Whether you’re looking at a condo in the city or a detached home in the suburbs, the search for your dream home is an exciting time! For many prospective buyers, the period between the decision to buy and the day you get the keys to your new home takes a back seat to your dreams of the exciting times ahead. As a buyer, you need to be informed and educated through every step of the process. It can be challenging to set aside your search for the perfect window treatments when your agent is asking you to sign a document you don’t understand: the Buyer Representation Agreement (BRA). To help you tackle this, we are going to give you the short and sweet explanation of what a Buyer Representation Agreement is, so you can get back to the decisions you’re excited about making!
What is a Buyer Representation Agreement?
This document is a written contract that defines the relationship between you and the brokerage, and how the agent will represent your best interests. It outlines the services your real estate agent provides and what they expect from you, including:
- The agent’s duties and obligations to the buyer
- Agency relationships
- The scope of the agent’s duties
- Buyer obligations
Homebuyers will sign a BRA when they’re working with a real estate agent and are ready to make an offer on a home.
What are the benefits and drawbacks of a BRA?
By signing a BRA, you enter into an agreement in which your real estate agent will represent you in the home buying process. Advantages include:
- Representation – A BRA ensures that your real estate agent works in your best interests and abides by the services listed in your contract. They can handle much of the home-buying process on your behalf, including negotiating, inspecting, and paperwork.
- Clarification – A BRA formalizes your professional relationship by clearly laying out what your real estate agent expects from you and what you can expect from them.
- Negotiable – Most of the terms in a BRA can be negotiated with your real estate agent.
Disadvantages of a BRA include:
- Locked term – By designating a real estate agent as your representative, your real estate agent will always receive a commission if you purchase property during the contract term.
- Exclusivity – With an exclusive BRA, you will not be able to use another real estate agent. If you are unhappy with your current agent, there are steps you can take to break your agreement and engage another agent.
How is a BRA presented?
While the agreement can be written, oral, or implied, it will ultimately be required by law to be reduced to writing with your signature in order to protect everyone involved.
When should you sign a BRA?
Like anything else you place your signature on, it’s important to fully discuss and understand the services provided, the cost related to the services, and that the written agreement is clear. Typically, a BRA is signed before you begin working with the real estate agent.
What will happen if you don’t sign?
According to the Code of Ethics, the broker and salesperson must protect and promote your best interest as their client on top of being fair, and honest. While you can choose to be a customer rather than a client, be aware that there could be some differences in how you are represented.
What is multiple representation?
Multiple representation means that a brokerage represents both the buyer and the seller of a property. There are no standard terms of service for multiple representation, so you need to consult the representation agreement before any offer is submitted. Multiple representation must be consented to in writing, so make sure you ask questions and are comfortable with how it may affect the services provided to you.
What is a holdover clause?
A holdover clause is an optional clause in your BRA. It means that once your BRA expires if you purchase a home after a certain number of days (usually 30 to 90 days) that came to your attention during the BRA, you must still go through the agent to purchase the home, and they will still receive a commission on the home purchase or lease.
Learn more about the many other important home buying steps so you can spend time where it really matters! Are you ready to take the next step? Contact us!
Courtesy of REMAX.ca