legal) for this agreement to continue, then list them in Article XVIII. 

XIX. Entire Agreement

(18) Buyer’s Signature And Name. Each Buyer participating in the above agreement with the Broker and Agency must sign this agreement as well as present the printed version of his or her name. The signature area provided has been formatted to accept the signature and printed name of two Buyers however if there are more (than two Buyers), copy and paste the Buyer’s signature section to accommodate every signature required. If only one Buyer is involved then he or she should sign the first line labeled “Buyer’s Signature” and print his or her name directly below the submitted signature.

(19) Buyer’s Signature Date.

(20) Broker’s Signature And Name. The Broker named above must sign his or her name to execute this agreement on the Agency’s behalf. This will obligate the Agency to the terms and conditions of the agreement above. Thus, if the Signature Broker or Sales Person is unable to work with the Buyer in the future (for legitimate reasons), the Agency will be obligated to complete the real estate sale by supplying a different Broker or Salesperson to the Buyer named above

(21) Broker’s Signature Date.