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What is a Buyers Agreement and why will I have to sign one?

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If you have ever sold a house in Alberta you have signed a Listing Contract with a REALTOR® explaining what your working relationship will be.


If you have bought a home in Alberta recently you may have been asked to sign a similar document. “Effective July 1, 2014, Real Estate Council of Alberta (RECA) will require REALTORS  who establish a client relationship when helping a client buy a home, to enter into a Buyer’s agreement with that client” says Natalie Scollard, communications coordinator with RECA.


Beginning February 1, 2014 RECA will be introducing new forms and a new guide book for REALTORS® to use in establishing their client relationships.


As a homebuyer, this means that you WILL be required to enter into a Buyer’s agreement stating the expectations of your relationship with any REALTOR dealing in “residential real estate” says Scollard. For someone entering into the home buying process this can come across as something that will restrict you, it’s not.


On RECAblog.ca it states, in regards to the representation relationship “whether that is an exclusive right to represent or not, RECA is simply requiring it be done through a written service agreement.”


Homebuyers will have the option of entering into either an exclusive or a non-exclusive service agreement, your REALTOR® will explain the options to you.


RECA and Alberta Real Estate Association (AREA) have re-written the forms to be easier to read and understand.


REALTORS® will guide their clients through these new forms to ensure that they are represented in a manner that meets expectations. - See more at: http://vanstaveren.ca/things-you-need-to-know.html


Understanding the Buyer Brokerage Contract Helps Protect You 

Understanding Buyer Agency 

The Buyer Brokerage Contract is the written agreement that establishes an agency relationship between you (the buyer) and the real estate brokerage (and its agents). When you sign the agreement, you agree to be represented by only the agent you’ll be working with and all other agents in the same brokerage.


The Buyer Brokerage Contract sets out duties and responsibilities of both parties. Your agent must provide you with information about the property and guide you through the transaction. 

 

 Buyers have obligations under the contract as well. 

 

 In signing the contract with a brokerage, you agree that all agents in the office can find suitable properties and help you negotiate the terms of any Purchase Contract. You need to provide information to enable the brokerage to search for properties that make the most financial sense for you.


 Finally, you need to inform the brokerage of any properties you’re interested in viewing. The buyer’s responsibilities under the contract enable the buyer’s agent to do the best job s/he can for you.

 

Agency relationships 

You’ll also find a section in the contract about agency disclosure. This authorizes the buyer’s agent to act as a dual agent and outlines the duties the agent owes to you in a dual agency situation. A dual agency situation could occur if you’re interested in making an offer on a property listed by your agent or another agent in the brokerage.

 

In this case, the agent and the brokerage act for both you and the seller and can’t fulfill all of the fiduciary duties owed to both parties.


In a dual agency situation, the agent doesn’t owe a duty of confidentiality and will disclose to you and the seller all defects and information known about the property that may affects its value. The only information that the agent will not disclose to the seller is the minimum or maximum price you (the buyer) are willing to pay. The agent will also not disclose any information about the price the seller will accept or the reason they’re selling.


Further, in a dual agency situation, the agent will not disclose to you or other buyers the terms and conditions of competing offers on the property.

 

Paying your agent 

Another important part of the Buyer Brokerage Contract is the section that determines the brokerage’s compensation.

Real estate commissions are negotiable in Canada and you and your agent have to agree on a suitable amount of compensation.

 

Usually, the contract will state that the brokerage will receive either a portion of commission offered by the seller’s brokerage or a fee that is negotiated between you and your agent. If the seller’s brokerage doesn’t offer a portion of commission to your buyer’s agent, you may want to take that into consideration when making an offer.


Some agents might ask for a deposit on their fee to be held in trust and applied to any commission payable or refunded to you if the contract expires.

 

 

Ending the contract 

The Buyer Brokerage Contract is in effect until the expiration date negotiated between you and your agent. The contract can be renewed or extended if you and your buyer’s agent need more time to search for a property or close a deal.


The Buyer Brokerage Contract is a legally binding agreement but it can be amended or cancelled under certain circumstances.


For example, if you or your spouse is suddenly transferred, talk to your agent about terminating or amending the contract.


Make sure to ask your agent about any ongoing obligations on your part if the contract is terminated.

 

 

Buyer Agency: Questions & Answers 

Why do I need a buyer’s agent? 

A buyer’s agent promotes your interests and represents you throughout the home-buying process, beginning with the search for the perfect home until you have the keys in your hand.


A buyer’s agent can provide you with many important benefits such as knowledge of the local market, negotiating skills and expertise in working with contracts.

 

What is a Buyer Brokerage Contract? 

A Buyer Brokerage Contract is the legal document that sets out the relationship between you and the real estate brokerage (and all of its agents).

The contract also establishes the obligations of each party: you agree to have only the brokerage represent you and the brokerage agrees to represent you and act in your best interests.

 

Do I have to sign a contract for a specific length of time? 

The expiration date on the Buyer Brokerage Contract is agreed upon between you and your agent.


There is no requirement for the contract to last any predetermined amount of time. The contract should be written to expire in a time period that works for both you and your agent.

 

 

What happens if I sign a Buyer Brokerage Contract and then find a home listed through another agent?

 

Any time you find a property you’d like to view, contact your buyer’s agent. The buyer’s agent will contact the seller’s agent to arrange a showing. 

 

What if I decide to buy a home directly from a builder?

With a buyer agency relationship, there is no obligation to purchase a resale home. Tell your agent you’d like to look at a new property.


Your buyer’s agent will help you navigate through all the information on new homes and neighborhoods.


More importantly, your buyer’s agent acts for you and represents your interests when negotiating with a builder. Your agent can help you work with the builder from the planning stage, or help you finalize details for your new home.


Your buyer’s agent can also assist you through other unique issues that new homes present such as warranties, GST, builder’s liens or encumbrances.


Buyer’s agents also have access to standard contracts and schedules that protect you, the consumer, when buying your new home.


Commission is paid per the terms of your Buyer Brokerage Contract.

 

Can I look at open houses without my buyer’s agent present? 

Yes, you can view open houses without your buyer’s agent but as a courtesy you should inform the agent at the open house that you are already represented. If you want to see the property again, your buyer’s agent will make arrangements for a showing.

 

How is my buyer’s agent paid? 

The terms of payment should be contained in the Buyer Brokerage Contract.

Usually, the contract will state that the brokerage will receive either a portion of commission offered by the seller’s brokerage or a fee that is negotiated between you and your agent (whichever is greater).


Real estate commissions are negotiable in Canada and you and your agent have to agree on a suitable amount of compensation.


If the seller’s brokerage doesn’t offer a portion of commission to your buyer’s agent, you may want to take that into consideration when making an offer on a property.

 

Should my buyer’s agent be a REALTOR®? 

Not all agents are REALTORS®. In addition to complying with provincial laws, REALTORS® belong to the local real estate board and subscribe to the strict Code of Ethics and Standards of Business Practice of the Canadian Real Estate

Association. This ensures you will receive the highest level of service, education and integrity. Source: Alberta Real Estate Association

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