Window to the Law: The Benefits of Using a Buyer Representation Agreement

Window to the Law: The Benefits of Using a Buyer Representation Agreement

May 1, 2023
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Learn how real estate professionals can use buyer representation agreements to ensure consumer protection and build strong relationships with buyers, as well as how to articulate the many benefits of these agreements when meeting with buyers.

Window to the Law: The Benefits of Using a Buyer Representation Agreement — Transcript

Buyer representation agreements are a win-win proposition for both real estate professionals and consumers. They assist in building trust and a mutually beneficial relationship by promoting transparency through up-front conversations, and provide clarity regarding services consumers can expect to receive, as well as how their real estate professional will be compensated. This transparent practice is crucial for consumer education during one of the biggest and most complex transactions many make in their lifetime.

In this video we’ll explain how real estate professionals can use buyer representation agreements to ensure consumer protection and build strong relationships with buyers, as well as the many benefits of incorporating buyer representation agreements as a regular business practice.

A buyer representation agreement is a legally binding agreement that details many crucial elements of the relationship, such as services, agency relationship and compensation. And, signing one at the outset of the relationship protects both the broker and the buyer by avoiding misunderstandings. While jurisdictions vary in what is required in terms of written agreements when it comes to compensation, most states require that any exclusive brokerage or agency relationship be in writing, and about half of states require written disclosure of an agency relationship in order for the real estate professional to be paid for their services. Make sure to know where you fall in terms of requirements, and check with your state REALTOR® association for a buyer representation agreement form. Be sure to explain all provisions of the agreement to a buyer client before they sign.

For brokers, a buyer representation agreement protects their exclusive client relationships, which is reinforced by Article 16 of the REALTOR® Code of Ethics. And, a signed agreement may be helpful in the event of a procuring cause dispute, or in rare instances, a legal dispute with a buyer. For example, in a recent Montana case, the court relied on the buyer representation agreement in holding that the broker had no obligation to disclose available zoning information.

When meeting with a buyer who may be unfamiliar with buyer representation agreements, be prepared to articulate the many benefits of these agreements, such as how they:

  • Ensure the client has a loyal advocate representing them in the transaction;
  • Provide clarity on the services a consumer should expect from their agent, and how the consumer can partner with the agent to conclude a successful transaction;
  • Understand the agent’s representation and duties owed to the consumer, including whether the agent may be serving as a dual agent; and
  • Allow consumers an opportunity to ask questions about how their real estate professional is being compensated, including who is responsible for the payment for their services.

For resources to help facilitate these important conversations during a buyer representation meeting, including articulating your value and explaining how compensation works, check out for infographics, informative articles and more.

Additional Resources

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