Ch 26 Buyer Representation Agreement

Other provisions typically found in a Kentucky buyer representation agreement include the following:

Agent's Duties Limitations of the Agent's Duties Buyer's Duties Disclaimer Indemnification of Broker Limitation on Broker's Liability RESPA Compliance Dual Representation Nondiscrimination Miscellaneous Provisions

Disclaimer

An acknowledgement that the broker is being hired solely as a real estate agent and NOT as a legal advisor or other professional expert, such as an engineer or home inspector.

What are the three types of buyer agency agreements?

Exclusive buyer agency agreement Exclusive-agency buyer agency agreement Open buyer agency agreement

Similar to listing agreements, there are three common types of buyer agency agreements:

Exclusive buyer agency agreement Exclusive-agency buyer agency agreement Open buyer agency agreement

What does the "Limitations of Agent's Duties" provision explain?

It describes the limitations of the agent, including the acknowledgement that he or she is not an expert in certain fields. It also explains that the agent may work for other buyers and may show the same properties to multiple buyers.

Buyer's Duties

Just as the agent has duties to the buyer, so does the buyer to the agent. This paragraph addresses such items as exclusivity, reasonable requests, notices, cooperation, etc.

The Parties

Most agreements start out by designating who the agreement is between - that is the Brokerage firm and the Buyer. There are spaces to write in the names of each party in this paragraph.

Miscellaneous Provisions

Other issues such as amendments, successors and assigns, and a definition of "days" are addressed in this paragraph.O

RESPA Compliance

The buyer will furnish all information required to comply with the Real Estate Settlement Procedures Act.

Agent's Duties

The listing of the duties the designated agent is bound to perform for the buyer. It's important to cover these carefully with your buyer client.

What are the ways a buyer's broker could receive compensation?

The seller could pay the commission. The buyer could pay the commission. The seller and the buyer could both pay the commission.

effective date of the contract

These paragraphs are followed by a section for the buyers' and the broker's signatures and dates. (The date of the broker's signature becomes the

Exclusive buyer agency agreement

This agreement is also known as the exclusive right to represent. With the signing of this agreement, the buyer is legally bound to compensate the brokerage firm when the buyer purchases any property of the same type as described in the contract. The brokerage firm is entitled to payment regardless of who locates the property. This means that even if the buyer finds the property himself or herself, the buyer must still pay the agreed upon commission to the brokerage firm.

Exclusive-agency buyer agency agreement

This exclusive contract is between the brokerage firm and the buyer. However, with this type of agreement the brokerage firm is entitled to payment only if the designated agent or another brokerage company actually finds the property that the buyer purchases. If the buyer finds a property himself or herself, the buyer does not owe a commission to the brokerage firm.

Open buyer agency agreement

This is a non-exclusive agency contract between a buyer and a designated agent. A buyer can enter into similar agreements with an unlimited number of other designated agents. Only the brokerage firm whose designated agent actually locates the property that the buyer eventually purchases is entitled to the commission.

Limitations of the Agent's Duties

This list describes the limitations of the agent, including the acknowledgement that he or she is not an expert in certain fields. It also explains that the agent may work for other buyers and may show the same properties to multiple buyers. Again this is a paragraph that you should discuss with and explain to your client very thoroughly.

Compensation

This paragraph - contained in every agreement - must be carefully explained to the buyer. The buyer's broker could receive commission in one of three different ways: The seller could pay the commission. The buyer could pay the commission. The seller and the buyer could both pay the commission. The compensation paragraph states that the buyer's broker will receive the commission from the listing broker under a cooperative brokerage arrangement or from the seller if there is no listing broker. However, this paragraph also indicates that if the seller or the listing broker does not pay the required commission, the buyer will pay a set percentage to the broker. There is a space to write in what that percentage will be. This paragraph also goes on to say: If the buyer purchases a property that was shown by the broker during the term of the agreement within some number of days or months after the termination of the agreement, the buyer will owe the broker the percentage commission indicated earlier in the paragraph. There is space to indicate how many days/months the buyer will be liable for the commission. If the buyer has an agreement for a purchase and the transaction does not close due to some fault of the buyer, the broker is still entitled to the commission set forth earlier in the paragraph. There is also a place to indicate if the buyer will pay the broker a non-refundable retainer fee and, if so, how much the fee will be.

The Term

This paragraph allows the designated agent to write in the time period during which the agreement will be effective. The "Commencement Date" is the date the agreement is signed. The "Termination Date" written in this paragraph is the date on which the agreement will automatically expire.

Limitation on Broker's Liability

This paragraph says that the brokerage firm or designated agent cannot be liable for any amount greater than the amount of compensation the broker receives from the listing broker or seller.

Dual Representation

This paragraph states how a disclosed dual agency relationship can be formed.

Nondiscrimination

This paragraph states that the broker and licensees will not act in any way to either induce the buyer to acquire or discourage a buyer from acquiring a property based on issues of protected classes.

Indemnification of Broker

This paragraph states that the buyer "holds the brokerage firm and the designated agent harmless" from any claims, disputes, litigation, etc.

Before you get a buyer to sign a buyer representation agreement, you must discuss several issues with the prospective buyer.

You should make the same disclosures to the potential buyer client that you would make if you were doing a listing agreement with a seller. You must discuss the different forms of agency that are available and explain what the rights and responsibilities are of each type. You should clearly outline all of the services that the buyer could expect to receive from you. You must deal with any questions about compensation. In Kentucky it is customary for the buyer's agent's brokerage firm to receive compensation from the seller. However, a licensee can negotiate a commission from the buyer the licensee is representing.

Buyer agency agreements

describe the terms of the relationship between the buyer's designated agent and his or her buyer client, and is a contract between the buyer and the brokerage firm that the buyer's designated agent represents. The agreement addresses such things as the duration of the agreement; the commission that will be paid; and the various rights, duties, and obligations of the parties.