Embarking on the journey of purchasing a home can be exciting, but it’s also one filled with many working parts and important decisions. The National Association of Realtors recently added another “105 More Ways Agents are Worth Every Penny of Their Compensation.”
As a follow-up to a February column, this week, I’m focusing on the buyer’s side of the real estate transaction and the steps Realtors take to ensure buyers receive the necessary guidance and expertise to get to a successful closing.
Preparing the buyer for executing a Buyer Representation Agreement
One of the critical aspects of this process is understanding and executing a Buyer Representation Agreement. This document isn’t just about formalizing the relationship between you and your real estate agent; it’s a step toward ensuring your interests are protected and your home-buying experience is as smooth and transparent as possible.
Before diving into the specifics of the agreement, it’s crucial for you, as a buyer, to comprehend what this contract entails. A Buyer Representation Agreement is a formal document that establishes a legal relationship between you and your real estate agent’s brokerage. It outlines both parties’ duties and responsibilities, ensuring certainty about the level of service you can expect.
Explain agency relationships to the buyer
The concept of agency relationships is at the heart of this agreement. In real estate, an agent can represent a buyer, a seller or, in some cases, both (though dual agency requires explicit consent from both parties due to potential conflicts of interest). As a buyer, it’s essential to understand that when an agent acts on your behalf, this includes negotiating, loyalty, confidentiality, and the obligation to act in your best interests.
The Realtors Code of Ethics and the broker’s business policies
Trust in your agent is as essential as their knowledge of and compliance with the Realtors Code of Ethics. The code ensures that all interactions and transactions are conducted with the highest level of integrity, honesty and professionalism. Additionally, familiarizing yourself with the broker’s business policies can clarify how transactions are handled, dispute resolution procedures, and the overall approach to serving clients.
Learn the buyer’s wants and nonnegotiable needs
Before finalizing any agreement, a crucial step is to have an open and detailed discussion with your agent about your wants, needs and non-negotiables in your home search. This dialogue helps your agent tailor their search and advice to fit your specific requirements, making the home-buying process more efficient and tailored to your desires.
After ensuring the buyer understands what’s done for them, how it’s done and the benefit to them, obtain signatures on the buyer representation agreement. Once you’re fully informed about what the agent does for you, how they do it and the benefits to you, it’s time to formalize the relationship by signing the Buyer Representation Agreement. This step is more than a formality; it’s your informed consent, acknowledging that you understand and agree to the terms of the representation and the services provided.
Explain how compensation is paid, who pays it, and what the buyer’s options are for paying it
A common question among homebuyers concerns the compensation of their agent. Many times, a seller will authorize their broker to offer compensation to the buyer’s agent. However, a Buyer Representation Agreement is essential, as there are scenarios in which you might be responsible for some, or all, of your agent’s commission.
Starting on the home buying process with a clear understanding of the Buyer Representation Agreement, agency relationships, ethical standards, and compensation structures ensures that you’re well-prepared and informed every step of the way. This knowledge not only empowers you as a buyer but also lays the foundation for a transparent and trustful relationship with your real estate agent, ultimately leading to a more satisfying and successful home-buying experience.
That’s Who We R.
Founded in 1912, Greater Chattanooga Realtors is the voice for real estate in Greater Chattanooga. A regional organization with more than 2,700 members, Greater Chattanooga Realtors serves Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. The association is one of approximately 1,100 local associations and board of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors owns and operates a multiple listing service that’s one of approximately 600 MLSs in the country and services more than 3,000 users. Local association membership is comprised of Realtors servicing the Greater Chattanooga area and specializing in a variety of disciplines – appraisal, commercial, industrial, land, multi-family, property management and residential. Working alongside Realtors are affiliate members, who represents related industries in sympathy with the objectives of the association. Our affiliate members include mortgage lenders, home inspectors, title and closing services, pest inspection and control and insurance.